Wednesday 24 January 2024

Government considers introducing 1% mortgage

The government is considering introducing a 1% deposit mortgage scheme as part of Chancellor Jeremy Hunt’s upcoming March Budget, The Independent reports.

It’s typical for lenders to require a 10% deposit, while some mortgages with 5% deposits are also available.

It’s thought introducing such a product would help the Conservatives attract younger voters ahead of the next general election, which is likely to take place this year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “99% mortgages could be a good idea in the appropriate circumstances.

“With added stamp duty costs, a 99 per cent mortgage can look identical to a 95% mortgage for previous generations. Add in the fact that saving for a deposit while renting is practically impossible, this could be a solution.

“There are negatives to consider of course, such as finding yourself in negative equity if house prices were to fall. This would only become relevant if you needed to move but assuming gradual house price inflation and a repayment mortgage where you chip away at the balance each month, equity will be gradually created over time, reducing the loan-to-value.

“There are 100% mortgages available today – for example, Skipton Track Record, which uses the evidence of long-term rent payments as part of its affordability basis and assessment. Also, Barclays Springboard, albeit using equity in a guarantor’s house, so net loan-to-value is lower.

“Unlike 100% mortgages in the past, lenders now have more stringent assessments to perform to assess affordability and stressing. There is less risk of borrowers over-stretching themselves.

“Naysayers will no doubt focus on the fact this is a policy to increase demand for housing not supply so inevitably the effect on house prices will be upwards.”

. ADVISER NEWSBUY TO LETPROPERTY NEWSUK

Monday 15 January 2024

Daylight Robbery? Council’s 60 per cent rise in fees on landlords

Landlords who fail to ensure their private rented homes meet required standards face massively increased charges from a council.

Bath & North East Somerset council has hiked the fee for serving a formal Improvement Notice from £250 to £400 - a whopping 60 per cent rise. 



The fee is charged when the council’s Housing Services team issues an Improvement Notice to address health and safety hazards in houses or flats. These could be property defects, such as absent or defective fire precautions, inadequate heating and insulation, or severe damp and mould.

Councillor Matt McCabe, cabinet member for Built Environment and Sustainable Development, says: “The majority of landlords run their properties responsibly, but the standard of rented homes across B&NES is inconsistent. Our Housing Services Team work hard to ensure that landlords act responsibly and renters have a safe and secure home. 

“We follow government guidance on setting the fees at a level that ensures the council recovers reasonable costs including the cost of taking enforcement action if necessary and for any staff time and expenses incurred.”

Other charges that have been increased include the fee for an HMO licence, which has risen from £795 to £995; and certain fees charged to Registered Providers for the marketing and delivery of affordable homes.

By Graham Norwood of Landlord Today

https://www.landlordtoday.co.uk/breaking-news/2024/1/daylight-robbery-councils-60-per-cent-rise-in-fees-on-landlords

Thursday 14 December 2023

Empty building epidemic worsening



Empty or derelict commercial properties on the high street are growing, according to 58% of people.

Two thirds (67%) of UK adults would like to see the government do more to incentivise people to buy and renovate empty properties, research from Market Financial Solutions has found.

Paresh Raja, chief executive of MFS, said: “Our research shines a light on a crucial societal issue: the prevalence of empty and derelict properties across the UK. Given the country’s longstanding housing shortage, it is an issue that the Housing Minister Lee Rowley – the 16th person to hold the role in the past 13 years – must put high on their priority list.

“Clearly, most Britons would like to see more proactive government action to ensure derelict properties are renovated and put back onto the market. However, it is essential to acknowledge that the responsibility should not rest solely on the shoulders of the public sector.

“The private sector can – and must – significantly contribute to resolving this challenge as well. Whether it is financing the acquisition of properties at auctions or funding the renovations required to bring these buildings up to scratch, lenders, developers and investors have an important role to play in transforming abandoned properties and, in doing so, boosting the UK’s housing stock.”

Half (51%) of people are in favour of new rules to make landlords sell properties (residential or commercial) if they have been empty for more than 12 months.

What is more, more than three in five (63%) respondents believe that putting empty buildings back onto the property market would be the most effective way of solving the UK’s housing shortage.

