Archive for the 'Property Information' Category
House purchase loans fell by more than three times the decline in remortgages in January, according to data released today by the Council of Mortgage Lenders.
This emphatically demonstrates the effect on the mortgage market from the end of the temporary stamp duty holiday in December.
There were 49% fewer house purchase loans in January than in December but only 15% fewer remortgage loans. However, the 32,000 loans for house purchase, worth £4.7 billion, were up from the low of 23,000 (worth £3.1 billion) seen in January 2009. Conversely, the 24,000 loans for remortgage, worth £3 billion, were down from 45,000 (£6.2 billion) a year ago. This is the lowest monthly level of remortgage activity - both by number and value - in eight years of available data.
First-time buyers recorded the largest drop among house purchasers, with a 54% drop (55% by value) from December to January, reflecting the fact that a high proportion would usually fall into the £125,000-£175,000 property value category and rushed through their purchase to complete in December.
There were 11,300 first-time buyer loans, worth £1.3 billion, in the month, down from 24,800 (£2.9 billion) in December 2009, but still up from 8,600 (worth £900 million) in January 2009.
Commenting on the data, CML director general Michael Coogan said: “It was a quiet start to the year. Lending volumes in January were low, but we had predicted this would happen due to the end of the stamp duty holiday distorting December’s figures.
“When December and January data are taken together, they show little change in underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier. We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”
The number of first time buyers actively looking to purchase a property in London has dropped off significantly in 2010, as a lack of affordability has hit demand, according to estate agent Marsh & Parsons.
In January 2009, first time buyers comprised 17% of new buyer registrations at Marsh & Parsons, but while there are plenty of buyers registering (over 2,600 so far in 2010), this number fell to 10% in January 2010 - and below one in ten in February. However, with so few London properties in the lower price threshold, the end of the stamp duty ‘holiday’ at the turn of the year has not played a significant part in this drop-off.
Between January 2008 and April 2009, house prices fell by up to 30% in some parts of London, and last year this improved affordability led to a large increase in demand from first time buyers, looking to get onto the property ladder. In August 2009, first time buyers made up almost one in five new registrations (19%), reaching a peak. However, strong house price growth in the capital since spring 2009 (up £39,602 or 13% on average) is now deterring growing numbers of first timers.
Peter Rollings, managing director of Marsh & Parsons, commented: “Central London may not be typical first time buyer territory, but it’s little wonder why. Mortgage lenders now typically require a 25% deposit from first time buyers, meaning they would need to put down over £84,000 to purchase the average London property – realistic for only the tiny minority with substantial parental assistance.
“The end of the stamp duty holiday has not had a great impact on demand, as so few purchases were eligible for exemption. The lack of homes priced below £175,000 meant only 13% of London transactions benefited from stamp duty relief in the first year of the holiday – and only 22% of these purchases were in Inner London boroughs. Higher average house prices mean London is the area where first time buyers are most in need of support and, if the government is serious about helping them, it must reintroduce the stamp holiday and – crucially – take into account the wide regional variations in prices.”
The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK’s fragile economic recovery.
Also as expected, the bank has not pumped any more money into the economy under its quantitative easing (QE) programme - for now at least.
Last month the Bank halted QE, having spent £200bn to boost the economy.
Figures released last week showed that the UK economy grew by 0.3% in the final three months of 2009, compared with an initial estimate of 0.1% growth.
But although the 0.3% growth in the final quarter of 2009 was stronger than previously thought, the Bank believes that continued economic growth is not yet guaranteed.
The October to December period was the first quarter of growth following six consecutive quarters of economic decline - the longest period since comparable figures were first recorded in 1955.
Inflationary pressure
Under QE, the Bank has bought assets in order to boost lending to businesses and individuals by commercial banks.
But the Bank has said that the full effects of QE will take more time to filter through to the economy.
Many analysts argue that banks have not in fact increased lending as the economy begins to recover. Banks in turn argue that businesses are looking to pay down debt rather than take out new loans.
The Bank must also be wary of the inflationary pressure caused by QE.
The latest inflation figures, released last month, showed prices rising by 3.5% in January, the fastest annual pace for 14 months. This compares with 2.9% the previous month.
As a result, the Bank’s governor, Mervyn King, had to write a letter to the chancellor explaining why prices were rising so quickly.
A letter from the governor is required if inflation is more than one percentage point above or below the government’s 2% target.
However, Mr King said that the rise in inflation was temporary, and was largely the result of the rise in VAT to 17.5% in January.
The government had reduced VAT to 15% to try to boost consumer spending.
One year ago this month the Bank of England ended six months of dramatic rate cuts leaving Bank of England Base Rate at a record low of 0.5%. But what has happened since?
