Borrowing request hits brick wall?

admin    Uncategorized     agents

After some advice, as have been a bit naive and hit a brick wall. I am looking to borrow more money against a property which has some equity in it, but is not due for remortgage yet.

My thinking is that I’d like to have some money available should an opportunity come up to invest and if I can’t find anything that I have additional money in case I need it as a liquidity buffer. I would invest the money in peer-to-peer to help cover the interest.

However, having applied I have been asked for the mortgage offer on a property I haven’t found yet. I’d appreciate people’s thoughts on whether I should reapply for a different use and if so what’s acceptable i.e could I say I would put the money in peer-to-peer? Or that I would spend it on property repairs?

I don’t see the point in continuing on the basis of a property investment until I find a place to buy as I’d incur survey fees etc.

However, I’d really like to hold the money rather than the bank having my equity particularly as interest rates look like they will rise.

Many thanks

Richard

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ARLA confirms landlords ‘rough ride’ is being passed on to tenants

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The Latest figures from the ARLA Propertymark report shows that in August agents reported 35% of landlords increasing rental costs to tenants. This figure has risen from 27% last year and is the highest figure since July 2015 at 37%.

This compares to only 2% of tenants who were able to achieve a rent reduction.

Demand from new tenants looking to rent per ARLA member letting agents increased to 72 per branch and the average number of properties landlords were looking to sell per branch was 3 out of an average 189 properties per branch.

ARLA Propertymark chief executive, David Cox, said: “This month’s findings paint another bleak picture for tenants. In November last year, only 16% of agents saw landlords increasing rent costs, but that figure now stands at 35%, which is likely to continue rising.

“Landlords have had a rough ride at the hands of policy changes at government level, and it’s becoming clear that these additional costs are now being passed onto tenants.”

Please see the graph below and for the full ARLA report please Click Here

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Tenant running out on utility bills

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I rented my property and once the tenant moved out she left owing nearly £700 in utility bills.

She contacted the gas company and said she was just renting a room from me and that I was responsible for the bills.

This of course wasn’t true, this has gone on for over 2 years, she has disappeared and I’m pretty sure she will do the same again as I have found out she had done the same at a property prior to renting mine.

What can I do?

Many thanks

Stuart

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Mezzanine Finance – a solution for building homes outside the big corporates

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The UK housing shortage will not be successfully addressed if we rely entirely on the major house builders. This is the view that was expressed by the government housing White Paper at the beginning of the year, which recognised both the importance of creating a diverse construction sector and the significant contribution that can be made by the development of smaller sites.

Securing the appropriate funding will be key in determining whether small developers are able to step up to the challenge and take advantage of this opportunity and, for many, achieving the right leverage at the right price will be the main consideration.

Conventional senior debt development finance was traditionally limited to around 50% gross development value (GDV), but it is now possible to secure finance up to 70% GDV with some specialist providers. This is known as stretch-senior debt and, while it offers greater leverage, it is also more expensive than senior debt.

An alternative to stretch senior is to split the financing into two layers of debt instead of one.  The first layer, the senior, can be structured conservatively at low cost, often by a large bank.  On top of this senior layer sits a strip of mezzanine debt from a specialist provider in a second charge, subordinated position.

In isolation mezzanine finance, or “mezz”, looks expensive, but when it is blended with a bigger chunk of cheap senior debt, the overall cost can be lower than a stretch senior deal can achieve.

There is more work in assembling and managing a structured solution that includes mezz, but for some developers it can provide a cheaper way of securing increased leverage on their schemes.

If you are a developer and would like to discuss how you could use mezzanine finance on your next development, please complete the contact form below and we will be happy to help.

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Student Rents remain static says new report…

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Student Landlords:

A new report highlights static accommodation costs across England in the wake of rising student debt.

An annual report (1) into student accommodation, compiled by Glide Utilities, the student utilities and service provider, has found that private student rent has remained at an average of £100 – £119 a week, for the second year running.

