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30/10/2023

Plans to phase out leasehold homes will be outlined in the King’s Speech, according to a report.

All new houses across England and Wales will have to be freehold properties, as part of a Leasehold Bill led by housing secretary Michael Gove, reports The Sunday Times.

Gove is also expected to overhaul lease extensions from a standard of 90 to 990 years, scrap the two-year residence clause before requesting an extension, and give residents more say over their building and service charges.

25/05/2023

Renters Reform Bill

This May, the Government set forward their Renters Reform Bill, which is now making its way through the Parliamentary process, with aims to be law by the end of 2023.

We've summarised the key proposals that will debated in the House of Lords and House of Commons. Continue reading to stay up to date.

Tenancy reform
• Fixed-term tenancies are ending and being replaced by periodic tenancies that don’t have an end date. Tenants will be able to leave the tenancy by giving two months’ notice
• Rent increases limited to one increase per year, a form must be completed by the landlord and served to the tenant with two months' notice

End of no-fault evictions
• Under the new legislation, section 21 ‘no fault evictions’ will be abolished
• Landlords will only be able to evict tenants under certain circumstances under section 8 grounds

Private rented sector ombudsman portal
• This independent body will oversee dispute resolutions, providing a fair and impartial platform for tenants and landlords alike
• Membership for landlords will be mandatory

Private rental property portal
• Landlords will be legally required to register themselves and their properties on a new property portal, created to help facilitate communications with tenants

Renting with pets
• Tenants will now have a legal right to request permission to keep pets in their rented homes. Landlords must consider these requests and cannot unreasonably refuse them.

Additional measures
• No blanket bans on renting to benefit claimants or families with children allowed
• Applying the Decent Homes Standard to the PRS for the first time, ensuring that rented properties meet minimum quality requirements.

24/04/2023

The average price of a home eased to 1.7% growth to £366,247 in the year to April, but first-time buyers face record prices “despite economic headwinds”, data from Rightmove shows.

The cost of a property lifted by just 0.2%, or £890 this month, “lower than the average of 1.2% at this time of year, as new sellers heed their agents’ advice to price cautiously and tempt spring buyers,” says the house sales website’s April House Price Index. This compares to 3% growth in the year to March.

However, prices for FTBs rose 2% over the year to £224,963, or 0.2% in April, even with inflation and the base rate near 40-year highs at 10.1% and 4.25%, respectively. FTB sales account for roughly 30% of all homebuyers.

However, the report says agreed sales are recovering, and are coming into line with the more normal pre-pandemic market of March 2019. They have also topped last September’s level, after which home sales plunged by 21% following the tax-cutting mini-Budget, which saw mortgage rates rise sharply to over 6%.

The survey adds that FTB homes (two bedrooms and fewer) leads this recovery, with agreed sales now 4% higher than in March 2019, with the second-stepper sector remaining 4% behind, while the top-of-the-ladder sector is 3% behind this benchmark.

But the index points out that agreed sales are still 18% behind last year’s exceptional market — driven by the post-pandemic ‘race for space and lower mortgage rates for much of the year — as the property market “transitions to a more normal level of sales activity”.

06/04/2023

Average house prices edged higher again in March, suggesting ‘relative stability’ in the housing market, according to the Halifax monthly house price index.

Prices rose 0.8% in March on a monthly basis, following a 1.2% rise in February, to £287,880, compared to £285,660 the month before. The typical house price is now around 2% below the peak of last August.

The average house price crept up across the regions too, with the strongest growth reported in Northern Ireland (4.9%), followed by the West Midlands (3.8%).

Annually though, the rate of growth has slowed to 1.6% versus 2.1% for the previous three months in a row. Despite this, the monthly rise points to a resilient market overall, the bank says.

05/04/2023

The Welsh Government has implemented the new Renting Homes (Wales) Act that will change the way homes in Wales are rented and managed. We outline how this will impact landlords.

05/04/2023

We look at how the change in Capital Gains Tax allowance, coming in April 2023, affects buy-to-let landlords.

People who own their homes are almost £500 per year better off than renters, according to the latest Halifax Owning vs R...
15/03/2023

People who own their homes are almost £500 per year better off than renters, according to the latest Halifax Owning vs Renting Review.

The analysis compares housing costs for first-time buyers (FTB) with a mortgage on a three-bed home to the average monthly rent for a similar property.

It found homeowners are typically spending £971 per month on things like mortgage payments, funding a deposit, household repairs and maintenance and insurance. This compares to the £1,013 paid by renters, who have to find an additional £42 per month.

While still equating to almost £500 savings for owners (on a rolling 12-month basis), the gap has reduced significantly from the peak in 2016, when homeowners were more than £1500 per year better off.

And the picture varies across the UK too. The biggest percentage gap is in Scotland, where homeowners pay £727 per month, compared to the rental bill of £918 – a 21% saving for those on the property ladder. Renters in London pay £2,074, where homeowners have a lower bill of £1,828.

It was cheaper to own in all regions bar the East of England, where it’s renters who are better off in comparison, with monthly savings of £90.