Analysis from moneysupermarket.com shows the winners and losers from this static rate.
Hannah-Mercedes Skenfield, mortgage expert at moneysupermarket.com said: “Undoubtedly the biggest winners from the fall in interest rates have been those consumers who have been sat on standard variable rates (SVRs). Traditionally lenders’ SVRs have usually been higher than the deal that was ending so consumers would have to remortgage as a result. Now we have a situation where many consumers are sitting on extremely low rates and have no incentive to move. We have started to see SVRs starting to increase again, and rates for remortgaging starting to fall so for some consumers, now is the time to consider looking for an alternative deal.
“The losers have been those consumers who have little equity in their property or those who have been looking to get a foot on the housing ladder, particularly first time buyers. There have been some positive signs in the mortgage market over the last 12 months; we saw the number of available mortgage products fall below the 2000 mark in 2009 but we have seen a steady increase since with numbers in excess of 2,700 which shows that the recovery in the market is in place, although it is a way short the height of 2007 when there was over 30,000 products. In addition, those who are even able to access a deal with an LTV of 90 per cent will have found themselves paying a hefty premium for the privilege, often as much as 6.05 per cent.
“Lenders have benefited from a low LIBOR and after a period of inactivity they are starting to loosen their purse strings and pass on some of these benefits to consumers in terms of lower rates. Borrowers need to be wary though as some lenders have introduced products with low ‘headline’ grabbing rates only to charge high fees which make the mortgage less competitive compared to products with higher rates. There are some good deals in the market at the moment so borrowers should consider fixing before rates start to rise again.”
First-time buyers in the UK are being forced into renting for a longer period than they would like, one expert has stated.
Alan Ward, chairman of the Residential Landlords Association, says that the recession has meant that fewer houses are being built and there is now a distinct lack of mortgage availability.
He states that many home loans are not available without a minimum 20 per cent deposit, which is forcing many first-time buyers into the rental market.
Mr Ward’s comments come in response to a recent report by Communities and Local Government, which found that the number of rental properties has increased by approximately one million since 2001, while home ownership has decreased.
And he expects this trend to continue for some time: “We expect rental demand to remain strong for the foreseeable future.”
The Association of Residential Letting Agents recently commented that there has been an influx of “reluctant tenants”, after a shift in property supply and demand.
First-time buyers need to make sure that they save enough money for a deposit so that they are taken seriously in the mortgage market, one expert has advised.
Catherine Hearnden, director of MyMortgageDirect, says that the majority of home loan lenders still require a five per cent deposit and will not just hand out mortgages “on a plate”.
“If nothing is done by people themselves, they won’t expect to have put the effort in when paying their mortgage,” she states.
Ms Hearnden’s comments come in response to recent statistics from the British Bankers Association, which reveal that mortgage lending fell to a figure of 35,000 in January.
This is in comparison to the 46,000 home loans that were approved in the last month of 2010.
She believes that both the end of the stamp duty holiday and the nationwide ‘big freeze’ both contributed to this fall but adds that banks need to open up their lending criteria if the effects of this downward turn are to be alleviated.
According to the Council of Mortgage Lenders, gross home loan lending fell by 32 per cent between December and January to a decade low of £9.1 billion.
The Financial Services Authority (FSA) ordered GMAC to pay a fine of £2.8 million and refund customers £7.7 million because of ‘serious failings’.
The FSA deemed that GMAC’s £45 monthly arrears charge is illegal. Around 30 other lenders have been operating similar arrears policies to GMAC.
A significant number of tenants are still struggling with rental payments, according to ARLA.
Results from the latest survey from the Association of Residential Letting Agents (ARLA) shows that 55% of members have seen an increase in tenants struggling to meet their rental payments.
Despite being a decrease on the previous quarter, this figure remains worryingly high.
Ian Potter, operations manager of ARLA, said: “Unemployment has been the primary factor behind rental arrears throughout the recession. If the jobless total rises in 2010 it is inevitable that the number of tenants forced to default on their rent will also increase.
“The housing market looks increasingly buoyant with demand for rental properties having risen strongly since October. The problem of rental arrears will therefore persist and potentially grow in seriousness as tenants get caught in a web of debt.”
As rental arrears begin to stack up residents run the risk of being evicted from their property. Simultaneously, landlords could be forced to default on their mortgage repayments which would ultimately lead to the property itself being repossessed.
“As the housing market continues to pick up and demand begins to exceed supply, there is likely to be an increase of new landlords and properties in the rental sector.” Mr Potter explained.
“It is crucial that agents engage in a careful selection process for both tenants and landlords, and ensure the relevant contracts and agreements are in place.”
A shocking 67% of mortgage lenders and repossessions experts are predicting an increase in the number of repossessions in 2010.