BY RYAN BEMBRIDGE


https://www.propertywire.com/news/uk/empty-building-epidemic-worsening/

Monday 13 November 2023

Retiring from the Rental Game: The Growing Trend Among Landlords Facing Challenges

We Quit! Third of landlords retiring or quitting because of rental woe

A third of landlords have suggested they are considering retiring or quitting the sector because of attacks and obstacles in the buy to let sector.

And a quarter of those quitting indicated they were driven out by too much legislation and compliance. A further 24 per cent claimed that rising mortgage costs and/or changes in tax was also a motivation.

Of the landlords surveyed by the Open Property Group, two fifths have just one rental property, while over a third have three or more properties and almost a fifth have over five. 

Over a quarter were enquiring about selling more than one rental property.

The most common type of property owned was terraced houses followed by flats and semi-detached houses. When asked what condition the property(ies) was in, just eight per cent stated poor, and one in five class their rental as in excellent condition.

“Landlord enquiries have certainly ramped up in the first three quarters of 2023 and these survey findings concur with the anecdotal conversations we are having with landlords” says Jason Harris-Cohen, the managing director of Open Property Group.

“Most of them are simply fed up of the never-ending red tape which is only worsened by the economic climate at the moment. As a result, retirement plans are being brought forward.

“This is not good news for tenants, or the private rented sector as a whole, but the fact that most landlords would prefer to sell with tenants in situ does offer some reassurance. It also removes the complex and time-consuming process of serving a Section 21.”

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

Author : Graham Norwood, Landlord Today

Full Article : https://www.landlordtoday.co.uk/breaking-news/2023/11/we-quit-third-of-landlords-retiring-or-quitting-because-of-rental-woe

Thursday 30 March 2023

Landlords to get five years to hit net zero targets

Buy-to-let investors face spending thousands of pounds on retro-fitting properties

Landlords will be blocked from letting properties unless they upgrade them to meet net zero energy efficiency targets within five years.

Ministers are poised to announce that landlords will have to spend thousands of pounds increasing the energy performance of their properties by 2028 – or face a fine of up to £30,000.

It is understood that the Government plans to force up to two million landlords to increase the Energy Performance Certificate rating of their properties to a minimum of a C standard to help reduce the nation's carbon footprint.

It means buy-to-let investors could have to spend thousands of pounds installing insulation or eco-friendly devices such as heat pumps and solar panels to make their properties more energy efficient.

Currently, all privately rented homes in England and Wales need to meet a minimum energy performance of band E before they can be let.

Ministers had previously proposed a deadline of 2025 for newly-let rentals to achieve an energy performance rating of at least a C, and a deadline of 2028 for all other rented properties.

But more than two years after the consultation was launched in early 2021, it is now understood that the deadline will be set at least three years later in 2028 and apply to all rental properties.

It comes after the Government was warned that the target was unachievable and risked driving landlords to sell up.

One industry source told The Telegraph that around 3,500 properties would need to be upgraded every day to meet the 2025 deadline, adding: “It’s a monumental challenge.”

The Government has been working with banks on the proposals, which will cap the maximum spend per property at £10,000 – regardless of whether or not the C rating is achieved. Landlords of higher value properties face paying more, as it is understood that this cap could now work on a sliding scale, starting at £5,000, and rising in line with the rental value of the property.

There are fears that older properties will require much more investment to upgrade. The UK is home to one of Europe’s oldest housing stocks, with over half (52pc) of homes in England built before 1965.

One property insider said: “The private rental sector will struggle without major investment to help build a supply chain and help finance the most challenging retrofits.”

Chris Norris, policy director for the National Residential Landlords Association, said: “With several years now having passed since the closure of the Government’s consultation on energy efficiency standards in private rented housing, the sector has endured a long wait for further clarity on how landlords can meet their obligations in this area.

“More to the point it is simply not feasible for every property in the market to be retrofitted to meet an EPC ‘C’ rating within the previously proposed timeframe.

“We are firmly of the view that rental properties must be as energy efficient as practicable. However, this can only happen if the Government takes steps to introduce bold, workable policies which take into account the financial burden incurred by many landlords looking to retrofit their properties.

“Whatever the response from ministers to the consultation exercise is, it is crucial that they adopt a pragmatic approach to matters by setting measurable, realistic energy efficiency targets.”

