The Mortgage Works, the buy to let lender owned by Nationwide Building Society, has been quick to reduce rates on buy to let finance following the referendum vote to leave the European Union.
Rates on two year, three year and five year mortgages have all been cut on both buy to let and let to buy offerings.
Some two year fixed term mortgages at 65 per cent loan to value have been reduced by up to 0.20 per cent and 75 per cent loan to value by as much as 0.70 per cent.
Three year fixed rate mortgages at 65 per cent loan to value have also been cut by 0.30 per cent, and five year fixes drop by up to 0.65 per cent.
Let to buy mortgage rates have dropped the most, with rates reduced by up to three quarters of a point (0.75 per cent).
The Mortgage Works led the way in increasing the amount of rent needed to cover the mortgage on all buy to let products recently, with the rental cover requirement rising from 125 per cent to 145 per cent following the announcement of landlord tax relief changes. So these reductions will be well received by buy to let investors to at least reduce one of the ever increasing costs landlords have to bear.
Managing director of The Mortgage Works, Paul Wootton, commented: ‘TMW is increasing the competitiveness of its mortgage rates for two year, three year and five year terms, helping to support landlords maintain a positive cash flow and help to manage their costs as the tax relief changes are phased in.’
Other buy to let lenders will be expected to follow suit.
Monday 27 June 2016
Thursday 23 June 2016
Industry group says massive leap in retired renters of 200,000 since 2012
The number of people living in private rented accommodation in retirement has soared by more than 200,000 in the last four years, according to a poll of private renters.
Overall, the poll shows that the proportion of retired private renters has grown by 13 per cent since 2012 – approximately 220,000 – with 17 per cent of the retired private rentin population live in the South East of England.
However, only three per cent live in London and only four per cent in the North East.
However, the proportion of landlords who let to retired renters has almost halved during the same timeframe, with nine per cent of landlords saying they currently let to retirees compared to 19 per cent in 2012.
The research - by the National Landlords’ Association - suggest that it could become harder for those approaching retirement to find suitable rented accommodation in the future, especially in high demand areas.
“More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants” says an NLA spokeswoman.
“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like central London for anyone without a well-paying job” she adds.
“As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield – leaving communities they have known and contributed to for decades.”
Overall, the poll shows that the proportion of retired private renters has grown by 13 per cent since 2012 – approximately 220,000 – with 17 per cent of the retired private rentin population live in the South East of England.
However, only three per cent live in London and only four per cent in the North East.
However, the proportion of landlords who let to retired renters has almost halved during the same timeframe, with nine per cent of landlords saying they currently let to retirees compared to 19 per cent in 2012.
The research - by the National Landlords’ Association - suggest that it could become harder for those approaching retirement to find suitable rented accommodation in the future, especially in high demand areas.
“More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants” says an NLA spokeswoman.
“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like central London for anyone without a well-paying job” she adds.
“As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield – leaving communities they have known and contributed to for decades.”
Monday 20 June 2016
House Prices Would Fall by 20% if We Vote to Leave, Warns Zoopla
House prices would fall by 20% if we vote to leave in Thursday’s EU referendum, warns property portal Zoopla.
The prediction appeared in yesterday’s Mail on Sunday, which has been fighting a fierce remain campaign.
Zoopla believes that a Brexit would wipe out nearly all of the house price gains made over the past five years, leaving some homeowners in negative equity.
The property portal says that the average house price, of just over £297,000, would drop by more than £53,000 if we vote to leave, due to the combined effect of uncertainty, increased unemployment, reduced investment and higher borrowing costs.
Altogether, a Brexit vote would cut £1.5 trillion off the total value of the UK’s housing stock, warns Zoopla.
In London, Zoopla claims that the average house price, currently at £671,989, would decrease to £550,989. Meanwhile, in the South East, it believes that prices would fall from £396,682 to £325,282.
Even in the region with the lowest house prices, Yorkshire and the Humber, the average would decline from £167,023 to £137,023.