The latest research published in the annual Moore Blatch 2010 repossessions report, compiling the views of lenders and repossessions experts, reveals that of the 67%, 50% believe repossessions will rise by as much as 5%, while 17% believe a rise of between 5-15% is likely. A further 6% foresee a rise in repossessions of over 15%.
28% of lenders thought there would be no change in repossessions in 2010, while 6% believe there will be a decrease.
Paul Walshe, head of lender services at Moore Blatch, commented: “The Council of Mortgage Lenders revised, and subsequently lowered their 2009 predictions for repossessions from 75,000 down to 48,000. However, much of this fall was due to the implementation of a Government initiative to provide consistency in lenders’ approach to repossessions; the Pre Action Protocol, as it is known. This created a bottleneck which will start to clear in 2010.
“Sadly, the underlying cause of repossession being excessive borrowing, is still causing people to default on their mortgages. This is one of the reasons why we believe that all providers of finance, whether, mortgages, credit cards, car loan or any other source, should have to take into account total borrowing before offering any money, as it is often secondary borrowing that tips people over the edge, and into losing their home.”
The National Landlords Association (NLA) has roundly condemned the Government’s announcement which will reduce the supply of shared housing.
In a statement, Housing and Planning Minister John Healey MP revealed plans which will require planning permission for new shared housing where three or more unrelated people live together. Twenty per cent of private-rented sector properties are shared, a figure which is rising year-on-year.
HMOs play a vital role in providing much needed housing for students, young professionals and those on low incomes who rely on this type of affordable accommodation. Large cities across the UK greatly depend on shared housing as a first step. By making it more difficult and costly for landlords to provide this type of accommodation, these measures will reduce choice for tenants and increase pressure on local authority housing lists.
The Rugg Review, an independent review of the private-rented sector commissioned by the Government, already dismissed these changes to the planning system as an ‘extreme response’ which ‘local authorities are ill-equipped to handle’. The Government clearly has no idea of the impact of this measure on the housing market, according to the NLA.
Gross mortgage lending reached an estimated £13.7 billion in December, a 14% rise from £12.1 billion in November and up 3% on December 2008, according to the Council of Mortgage Lenders.
This is the first time the annual monthly comparison has been in positive territory since October 2007. However, other than in 2008, this is still the lowest figure for December since 2001 (£13.4 billion).
Lending totalled £39.1 billion in the fourth quarter, up slightly from £39 billion in the previous quarter but down by 14% on the last three months of 2008. There is typically a 6% fall between the third and fourth quarter.
For 2009 as a whole, lending totalled £143.7 billion, slightly above the CML’s annual forecast of £141 billion. However, this is down 43% from £253 billion in 2008 and the lowest annual total since 2000 (£119.8 billion).
Research carried out by Paragon Mortgages found that nearly six out of 10 (58%) of landlords said they were worried about the amount of regulation needed in relation to running their property business during the year. It wasn’t only existing regulation that was of concern, but the chance of new rules and regulations that may come into play and affect their letting business.
Private sector landlords are already heavily regulated with about 50 Acts of Parliament and 70 sets of regulations governing the rental sector but it’s possible that even more could be on the way. For example, the government are expected to report soon on its research into the possibility of a national mandatory registration scheme for landlords.
For those looking to invest in more properties, 37% of landlords said they were worried about how they’ll fund property purchases in 2010. In addition, some of the other major issues concerning landlords in the coming year were found to be how to retain tenants (32%), how to find tenants (31%), how to deal with tenant disputes (24%) and how to meet those all important mortgage payments (12%).
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £200 billion financed by the issuance of central bank reserves.
The proportion of first time buyers (FTBs) looking to put a foot on the property ladder has reached its lowest level for twelve months according to the National Association of Estate Agents (NAEA).
The monthly market survey of the NAEA members found that in November, only 19% of registered buyers were FTBs, the lowest since December 2008 when levels plummeted to 11%.
This figure pales in comparison to six months ago when 43% of the market was made up of FTBs.
The Bank of England has yet again decided to hold interest rates steady at 0.5 per cent. The Monetary Policy Committee – which meets monthly to decide whether to hold, increase or decrease interest rates – has voted to maintain interest rates at this level, making it the nine consecutive month it has decided to keep them on hold.
Historically, interest rates have been much higher and even one year ago, they sat at 2 per cent and in December 2007, interest rates were 5.5 per cent.
Last week Moneyfacts.co.uk reported that the average two year fixed had fallen below 5.00% for the first time since June 2009, but since then rates have fallen further, standing at 4.86% today.
This is the biggest weekly fall since the beginning of the year, when the Bank of England cut bank rate by 0.50% to 1.50%.