A source at the Department for Energy Security and Net Zero said discussions had been held with stakeholders, but no decision has yet been made.

A Government spokesman said it has consulted on energy performance targets and will publish an official response “in due course, after careful consideration of ways to make sure improvements are fair and proportionate” for both landlords and tenants.

He said: “The Government is improving energy efficiency, including across the private rented sector. Just this month we announced the allocation of £1.8bn worth of support to make homes more energy efficient and the number of homes in England with an energy efficiency rating of C or above has gone from 16pc in 2011 to 47pc in 2022.”

https://www.telegraph.co.uk/property/buy-to-let/landlords-get-five-years-hit-net-zero-targets/

Wednesday 15 March 2023

Forfeiture Cases On The Rise


Forfeiture Cases On The Rise - Landlords’ rights

It has been widely reported that lenders are expecting a rise in the number of homeowners handing back their keys as the cost-of-living crisis forces borrowers to default on their loans. Businesses, particularly SMEs, are also reported to be struggling to meet the business demands in a tightening market.  

Defaults will not only be seen in relation to monthly mortgage and loan payments but also in relation to service charge and ground rents owed under leases for property. These are expenses that have increased significantly in the last couple of years. If these costs are not paid, the landlord can seek to forfeit the lease, which extinguishes the borrowers interest, and critically, removes the lender’s security. This would leave a lender with no property to repossess, or no asset to sell, in order to recover the sums owed. 

Forfeiture

Forfeiture is the right of a landlord to terminate a lease in the event of a tenant breaching a covenant in the lease. This is commonly used as a remedy when the tenant has defaulted on monies due to the landlord, i.e., monthly rental payments, service charges and or ground rent monies. Other breaches could include failing to keep the property in a state of good repair and condition, which may be a consequence of limited funds being available to spend on maintenance. 

Providing the lease allows for forfeiture, landlords can take the necessary steps to terminate the lease. This can be done by either court order or peaceable re-entry (for properties let other than a dwelling) to obtain possession of the property. Once the claim for possession has been issued, or the property peacefully re-entered, the lease is forfeited, i.e., it ceases to exist and the property reverts to the landlord’s ownership. 

How can a lender protect their security? 

Lenders are entitled to apply to the court for relief from forfeiture, but there is action that lenders can take before they get to this stage. 

A common solution to protect the security and avoid forfeiture proceedings, would be to pay such sums that have accrued and to apply the same to the borrower’s mortgage/loan account. The mortgage/loan terms and conditions would need to be carefully considered but most have provisions that allow the lender to take action to protect their security and to pass these costs on to the borrower. This solution is only possible if the lender is notified, in advance of forfeiture, that these sums are outstanding. Unfortunately, this is not always the case. 

A further consideration of taking this action, particularly in the current market, is that the borrower may become reliant on the lender to repeatedly pay such costs. This could have a significant impact on the equity available to repay the sums owed to the lender and impact on the borrower’s general affordability.  

If pre-emptive action is not possible, and the lender learns that their security has been forfeited, then they must apply to the Court for relief from forfeiture. Once a lease has been forfeited, it cannot be reinstated without an order of the Court. The Court will usually only grant relief if the breach can be remedied, i.e., if outstanding sums owed are paid or if it can be shown that the landlord has waived their right to forfeit. 

A lender, if applying for relief on behalf of the borrower, would usually have to be willing, and able, to remedy the breach (or argue waiver). If they are able to do so, the Court will likely grant relief on the condition that the breach is remedied within a set time period. This can be agreed with the landlord in advance, and a consent order filed, but it must be sealed by the court for the lease to be reinstated. 

Alternatively, and once a lender becomes aware that the borrower is not meeting the demands under the lease, and their security is at risk, they can look to enforce the terms of the mortgage/loan themselves and look to realise their security - by way of mortgage possession proceedings, enforcing their power of sale, appointing Receivers of rent, etc. This will allow a lender to retain some control whilst preserving the security and ultimately recovering the outstanding debt owed.  

What to expect

The moratorium imposed by the Commercial Rent (Coronavirus) Act 2022 has long since been lifted and we have seen the number of forfeiture instructions progressively increasing and accelerating since the start of the year. 