Zoopla states that its calculations, based on Treasury projections, suggest that “most of the gains clawed back since the credit crisis would be wiped out, leaving homeowners with less equity and some in negative equity territory”.
While the portal puts the average house price at £297,000, the latest figures from the Office for National Statistics and Land Registry indicate that the average price is significantly lower, at £225,000.
The prediction appeared in yesterday’s Mail on Sunday, which has been fighting a fierce remain campaign.
Zoopla believes that a Brexit would wipe out nearly all of the house price gains made over the past five years, leaving some homeowners in negative equity.
The property portal says that the average house price, of just over £297,000, would drop by more than £53,000 if we vote to leave, due to the combined effect of uncertainty, increased unemployment, reduced investment and higher borrowing costs.
Altogether, a Brexit vote would cut £1.5 trillion off the total value of the UK’s housing stock, warns Zoopla.
In London, Zoopla claims that the average house price, currently at £671,989, would decrease to £550,989. Meanwhile, in the South East, it believes that prices would fall from £396,682 to £325,282.
Even in the region with the lowest house prices, Yorkshire and the Humber, the average would decline from £167,023 to £137,023.
Zoopla states that its calculations, based on Treasury projections, suggest that “most of the gains clawed back since the credit crisis would be wiped out, leaving homeowners with less equity and some in negative equity territory”.
While the portal puts the average house price at £297,000, the latest figures from the Office for National Statistics and Land Registry indicate that the average price is significantly lower, at £225,000.
Thursday 16 June 2016
Buy-to-let landlords win multimillion payout from West Bromwich
Thousands of buy-to-let landlords will share a multimillion-pound payout after winning a “David and Goliath” legal battle against one of Britain’s biggest building societies.
Court of appeal judges have ruled that the West Bromwich was not legally entitled to vary the landlords’ mortgage interest rates in the absence of a change in the Bank of England base rate, which their home loans track until the end of the term.
West Bromwich building society has been left with a £27.5m bill after being defeated in the court of appeal – but it said this “will not put the society in financial difficulty,” adding: “Our financial position remains very strong.”
The case involves a controversial 2013 decision by the West Brom to hike the monthly costs of more than 6,000 customers with buy-to-let mortgages that tracked the Bank of England base rate.
The action group that fought and won the case said the ruling “sends a clear message” to other mortgage lenders that might have considered following suit. It added there were around 1m buy-to-let tracker mortgages that could have been affected if the decision “had gone the wrong way”.
Borrowers reacted with fury when the the West Bromwich Mortgage Company, a division of the building society , said it would be increasing their interest rates by two percentage points. This was despite the fact that the base rate had been at 0.5% since 2009.
Some of those affected – for example, those paying a rate of 1.49% – saw their mortgage rate more than double at a stroke.
Scores of borrowers formed the Property118 Action Group, initially raising more than £400,000 to fight the decision. They took their case to the high court, where they were defeated, but they have now won their case at the court of appeal.
The West Brom said that while it was “disappointed”, it accepted the court’s decision and so would be contacting all 6,415 affected borrowers, most of whom were not part of the court action, to advise them of the outcome. The society said the borrowers would receive a refund of any additional interest charged.
It is not clear how or when this money will be distributed, but some borrowers look set to receive thousands of pounds. The total cost to the business is £27.5m, which, if it was all distributed to the borrowers would mean an average payout of £4,286 each.
The West Brom said: “Although this will result in the society recording a loss for the year to March 2017, underlying profitability is expected to be maintained, and the capital position of the society remains strong, and is significantly in excess of regulatory requirements.”
It is understood the affected customers took out their deals between 2006 and 2008, and are on a variety of different interest rates. All, according to the society, were described as “landlords of multiple property portfolios”.
The society had argued that the small print of the mortgages contained a clause that, under certain circumstances, enabled the lender to change the interest rate “to something more in line with the current market norm”. It suggested it had acted in part because of the plight of savers, who make up the vast majority of its 446,000 members and had suffered dramatic falls in income due to plummeting interest rates.