Lenders who have cut fixed rates in the last week include:
Abbey - selected rates cut by 0.20%
Accord mortgages - rates cut by 0.40%
Alliance & Leicester - selected rates reduced by up to 0.25%
Cheltenham & Gloucester - selected rates cut by 0.10%
first direct - selected rates reduced by 0.05%
Leeds BS - selected rate reduced by 0.26%
Post Office - rates reduced by up to 1.30%
Scottish Widows Bank - rates reduced by up to 0.40%
Yorkshire BS - rates reduced by up to 0.30%.
Whitehotwhitehot property, the seller of chain free properties (repossessions, probate and part-exchanged properties) is offering up to 95% mortgages on over £14 million worth of stock.
The 95% mortgage offer is aimed to help encourage first time buyers into the property market and help home movers find an affordable new property. With the average price for these properties at just £105,000, a buyer would need just over £5,000 for a deposit, which is ideal for first time buyers.
In addition, many of these properties come with a further incentive of fixed conveyancing legal fees of £299, to allow buyers the added financial freedom to complete the purchase.
Robin King, whitehotproperty.co.uk, director, commented: “Property that is affordable is not easy to come by in the current market. By offering a 95% LTV, we are giving purchasers the chance to buy a home that does not break the bank. Despite indications that the property market is picking up, the industry still has a long way to go to full recovery and encouraging buyers back into the market is the first step towards this.”
Following the release of numerous arrears and repossession data over the past few days, experts believe repossessions will be under 50,000 for 2009 – a great deal fewer than predicted.
Statistics on mortgage and landlord possession actions in the county courts for the third quarter of 2009, released by the Ministry of Justice, found that 24,337 mortgage possession claims were issued on a seasonally adjusted basis, 37% lower than in the third quarter of 2008 and 7% lower than in the second quarter of 2009.
Of these 17,134 mortgage possession claims led to orders being made on a seasonally adjusted basis, 35% lower than in the third quarter of 2008 and 9% lower than in the second quarter of 2009. 44% of mortgage possession claims leading to orders being made were suspended compared with 47% in the third quarter of 2008 and 46% in the second quarter of 2009.
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.
The Committee also voted to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by £25 billion to £200 billion.
Looking back, we can see that the turn of the year represented the low point of the current housing market correction.
In the first three months of this year, fewer than 30,000 mortgages were taken out by first-time buyers, compared with an average just before the credit crunch approaching 100,000 a quarter. It was the lowest quarterly figure recorded in the 35 years we have been collecting data.
The last housing market correction was also characterised by a dramatic fall in the number of first-time buyers. In that cycle, first-time buyer activity declined between 1990 and 1992 before gradually recovering. But within a few years, there were more first-time buyers than there had been before the market correction.
Unlawful sale and rent back companies are still operating and advertising their services despite the introduction of strict regulation, a new investigation by Shelter has revealed.
Many homeowners have fallen foul of unscrupulous sale and rent back companies who offer the false hope of keeping people in their homes, but can ultimately leave them homeless.
The Financial Services Authority introduced an interim regulatory system on 1 July this year to drive out rogue operators in the sale and rent back industry once and for all, with a tougher full regime launching in 2010.
Over the last two months, the housing charity Shelter has been investigating sale and rent back companies who take out adverts in national and regional newspapers to check whether the companies that are advertising are signed up to the FSA’s tough new regulations.
Results show that out of the eighteen main companies that advertise regularly in the press, four are still not signed up to the regulation and are therefore operating illegally. These companies are MPG Investments, Sell It Fast, House Direct UK and Home Savers UK.
Lloyds Banking Group has announced that it has reached an agreement in principle to sell its Halifax estate agency business for £1.
Halifax Estate Agencies (HEA), which operates through a network of 218 offices, including 93 franchise operations, is to be sold to LSL Property Services plc (LSL). LSL is the parent company of estate agency brands Your Move, Reeds Rains and Intercounty.
The proposed transaction is expected to complete in January 2010 and will involve the assumption of HEA’s assets and liabilities for a cash consideration of £1. The Halifax brand is not included in the sale and, in time, the Halifax Estate Agency offices will be rebranded to either Your Move, Reeds Rains or Intercounty.
Lloyds said: “The decision to sell the estate agency business, which has been loss making for some time, follows a strategic review undertaken by the Group which concluded that an estate agency operation is no longer integral to its business model. As part of the transaction, there are 121 Halifax banking counters located within the estate agent offices which will close early in the New Year. The vast majority of these locations have either a Halifax or Lloyds TSB branch within one mile.”
It is anticipated that approximately 1,050 estate agency staff will transfer, on completion of the sale, to companies within the LSL group. However, as a result of the counter closures, up to 460 staff will be affected with the loss of approximately 360 full time roles.