The news comes as a respite for students, who face increasing debts, with the Institute for Fiscal Studies (IFS) last month reporting that students in England are likely to graduate with debts just shy of £60,000. (2) The fourth annual ‘What Students Seek’ report found that 20% of students don’t envisage paying off their loans, a number that is dramatically out of sync with the IFS, which forecasted that three quarters of students will never be able to pay off their loans.

Accommodation represents the second biggest spend for students during their studies following fees. The What Students Seek report found that 72% of students pay between £80 and £139 per week. University locality creates some variance with 15% of London students paying over £200 a week, and 69% of students in the North East paying less than £90 a week.

Almost half, 45%, of students surveyed said their accommodation offers good value for money, but 36% disagree, suggesting that while rents remain static, landlords need to understand students better to attract and retain the best tenants; a growing concern given the continued increase of modern student developments on the market. (3)

The annual What Students Seek report uncovers what students look for when it comes to their accommodation to reveal common themes that could help landlords improve the market appeal of their HMO property.

Key insights from the 2017 report:

Less is more: On average students live with four other people, with 39% sharing with five people or more. However, when asked how many people they’d ideally like to live with, almost half, 48%, indicated they’d like to share with just two or fewer people in their next property.

Switch off the TV:  It appears that a television is not going to sway students into renting a property. The majority, 60%, rated having a TV as the least important factor when choosing accommodation. After cost, a fast broadband connection is by far the most important factor for students, followed by good storage space, bills inclusive and double beds.

Management: The majority of students are positive when it comes to the way their property is managed; 57% shared this view. However, almost a quarter, 23%, felt negatively citing the following top issues to be causing problems:

Lack of response on maintenance issues, (37%)

Poor upkeep of the property, (30%)

Lack of communication, (28%)

Bills included: Three quarters of students said that having bills included in their rent was either essential or quite important when considering a property, making this an easy fix for landlords and letting agents in attracting tenants.

Incentives: One in 20 students said they had been given either a cash or non-cash incentive for taking their current property. Although very low, 2% said they had been taken out for a drink by their landlord

The report also revealed the best university cities for landlords to invest in, based on overall tenant satisfaction ratings and annual yield. (4) Although there are great investment opportunities across the UK, university cities in the North East consistently rate highly for both annual yield and tenant satisfaction, with properties in Middlesbrough providing a 16.1% annual yield4 and 82% satisfaction rating. Durham and Sunderland followed close behind while on the other end of the scale, London rated lowest with just a 2.7% annual yield and 76% satisfaction rating.

Outside of accommodation needs, the report also pointed to a decline of the infamous student social life. When asked how respondents funded their social life, almost one in five, (17%) admitted that they didn’t have one.  Despite this over a third still rated the proximity to bars and clubs as an important factor when choosing accommodation.

James Villarreal, CEO at Glide Utilities said of the 2017 What Students Seek Report; “It’s good news for students that private rental costs remain static, especially since the price of living in Halls of Residence continue to rise. However, it’s very likely that costs will rise moving forward as the ban of tenant fees will inevitably get passed through to the price of the rent., therefore landlords and agents can offer students greater value for money  by offering bills included and ensuring that properties are well maintained and efficiently managed”

What Students Seek was commissioned in April and May 2017 by Glide Utilities. 722 students responded to the report via www.accommodationforstudents.com, the UK’s leading student accommodation website. The full report can be downloaded here.

1. Results taken from a survey of 722 students in April and May 2017 as well as year-on-year data obtained from previous surveys and focus groups conducted by AFS.
2. From a report by the Institute of Fiscal Studies, July 2017
3. In May 2017 the property advisory group, JLL, predicted that 2017 would see a higher amount of investment in the student housing market.
4. Average annual yield research taken from the Rightmove House price data, May 2017 and the Student accommodation rent report 2016 (Accommodation for Students). Average weekly rent multiplied by 3 tenants, multiplied by 52. The average annual income divided by average property price, multiplied by 100. Full report available upon request.

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