Halifax mortgages director Kim Kinnaird comments: “Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year. These benefits are felt most keenly in London, where homeowners are saving nearly £3,000 annually compared to those renting similar properties – a significant figure. In fact, the only region where it is cheaper to rent than own is the East of England, where renters are holding onto £90 each month, compared to owners.

“Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging. While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”

The Halifax analysis also looked at the size of cash deposits being raised by FTBs across the country, which found these are lowest in the North East at £32,920, or 19% of average property prices. This compares to £97,320 in the South East, £87,157 in the East of England and a staggering £188,663 raised on average by FTBs in London.

15/12/2022

The Bank of England’s Monetary Policy Committee (MPC) has increased the Bank Rate to 3.5% from 3.0%.

The MPC voted by a majority of 6-3 to increase Bank Rate by 0.5 percentage points, to 3.5%. Two members preferred to maintain Bank Rate at 3%, and one member preferred to increase Bank Rate by 0.75 percentage points, to 3.75%.

The majority of the Committee judged that, should the economy evolve broadly in line with the November Monetary Policy Report projections, further increases in Bank Rate may be required for a sustainable return of inflation to target.

30/09/2022

The total number of mortgage products on Twenty7Tec’s system stood at 7,356 on 30 September, down from 15,196 on 1 October last year, a decrease of 51.6%.

Mortgage products available on Twenty7Tec’s system peaked in April reaching 18,542.

In the days following Chancellor Kwasi Kwarteng’s tax-cutting statement on Friday, a range of large and small lenders have pulled all or part of their residential and buy-to-let loans.

Moneyfacts revealed that on Tuesday this week a record 935 home loans were withdrawn from the market, more than double the previous highest fall of 462 products on 1 April 2020 at the start of the pandemic lockdowns.

Halifax Intermediaries said by the end of Tuesday all products in its homebuyer range that charge a fee – including shared equity and green products – will be removed.

Kensington removed most of its residential and BTL options and Keystone pulled all of its product offerings as a temporary measure.

BM Solutions withdrew its buy-to-let (BTL) and let-to-buy mortgages that charge a fee, Clydesdale Bank took a selection of new business deals off the market, West One pulled its entire fixed-rate BTL catalogue, and The Nottingham for Intermediaries repriced a number of its offerings.

However, on 27 September, Twenty7Tec said it handled 101,620 queries for the first time on its platform, a 14.3% increase on the previous day.

Twenty7Tec director of customer relationships Nathan Reilly says the increase was driven by the remortgage market, which accounted for 54.6% of the market, well above its 45% long-term average.

He comments: “The drop in product availability is likely to be a short-term measure as lenders reassess the market, economic situation and any operational challenges that could arise if they return before their peers.”

“Positively, we’re already seen that a number of lenders have completed this assessment and are lining up gradual returns. This is likely to result in an increase in products next week.”

Moneyfacts finance expert Rachel Springall explains: “Borrowers would be wise to keep calm over the current volatility in the mortgage market and seek advice from an independent broker. Various lenders have been very vocal that their decision to withdraw products is a temporary measure, amid the uncertainty over interest rates.”

Indeed, some lenders have already relaunched previously withdrawn products.

For example, earlier this week, Clydesdale Bank withdrew all its products for new customers, but today the lender has reintroduced its £1m plus 65% LTV to 85% LTV two-year fixed rates from 5.10%.

The lender also announced that all its fixed products in its product transfer range will see new rates increased, starting from 4.49%.

Meanwhile, Kensington withdrew all its products – excluding the flexi fixed for term 60% LTV, 75% LTV and 85% LTV products – at the close of business on 29 September but has also announced that is it planning to relaunch products with new pricing from today, 30 September.

Coreco managing director Andrew Montlake adds: “It was re-assuring to see lenders start to return to the market after the briefest of sojourns from some lenders. Yes, the products are substantially higher than they were, but the fact they are returning, with more set to in the coming week, shows that this is a short-term pricing issue rather than a long-term funding issue.”

“There are still a couple of lenders who are yet to sort themselves out, but they will do in time, and we appreciate all those lenders who have stuck with brokers, honoured their pipeline and communicated well in exceptionally difficult times.”

18/08/2022

The Bank of England (BoE) could hike interest rates to 3% or 4% by the end of this year, some have predicted.

Speaking on BBC Radio 4, former MPC member Andrew Sentance says the BoE is falling behind and it might need to hike rates between 3% and 4% by the end of the year.

As the cost-of-living crisis continues, the Office for National Statistics (ONS) reported yesterday that inflation in the UK had reached 10.1% in July, setting a new 40-year record high.

The latest figure is driven by a 43.7% rise in the price of motor fuels year-on-year and an increase of 12.7% in food and non-alcoholic beverages.

Last month, the ONS reported inflation hitting 9.4% in June, rising from 9.1% in May.

The Bank of England (BoE) increased the base rate by 50 basis points to 1.75% on 4 August.

The increase marked the sixth base rate rise since December 2021 after a decade of historic lows. Interest rates are now at their highest since December 2008.

Speaking on what can be done if rates do reach 4%, Private Finance technical director Chris Sykes says: “One of the major things some people are doing if they have savings and if they can afford it is paying down their mortgage with either overpayments or a lump sum when remortgaging.”