The Financial Services Authority’s mortgage market review is due out next week and expectations are that the City regulator will ban new self-certification mortgages.
Back in July 2007, 860 or 23% of the 3,803 prime residential mortgages were available through self-certification. There are now only two self-certification mortgages left in the market, both available from Platform, part of Britannia BS, and are only available to the self-employed.
Nationwide’s The mortgage Works pulled out of the sector this week and there are rumours that Platform will be following suit shortly.
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.
The Committee expects the announced programme to take another month to complete. The scale of the programme will be kept under review.
With competition mounting in the mortgage market, Woolwich is reducing rates by 0.45% on its leading tracker mortgage from today.
This brings the rate down to 2.79% [base rate plus 2.29%, 70% LTV, £999 fee, 1% ERC for 2 years] from 3.24% [base rate plus 2.74%].
Also being launched is a fee-free tracker mortgage at 3.19% [base rate plus 2.69%, 70% LTV, £0 fee, 1% ERC for 2 years].
The new rates make these the lowest tracker mortgages in their class, according to Woolwich, and represents the third mortgage rate reduction by Woolwich in two months.
Mortgage approvals for house purchase by high street banks in August was up by a whopping 81% on August 2008, whilst net mortgage lending returned to trend after dipping in July.
Consequently, mortgage lending has grown by 4.6% over the last year and looking ahead, the number of loans approved for house purchase remained stable. Consumer credit continued to contract while personal deposits strengthened in August. Remortgages were down 47% on last August’s figures.
No surprise that Bank of England announced today that Base Rate will stay at 0.5% and we envisage this to be the case until the end of 2009 and well into 2010 as the country slowly recovers from the current recession.
Lenders are still paying high rates for money in spite of the LIBOR rate and SWAP rates as they currently stand. However, this month there maybe some movement on rates as lenders look to meet their lending targets before the year end.
HSBC’s new mortgage range features its lowest ever interest rate - 1.99 per cent on a 2-year discount loan - available to customers with a deposit of 40 per cent of their property value.
The range of new loans includes a second two year discount mortgage for customers with at least a 25 per cent deposit at an interest rate of 2.49 per cent. Both discount mortgages have arrangement fees of £1,199 and are discounted from HSBC standard variable rate which is currently 3.94 per cent.
A new three year fixed rate mortgage, at 4.19 per cent with a fee of £999 and a maximum loan to value of 60 per cent is also available.
The ‘reluctant landlord’ has been a key symptom of the housing market downturn, as homeowners desperate to sell their property turned to the rental market to pay their mortgages.
ARLA’s research shows that 80 per cent of its members’ offices have seen property being rented out rather than sold. This figure has dropped from a high of 95 per cent of offices in November 2008 when consumer confidence and house prices dipped.
The ‘reluctant landlord’ has been a key symptom of the housing market downturn, as homeowners desperate to sell their property turned to the rental market to pay their mortgages.
ARLA’s research shows that 80 per cent of its members’ offices have seen property being rented out rather than sold. This figure has dropped from a high of 95 per cent of offices in November 2008 when consumer confidence and house prices dipped.
Gross lending by building societies in July 2009 was £2.1 billion, the highest monthly figure this year, but 42% lower than the £3.6 billion lent in July 2008.
New research from The Co-operative Bank Mortgages reveals that a third of people (35%) are not prepared to drop their asking price at all to sell at the moment.
With growing signs of consumer confidence in the housing market, the research also shows that only one in ten would offer the full asking price on the property they are looking to buy (12%).
The research also reveals a more positive outlook to the current market, with over half of people (54%) becoming more optimistic about the housing market recently, and a third of people (29%) stating that this optimism has started within the last month.
The findings reveal that house sellers from Scotland are most likely to hold out for the full asking price (40%), whereas people from the East Midlands are the most likely to accept a lower asking price, with only 30% of sellers here not prepared to negotiate on the asking price.
Over seventy five percent of countries surveyed have seen a rise in distressed sales in the commercial property market, says RICS research published today.
During the second quarter of 2009, RICS surveyed members and other real estate executives in 27 countries across the globe to ascertain the volume of distressed sales in the commercial property market. Respondents in seventy five percent of the countries surveyed reported an increase in distressed sales compared to three months earlier. The biggest pick up in distressed sales was reported in South Africa, followed by the US, New Zealand, Malaysia and Hungary with the Caribbean, Ireland, Spain, Russia and the Ukraine making up the remainder of the top ten.