The Supreme Court have recently issued a favourable decision for landlords to compel tenants to pay any service charge (following service of a service charge certificate) that is due straight away to comply with the terms of the lease (Sara & Hossien Asset Holdings Ltd v Blacks Outdoor Retail Ltd).  This is true even if the tenant wishes to challenge the sums owed, e.g. if the landlord wants to carry out repair works to the property and the tenant doesn’t agree they are necessary and/or that they will cost what the landlord has forecasted them to cost, they will have to pay the sums regardless. 

The tenant does not lose the right to challenge the sums, and indeed can do so, but this must be done after the payment has been made – a concept termed “pay now, argue later”. A failure to make the payment (however large it is) would be in breach of the lease and leave the landlord free to forfeit the lease.  This could place a tenant in difficulty, if faced with a large service charge demand from their landlord, that they cannot afford and/or that they wish to dispute. In this situation, if a tenant does not pay, and the lender steps in, they would need to “pay now, argue later” which is no small undertaking for a lender. 

Conclusion

Preserving their security is at the top of every lender’s to do list. Forfeiture poses a real risk to a lender’s security and is a tool used by landlords more frequently when the country is in a recession, or a period of economic difficulty. It is therefore something that a) in these uncertain economic times lenders must be alert to and b) if they find themselves in a situation where this threat becomes a reality, they must act quickly to seek legal advice in order to best protect and preserve the security held. 

* Kate Rigby is a partner in the Dispute Resolution Group of London-based law firm Rosling King LLP, with particular expertise in the fields of commercial litigation and real estate litigation *

Monday 6 March 2023

Pandemic property boom added £100k to price of detached homes

Race for space fuels bidding wars among buyers

Detached houses are now worth £100,000 more than before the pandemic, after demand for bigger homes pushed up prices.

House prices across the board rose by a fifth on average between the beginning of 2020 and end of 2022, climbing from £237,895 to £286,515 during the pandemic boom, according to analysis by lender Halifax.

But detached homes grew in value more than all other property types, fuelled by a race for space which locked buyers into bidding wars for homes with more rooms and bigger gardens.

Detached houses outpace other property growth

Bar chart with 5 data series.
Average price growth across property types
The chart has 1 X axis displaying values. Data ranges from 2020 to 2022.
The chart has 1 Y axis displaying £ thousands. Data ranges from 142.792 to 453.07.
SOURCE: Halifax
End of interactive chart.

Detached house prices jumped by around a quarter in the three-year period, rising from £359,725 in January 2020 to £453,070 in December 2022, in an acceleration away from longer-term trends. 

Prices for standalone homes rose by just 8.8pc in the three-year period before – between 2017 and 2019 – and in January 2020 had grown by just 1.7pc year-on-year, compared with a growth rate of 4.1pc for flats.

Increases in the market value of more spacious houses have dwarfed jumps in the prices of smaller property types in the three years since. The average price for a flat rose by 13.3pc between 2020 and 2022, while the value of terraced houses jumped by 21pc and the price of semi-detached houses climbed by 23pc.

Kim Kinnaird, of Halifax, said the pandemic had transformed the property market and triggered a “huge step change” in house prices.

“Heightened demand created a much higher entry point for bigger properties right across the country, and that impact is still being felt today by both buyers and sellers, despite the market starting to slow overall.

“Even if the average detached property price now fell by 10pc, it would still be around £50,000 more expensive than before the pandemic," he said. 

Owners of detached houses in Greater London, the South East and South West, eastern England and the West Midlands all gained more than £100,000 on the price of their homes between 2020 and 2022, the bank said. 

The biggest gain was in the South East, where the average price of a detached house jumped by more than £136,000 to reach £637,292 in December 2022.

Homeowners in Greater London gained more than £122,000 in the three-year period, with the average detached house price rising to £903,278. In the South West the average detached property price rose by more than £115,000 to £490,066.

In the West Midlands, the typical detached house cost £431,257 in December 2022 having climbed by more than £104,000 in the three years prior. Meanwhile homeowners in the East gained a little more than £100,000, with the average detached house price rising to £536,577.

https://www.telegraph.co.uk/property/house-prices/pandemic-property-boom-added-100k-price-detached-homes/