Mark Alexander, from the action group, said it had been a “David and Goliath legal battle”, and that justice had prevailed. He added that buy-to-let landlords often lacked the experience and finances to defend their legal rights, and Property118 Action Group Limited “will offer them a unique and powerful umbrella at a very reasonable price”.
Jonathan Westhoff, the society’s chief executive, said: “Naturally we are disappointed by today’s decision from the court of appeal. At all times, we acted to ensure we were treating customers fairly and that our approach was in the best interests of the society and its members as a whole.
“We will now contact all affected borrowers and ensure we process promptly any reimbursement they are due. In line with our prudent approach to managing the society, we had already allocated capital to cover this unexpected outcome, and so the society remains in a strong financial position.”
Court of appeal judges have ruled that the West Bromwich was not legally entitled to vary the landlords’ mortgage interest rates in the absence of a change in the Bank of England base rate, which their home loans track until the end of the term.
West Bromwich building society has been left with a £27.5m bill after being defeated in the court of appeal – but it said this “will not put the society in financial difficulty,” adding: “Our financial position remains very strong.”
The case involves a controversial 2013 decision by the West Brom to hike the monthly costs of more than 6,000 customers with buy-to-let mortgages that tracked the Bank of England base rate.
The action group that fought and won the case said the ruling “sends a clear message” to other mortgage lenders that might have considered following suit. It added there were around 1m buy-to-let tracker mortgages that could have been affected if the decision “had gone the wrong way”.
Borrowers reacted with fury when the the West Bromwich Mortgage Company, a division of the building society , said it would be increasing their interest rates by two percentage points. This was despite the fact that the base rate had been at 0.5% since 2009.
Some of those affected – for example, those paying a rate of 1.49% – saw their mortgage rate more than double at a stroke.
Scores of borrowers formed the Property118 Action Group, initially raising more than £400,000 to fight the decision. They took their case to the high court, where they were defeated, but they have now won their case at the court of appeal.
The West Brom said that while it was “disappointed”, it accepted the court’s decision and so would be contacting all 6,415 affected borrowers, most of whom were not part of the court action, to advise them of the outcome. The society said the borrowers would receive a refund of any additional interest charged.
It is not clear how or when this money will be distributed, but some borrowers look set to receive thousands of pounds. The total cost to the business is £27.5m, which, if it was all distributed to the borrowers would mean an average payout of £4,286 each.
The West Brom said: “Although this will result in the society recording a loss for the year to March 2017, underlying profitability is expected to be maintained, and the capital position of the society remains strong, and is significantly in excess of regulatory requirements.”
It is understood the affected customers took out their deals between 2006 and 2008, and are on a variety of different interest rates. All, according to the society, were described as “landlords of multiple property portfolios”.
The society had argued that the small print of the mortgages contained a clause that, under certain circumstances, enabled the lender to change the interest rate “to something more in line with the current market norm”. It suggested it had acted in part because of the plight of savers, who make up the vast majority of its 446,000 members and had suffered dramatic falls in income due to plummeting interest rates.
Mark Alexander, from the action group, said it had been a “David and Goliath legal battle”, and that justice had prevailed. He added that buy-to-let landlords often lacked the experience and finances to defend their legal rights, and Property118 Action Group Limited “will offer them a unique and powerful umbrella at a very reasonable price”.
Jonathan Westhoff, the society’s chief executive, said: “Naturally we are disappointed by today’s decision from the court of appeal. At all times, we acted to ensure we were treating customers fairly and that our approach was in the best interests of the society and its members as a whole.
“We will now contact all affected borrowers and ensure we process promptly any reimbursement they are due. In line with our prudent approach to managing the society, we had already allocated capital to cover this unexpected outcome, and so the society remains in a strong financial position.”
Thursday 9 June 2016
Landlord Licensing
Landlords who self-manage their properties in Wales must apply for a licence. This is in addition to having to register.