RICS members work on both sides of any distressed property transaction. Consequently, the survey asked surveyors whether the level of interest from specialist funds in distressed properties was increasing. Unsurprisingly, the majority of agents are reporting a rise in specialist funds expressing interest in distressed commercial properties. Those markets at the forefront include Italy and the UK, with Germany, US, Hungary, Spain and Ireland closely behind. One obvious reason for current interest must undoubtedly be the scale of property price declines which have occurred in some of these markets since the onset of the credit crunch drawing bargain hunters in. Furthermore property yields, compared to other asset classes, are starting to offer value in some markets when compared to historical averages which may start to attract the interest of long term equity players such as life and pension funds.
The Rightmove House Price Index fell 2.2% in August, with the average asking price being £222,762 as against £227,864 in July, as summer sellers priced more realistically.
Rightmove saw record traffic in the month it says, as ‘marginal’ buyers search hard for property that meets their restricted loan parameters and the ‘creditworthy’ trawl for limited supply of quality homes
Sentiment continued to improve as 75% of home movers didn’t expect prices to fall in the next 12 months according to Rightmove. However new sellers in August were still 48% down on pre-credit crunch numbers as tight mortgage lending criteria continued to restrict transactions and stifle property coming to market.
Almost a third (27%) of homeowners are now staying on their lender’s standard variable rate (SVR) according to new research from Unbiased.co.uk, the professional advice website.
This has increased from 23% on their lender’s SVR earlier in 2009, highlighting that more homeowners are now sitting tight on their low rate SVR, rather than remortgaging to a fixed rate.
When describing their current mortgage situation, one in four (25%) of homeowners state they are on their lender’s SVR and have no plans to change this. This rose to over one in three (36%) of those aged 55 and over. With best buy standard variable rates generally remaining lower than best buy fixed rate mortgage deals in the current market place, it appears homeowners may not be considering a move to a fixed rate unless the base rate starts to rise.
The research also shows there are now only 11% of homeowners moving to another mortgage deal once their discounted, fixed or tracker rate deal comes to an end, compared to a slightly higher 12% earlier in the year.
The number of homeowners renting out a spare room has tripled over the past twelve months according to Abbey Mortgages - over 981,000 people in total and up by 152 per cent from 388,000 in July last year.
Today, three per cent (981,000) of homeowners are boosting their income by renting out spare rooms and a further three per cent have said that they are currently considering taking in a lodger.
Those people who have taken in a lodger are now earning an average of £393 a month or £4,716 a year in rental income - just over the Government’s Rent a Room scheme’s tax free threshold of £4,250.
Abbey mortgages found that 16 million UK homeowners have at least one spare room and if all of these rooms were to be let, homeowners would collectively reap as much as £6.29 billion in lodger loot.
Homeowners in London were the most likely to take in a lodger at 6 per cent, compared to just 1 per cent in Scotland and Northern Ireland.
Nici Audhlam-Gardiner, Director of Alliance & Leicester Mortgages, commented: “If you have a spare room that’s gathering dust, its worth considering a lodger and earning £4,716 a year. Not only will you have some extra money each month but most of it could be tax-free too. Those homeowners who still have spare rooms to rent are collectively missing out on over £6billion a year.
There have been more landlords than ever before as a result of the credit crunch - those ‘accidental landlords’ that didn’t really want to be letting but couldn’t sell their property on at a price they were happy with - but now, new research reveals that letting your pad could actually end up costing you dear if you are unlucky with tenants…
It’s when the tenants turn bad that you have to start worrying. New research from Homeserve has found that most tenants, no matter how caring they are, cause on average £511 of damage to the properties they rent each year.
As expected, the Bank of England has frozen interest rates at 0.5% again and Increases Size of Asset Purchase Programme by £50 Billion to £175 Billion.
This is still the lowest interest rate ever seen, the Bank of England is still struggling to save the UK from the worst recession in history.
As expected, the Bank of England has frozen interest rates at 0.5% again.
This comes on the day that the Nationwide has announced it is to offer 125% mortgages for those in negative equity with their homes.
This is still the lowest interest rate ever seen, the Bank of England is still struggling to save the UK from the worst recession in history.
The Land Registry is putting up some of its fees for the first time since 1993.
The registry, which covers England and Wales, is the government body that records and guarantees the ownership of domestic and commercial property.
There are nine price brackets for registering a sale which will rise by between £10 (to £50) for the cheapest and £220 (to £920) for the dearest.
The registry says it has raised its fees because the recession and property market slump have depressed its income.
The register enables anyone to find out who owns land, whether there is a mortgage or legal restriction on it, and how much was paid when it was last sold.
‘Regrettable’
The higher fees will make the sale and purchase of a property - the conveyancing process - slightly more expensive.
Our intakes of work fell heavily in 2008 and 2009 leading to an unsustainable reduction in our fee income
Land Registry
But the Land Registry said that without the extra money it would no longer be able to cover its costs.