“In the past when rates have been low people have often kept debt high and invested spare monies, now perhaps guaranteeing yourself a saving of say 3.5% vs an investment that might make you 6% might lose you 5% perhaps is worth liquidating and putting into your mortgage.”

“If you don’t have this option then two ways to reduce the monthly payments are by extending the mortgage term or by putting some of the debt on interest only. I am generally encouraging clients to, if they can, just pay the higher rates and not take any actions to lower the payments as inevitably this means paying more interest over the term (unless you are making overpayments).”

Meanwhile, Connect Mortgages chief executive Liz Syms says: “We have become used to rates being very low so 3% to 4% sounds high, but historically, this is still low. For some though this could cause a price shock, particularly when combined with other increases such as energy bills.”

“Anyone still on a variable or tracker rate could still look at fixed rates to protect themselves from the next possible rises, but it’s worth considering what is the price difference between their variable and a fixed rate. If their current variable rate is 1% lower than the fixed rate for example, then switching to a fix just guarantees they will have to pay more.”

“Those that have benefitted from building up savings over the last couple of years may want to explore linking their savings and mortgage with an ‘offset’ mortgage. This means they will save interest on the mortgage as if they had used their savings to pay the mortgage down, but retain the flexibility of still being able to use those savings in the future.”

“The most important thing is that the customer seeks advice from an independent mortgage adviser to make sure they know all the options available to them.”

17/03/2022

The Bank of England (BoE) has increased the base rate by 25 basis points to 0.75%.

The Monetary Policy Committee (MPC) voted 8-1, with a single member preferring to keep the base rate at 0.5%.

It is now at the highest level seen since March 2020.

In a summary of the MPC meeting, the body says that previous expectations that inflation would peak at “around” 7.25% in April 2022 have since been revised upwards because of the Russian invasion of Ukraine and its attendant effect on commodity prices alongside further supply chain disruption.

It details: “Developments since the February Report are likely to accentuate both the peak in inflation and the adverse impact on activity by intensifying the squeeze on household incomes.”

It adds: “Inflation is expected to increase further in coming months, to around 8% in 2022 Q2, and perhaps even higher later this year.”

The MPC believes that falling consumer confidence, a result of said squeezed household disposable incomes, will also dampen UK GDP.

Markets are expecting the bank rate to hit 2% by the end of the year, so this rate rise of 0.25% to 0.75% is a step on that journey.

With the risk of wage inflation or even Japanese-style stagflation continuing to emerge, the MPC may have a few more difficult meetings in 2022.

Meanwhile, Knight Frank Finance managing partner Simon Gammon comments: “The BoE’s third consecutive rate hike ensures that we’ll continue to see lenders withdraw and reprice products on a daily basis.

“Mortgage rates that borrowers see today are noticeably higher than six months ago and in six months we would expect to see a similar increase. Often the repricing we’re seeing is by as little as 0.1% or 0.2%, but if that’s happening every other week then you start to see a steady upward trend.

“Five-year fixed rates were as low as 0.91% late last year, but now you’d be lucky to get them under 2%. You haven’t missed the boat, these rates are still very low by historic standards, but we do expect the upward trajectory of mortgage rates to endure for the foreseeable future.”

16/03/2022

Tomorrow (17 March) the Bank of England (BoE) is expected to raise rates again in a bid to curb inflation that continues to climb.

This will be the second rate rise in two months since the central bank’s Monetary Policy Committee voted 5-4 in favour of raising the interest rate from 0.25% to 0.50%.

With another hike expected tomorrow, mortgage brokers understand the logic but are critical of the timing. Specifically, those working in the mortgage industry are way of the added financial pressure a rate rise now could put on households.

“Should the BoE raise interest rates?”, asks Finanze managing director Alastair Hoyne.

“Without a shadow of a doubt, yes. Can consumers and households afford it? No, far from it.”

The impact on mortgage repayment affordability has been cited as the main issue.

Combined with climbing household expenses such as energy costs, he questions the logic of potentially disadvantaging homeowners: “We’re about to make the most significant single debt most householders have, their mortgage, more expensive.

“Not to mention, push too hard on rate rises now and there’s a very real risk of prices flattening, and a worry they may reduce. Given the government is on the hook backstopping a lot of high LTV mortgages, at a time of economic pain it’s not such a wise thing to put more pressure on public finances by lumping private mortgages into the mix.”

Borrowers are now faced with eyewatering household bills and a real cost of living crisis, made only worse by the upcoming National Insurance rise and another energy price cap rise in October where inflation could hit double figures.

All of this will without a doubt have a serious impact on affordability calculations when applying for a mortgage.

The banks have been lending phenomenal amounts of printed money, creating excessive debt, allowing consumers to buy whatever they want, and buy it now. This has led to inflation getting out of control and now, with the war in Ukraine causing the price of oil to surge, individual households have been left ‘in the cold’ metaphorically and literally. The BoE is in an almost impossible position.

However is now the time for the BoE to throw petrol on the fire? Do we really think a 0.25% base rate increase is going to help the consumer?

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