Which landlords must obtain a licence?
If you undertake any of the following at a property in Wales for which you are the landlord, then you need a licence:
Landlord Letting Activities:
- arranging or conducting viewings with prospective tenants;
- gathering evidence for the purpose of establishing the suitability of prospective tenants (for example, by confirming character references, undertaking credit checks or interviewing a prospective tenant);
- preparing, or arranging the preparation, of a tenancy agreement;
- preparing, or arranging the preparation, of an inventory for the dwelling or schedule of condition for the dwelling.
Landlord Property Management Activities:
- collecting rent;
- being the principal point of contact for the tenant in relation to matters arising under the tenancy;
- making arrangements with a person to carry out repairs or maintenance;
- making arrangements with a tenant or occupier of the dwelling to secure access to the dwelling for any purpose;
- checking the contents or condition of the dwelling, or arranging for them to be checked as part of a current tenancy or for one which has ended;
- serving notice to terminate a tenancy
How do I obtain a licence?
The licence application can be completed on this website. This can either be done in the account you have created in order to register as a landlord, or if you are a joint landlord who is not the lead registering landlord, you can start your individual licence application by creating an account.
To submit a valid licence application, all the information required must be submitted, evidence of suitable landlord training provided and the 'fit and proper' person declaration must be completed.
The training that a landlord must do in order to obtain a licence can either be done direct with Rent Smart Wales, or an approved course can be completed by a training provider authorised by Rent Smart Wales. To read more about the licensing training requirement go to the training page.
Once a complete application is submitted to Rent Smart Wales they will assess it to determine if a licence can be granted. They will make sure the application is complete and the correct fee has been paid. They will also determine that the landlord is ‘fit and proper’ (by ensuring they have no relevant convictions against them) and make sure the training they have completed is suitable for licensing purposes. Once they have assessed the application they will award a licence. Only in exceptional circumstances would a licence be refused.
Once a licence is awarded the landlord will receive notification of their unique licence number and the conditions attached to their licence. The landlord will also receive a licence card in the post.
How long does a licence last?
Once a landlord is licensed it lasts for 5 years. During that time you must keep the information in your licence application up to date (e.g. change your phone number if you update it) and also comply with the conditions of your licence. One condition will always be to adhere to the Code of Practice. The Code of Practice has been created by the Welsh Ministers as a way to ensure a consistent standard of letting and management practice in line with legal requirements in Wales. You can read a copy of the Code here.
If a licence holder fails to comply with any condition of their licence, or is no longer ‘fit and proper’ then their licensed can be revoked. This is a serious action as it means that the person can no longer undertake any letting or management activities at any rental properties in Wales. Instead, they must instruct a licensed agent to act on their behalf at all their rental properties.
Avoid the hassle. YOUR AGENT lettings were amongst the first ten agents to be awarded an Agents Licence across the whole of Wales. So why not let YOUR AGENT be your agent?
Rent price increases set to outstrip house price growth
Tenants are set to see the cost of renting a home rise faster than their incomes and faster even than house price growth, according to a new report.
People living in private rented accommodation are expected to bear the cost of the tax increases for landlords as they will result in a reduction of properties on the rental market that in turn will push prices higher.
A new report from the Royal Institution of Chartered Surveyors (RICS) forecast that while house prices are thought likely to regain momentum following a short-term dip over the next few months, rents look set to outpace them.
RICS predict that rents in the UK will increase by an average of 4.7% year-on-year for the next five years, compared to house price increases of 4.1%.
The RICS survey is not the only one spelling bad news for tenants.
The latest data from the HomeLet Rental Index reveals that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 4.4% in the three months to May 2016 compared with the corresponding period 12 months earlier.
Rental price growth in the UK was led by Scotland, where rents rose by 10.6% year-on-year, followed by gains of 8.3% in the East Midlands. London’s rental market, where the average rent on a new tenancy is now £1,563, up 6.2%, also continues to see rents increase more quickly than in most other areas of the country.