“Due to the downturn in the property market and the deterioration in the economy generally, our intakes of work fell heavily in 2008 and 2009 leading to an unsustainable reduction in our fee income,” the registry said.
“A range of measures has already been taken to cut costs including a voluntary redundancy scheme and an accelerated plan to merge offices.
“Despite this the increases are, regrettably, unavoidable,” it added.
Property sales across the UK are currently just 44% of the level recorded this time two years ago.
Going up
The latest round of increases affects all the Land Registry charges, of which there are more than 90.
They include fees for recording the sale of a property, inspecting the register, supplying answers to questions, and supplying copies of an entry.
Fees for registering the sale of the cheapest homes, worth up to £50,000, will go up from £40 and £50.
Registering the sale of a house costing the current average of nearly £153,000 will cost an extra £50 at £200.
But fees for registering the most expensive properties, worth more than £1m, will rise from £700 and £920.
Monthly average figures taken from all the major house price indices clearly show that the market bottomed between April and May this year, according to Assetz.
The data, in fact, shows that prices are growing again, according to the company, with May figures showing very strong annualised growth of 17.3% per annum. The three month rolling average data shows 4% growth currently and the 6 month moving average reflects only a 5% fall, indicating the start of a reversal in the recent downward trend in house prices.
The five major house price indices still show an average of 12.2% falls for the twelve months prior to May 2009 but this hides the sudden reversal in house prices seen in the last few months. The bottom of the growth curve can clearly be seen in February and March this year, with the rate of annual decline slowing in recent months. The average house price in May 2009, taken from the average house price provided by five major UK indices, was £185,276, an increase of £1,978 compared to the previous month’s average value (£183,298). The average house price is almost the same as in January 2009 (£185,408), showing house prices have barely fallen since the start of the year.
Citizens Advice Bureaux in England and Wales have seen large and rising increases in debt, employment and benefits related enquiries over the last year, the annual Citizens Advice parliamentary reception will be told today.
Debt remained the biggest volume of enquiries for the service with 1.93 million new debt problems advised on by bureaux, an 11% increase on 2007/8. Total employment related problems saw a 17% increase compared to last year and benefits enquiries were up 13%. Over the year the service enquiries saw:
114% increase relating to redundancy (83,024 new enquiries in 2008/9 compared to 38,745 in 2007/8)
61% increase relating to Job Seekers Allowance (109,407 new enquiries in 2008/9 compared to 68,052 in 2007/8)
49% increase relating to mortgage and secured loan arrears (95,342 new enquiries in 2008/9 compared to 64,053 in 2007/8)
24% increase relating to bankruptcy (137,406 new enquiries in 2008/9 compared to 110,819 in 2007/8)
19% increase relating to fuel debt (82,891 new enquiries in 2008/9 compared to 69,378 in 2007/8)
15% increase relating to Council Tax arrears (137,551 new enquiries in 2008/9 compared to 119,795 in 2007/8)
Enquiry figures showed a sharp spike at the start of 2009, with debt enquiries 21% higher in Jan - Mar 2009 compared to Jan - March 2008 and enquiries about redundancy 179% higher than the same period last year.
A recent profile of CAB clients revealed that CAB debt clients owe an average of £16,971, an amount it would take an average of 93 years to pay off at a rate they can afford. The most common reasons for debt were low income, over-commitment, illness or disability and job loss. But irresponsible lending, poor financial skills and increases in the cost of living had also played a significant part in people’s debt problems.
Local housing allowance has been controversial for landlords. The general belief is that the housing allowance can only be paid to the landlord if the tenant is either in arrears or the tenant is judged to be vulnerable. This is however not true, the legislation clearly states that the rent can be paid direct to the landlord if the tenant requests it. Landlords and letting agents in the know insist that the all housing allowance tenants request this request this. Below is the extract from the legistration for your information.
Circumstances in which payment may be made to a landlord
96. —(1) Subject to paragraph 8(4) of Schedule A1[179] (treatment of claims for housing benefit by refugees), where regulation 95 (circumstances in which payment is to be made to a landlord) does not apply but subject to paragraph (3) of this regulation, a payment of a rent allowance may nevertheless be made to a person’s landlord where—
(a) the person has requested or consented to such payment;
(b) payment to the landlord is in the interest of the claimant and his family;
(c) the person has ceased to reside in the dwelling in respect of which the allowance was payable and there are outstanding payments of rent but any payment under this sub-paragraph shall be limited to an amount equal to the amount of rent outstanding.
As expected, the Bank of England has frozen interest rates at 0.5% again.
This comes on the day that the Halifax reported a house price rise of 2.6% in May compared to April, athough activity is still low.
Research by Alliance & Leicester Mortgages reveals that homeowners currently on their lender’s SVR risk missing out by not taking the chance to fix now at a low rate. With fixed rate deals now available from as low as 2.99%, A&L is urging borrowers who need to remortgage to act quickly in order to secure some of the best deals currently on offer for a limited period only.
The research revealed that eight out of ten (81%) borrowers currently on their lender’s SVR deal have no immediate plans to search for a better deal, with a further 264,000 existing SVR holders (14%) planning to wait until interest rates and house prices start to rise again.
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by £50 billion to a total of £125 billion.
The world economy remains in deep recession. Output has continued to contract and international trade has fallen precipitously. The global banking and financial system remains fragile despite further significant intervention by the authorities. In the United Kingdom, GDP fell sharply in the first quarter of 2009. But surveys at home and abroad show promising signs that the pace of decline has begun to moderate.
This is the belief of Andrew Hagger of Moneynet.co.uk, who looks at drastic changes seen in the buy-to-let mortgage market since the onset of the credit crunch.
Commenting he said: “For anyone thinking of becoming a landlord in 2009 they will be faced with an almost unrecognisable market compared with the one that existed in September 2007. Whilst house prices may have fallen and base rate slashed to a mere 0.5%, many lenders no longer have an appetite for this type of business and those that remain have tightened their criteria considerably.
“Whereas 18 months ago you would have been faced with nigh on 100 lenders to choose from and needing a deposit of just 10% or 15%, the choice of loans has shrunk rapidly with barely 30 lenders operating in this field, with those that are left demanding a minimum 30% or 40% stake from would be landlords.
“Whilst buy-to-let can still prove to be a profitable medium to long term form of investment, we are now seeing a more realistic financing requirement. Unfortunately it was a decade of booming house prices and a ‘me too’ mentality to make a quick buck that has seen both borrowers and lenders get their fingers severely burnt.
“Too many people got carried away with hearing how others were raking in the monthly rental income but without appreciating the potential pitfalls or having the financial back up to cope when things didn’t go according to plan.
“So if unemployment issues result in tenants being unable to keep up the rental payments some landlords will be faced with the situation of having to sell the property in an adverse housing market, losing their initial stake and in some cases ending up with a residual debt into the bargain.
“With some lenders demanding a fee of up to 2.5% of the amount borrowed for just a 2 year loan deal, getting an immediate positive return on your buy-to-let business venture will prove tougher than ever, but for seasoned property investors in it for the long term, the capital appreciation prospects remain.”
So called ‘accidental landlords’, a new breed of landlord that lets out their property to avoid selling at a loss, are providing a welcome boost to the supply of housing at a time of very high demand for private rented homes, according to buy-to-let specialist Paragon Mortgages.
Common regulations in the private rented sector include:
Gas and electricity: Boilers must be checked annually by a Corgi-registered tradesman, who will issue a Gas Safety Certificate. Tenants should be given a copy when they begin the tenancy and within 28 days of an annual check. All electrical items and fittings should be checked regularly as landlords could be liable if a tenant is harmed by an electrical item provided.
Fire safety: If the property was built after June 1992, tenants must have an adequate means of escape and a mains-operated inter-connected smoke alarm should be fitted on every floor. It the property is a furnished let, furniture and furnishings made after 1950 must meet fire resistance regulations. The National Landlords Association has produced a Fire Safety Logbook, available from its www.landlords.org.uk website.
Regulator Reform (Fire Safety) Order: Landlords who own flats in a block are required to liaise with the managing agents and other homeowners to ensure that a fire risk assessment of the common parts is carried out.
Energy Performance Certificates: From October 2008 it became a legal requirement for landlords to make an Energy Performance Certificate of the property available to prospective tenants when letting a property. Failure to do so can result in a £200 fine and the landlord being prevented from marketing the property until the EPC is obtained. For further information on EPCs visit www.paragon-epcs.co.uk.
Tenancy deposit protection: From 6 April 2007, all deposits (for rent up to £25,000 per annum) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales, must be protected by a tenancy deposit protection scheme.
HMOs: Rental homes spread over three stories or more and occupied by at least five tenants in two or more households are classed as Houses in Multiple Occupation and require a license by the local authority. A comprehensive guide on HMOs is available to download from the Literature section of the www.paragon-mortgages.co.uk website.
Estimated property equity in homes owned outright by people aged 65+ (February 2009)
London £137.3 billion - South East £122.0 billion - South West £64.6 billion - East £57.5 billion - North West £60.5 billion - Yorks/Humbs £43.9 billion - West Midlands £46.6 billion - Wales £26.6 billion - East Midlands £34.5 billion - North East £18.0 billion - England & Wales £611.5 billion
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