“The May HomeLet Rental Index continues to show a rental market characterised by steady growth in rents, as the number of tenants looking for property runs ahead of the supply in the market – that remains the picture in most regions of the country,” said Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company.
People living in private rented accommodation are expected to bear the cost of the tax increases for landlords as they will result in a reduction of properties on the rental market that in turn will push prices higher.
A new report from the Royal Institution of Chartered Surveyors (RICS) forecast that while house prices are thought likely to regain momentum following a short-term dip over the next few months, rents look set to outpace them.
RICS predict that rents in the UK will increase by an average of 4.7% year-on-year for the next five years, compared to house price increases of 4.1%.
The RICS survey is not the only one spelling bad news for tenants.
The latest data from the HomeLet Rental Index reveals that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 4.4% in the three months to May 2016 compared with the corresponding period 12 months earlier.
Rental price growth in the UK was led by Scotland, where rents rose by 10.6% year-on-year, followed by gains of 8.3% in the East Midlands. London’s rental market, where the average rent on a new tenancy is now £1,563, up 6.2%, also continues to see rents increase more quickly than in most other areas of the country.
“The May HomeLet Rental Index continues to show a rental market characterised by steady growth in rents, as the number of tenants looking for property runs ahead of the supply in the market – that remains the picture in most regions of the country,” said Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company.
Friday 3 June 2016
Landlord Registration
Since 23 November 2015, all landlords operating in Wales must become registered. Landlords have a year to comply with this new obligation.
In order to register a landlord must provide accurate and up-to-date information about themselves and their rental properties in Wales.This new requirement comes from Part 1 of the Housing (Wales) Act 2014
Does this apply to me?
Do you own a property in Wales that you don’t live in?Do you allow someone else to live in that property (as their main residence), and do they pay you money to live there?
Is the property rented on an assured, assured shorthold or regulated tenancy?
If you answer yes to these questions you are a landlord and need to comply with the registration requirements in Wales.
How do I register as a landlord?
You can register as a landlord through this website; you simply need to create an account and work through the on-line process. A landlord must complete the registration themselves; an agent or another person who is not the landlord cannot do it on their behalf.If you are a self-managing landlord you will also need to apply for a licence.
Tell me more about landlord registration
A landlord, for the purpose of the legislation, is the person who is entitled to possession of the property. This in most cases will be the owner of the property.A landlord who must register therefore could be an individual person, a group of people or even a company (depending on how the property is owned). If the property being registered is in joint ownership, one lead owner must register it on behalf of all other owners. If a property is owned by a company, the company registers as the landlord.
A landlord registration costs £33.50 if completed on-line. This is the cost for each landlord type registering. The cost for registration does not increase if more than one rental property is part of the registration.
If someone requests a paper application form to complete instead of doing the registration on-line it costs £80.50.
What rental properties must be registered?
A landlord must include the address of all rental property in Wales they are the landlord for in their registration. This will be the address of all dwellings (buildings, or part of a building, occupied as a separate dwelling) which are subject to, or marketed or offered for let under a domestic tenancy. Only dwellings rented on assured, assured shorthold or regulated tenancies are required to be part of the register. These are the main types of tenancies used to rent out properties privately in Wales.Once a landlord is registered; what then?
A landlord’s registration lasts 5 years after which time they must re-register. During the registered period a landlord must keep the information within it up to date. By law, certain changes in information must be notified.These are:
- Any change in name; correspondence address; contact telephone number; e-mail address or other contact information provided as part of the registration
- Any change (either that someone has started or ceased) to undertake letting or management at the registered rental property (for which they would need a licence from Rent Smart Wales)
- Any changes of interest the landlord has with the rental property (i.e. if they sell a registered property)
Click Here for further info on the Rent Smart Wales Website.
YOUR AGENT Letting were one of the first ten agents to be granted an agents licence across the whole of wales. Why not let YOUR AGENT be your agent?
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