This feels like it should be criminal?

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For the last month, the freeholder of my property has blatantly refused to supply my conveyancing solicitor (and I) with a copy of the Building Insurance Certificate & Policy to which I am legally entitled ‘free of charge’.

Despite daily requests since the beginning of June from solicitors

View Full Article: This feels like it should be criminal?

Halifax House Price index inflation continues with supply imbalance

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The Halifax House Price Index jumped by 1.8% in June with annual inflation at a record 13% the highest since 2004. The average house price now stands at £294,845.

Northern Ireland continues to display the highest annual inflation in the UK at 15.2%.

View Full Article: Halifax House Price index inflation continues with supply imbalance

A Guide to Commercial Bridging Loans

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If you are trying to finance a commercial property project but are struggling to pin down a mortgage, taking out a commercial bridging loan could be the answer. However, as with any type of borrowing, it’s important to know all you can before agreeing to anything and signing on any dotted lines. 

So, with this in mind, join us as we not only run through what a commercial bridging loan is exactly but also highlight some of the key benefits that they can offer. 

What is a Commercial Bridging Loan? 

In simple terms, a commercial bridging loan is a short-term financing arrangement secured against the perceived value of a commercial property. 

Whether it be an office space, hotel, warehouse, shop or retail unit, these loans can be taken out by more or less anyone who works in a commercial space and offer a great alternative to a mortgage. In fact, a commercial bridging loan actually comprises two separate types of products within it – what’s known as a bridging loan, and a commercial mortgage. 

In essence, the bridging loan allows the initial commercial property purchase to go through, whereas the business mortgage sets up a longer-term financing arrangement with a lender. 

What Are the Benefits of a Commercial Bridging Loan? 

As we’ve touched on already, commercial bridging loans can offer a huge number of benefits. These typically include: 

• Quick Turnaround Times. Verus Capital is one example of a lender that can arrange a commercial bridging loan in as little as one to two weeks, making them particularly useful whenever you need to access funds quickly. This might include, for example, when buying a property at auction, where it won’t always be possible to set up a commercial mortgage in time for the sale to go through. 

• Short Term Arrangement. Commercial bridging loans can typically be repaid over a period of between one and 24 months. Therefore, if you are waiting for capital to come through but need quick access to funds, taking out a short-term commercial bridging loan could prove a lot more beneficial than a mortgage. 

• Added Flexibility. If you are trying to purchase a commercial property that’s derelict, or in dire need of repair work, you’re unlikely to be eligible for a mortgage. However, taking out a commercial bridging loan could provide you with the funds you need to get this repair work done, helping you secure a better mortgage deal later on. 

Which Situations Are Commercial Bridging Loans Useful For? 

While on the topic of unmortgageable properties, there are a number of other situations where taking out a commercial bridging loan can prove incredibly useful, as proved by their recent boom in popularity. 

These situations largely centre around times when needing a quick cash flow injection into your business. Whether it be to cover a tax bill, pay for new lines of stock or cover any unexpected staffing costs, taking out a commercial bridging loan provides quick and easy access to funds when you need them most. 

Likewise, if you are looking to expand your business by purchasing new commercial premises, a commercial bridging loan can provide you with the funds you need to move more quickly. 

What Are the Eligibility Criteria for a Commercial Bridging Loan? 

Unlike other forms of borrowing, there are no set eligibility criteria for taking out a commercial bridging loan. However, there are a few key things a lender will look for in your application. These include: 

1. Exit Strategy 

When applying for a commercial bridging loan, your lender will be looking to determine how likely you are to be able to repay what you owe. 

More commonly referred to as your exit strategy, you will need to inform your lender on how you intend to repay the loan – whether it be through selling the property in question or taking a commercial mortgage out on it. 

The lender will then assess certain conditions within your application, such as the property’s location and how much renovation work is required, before letting you know whether you’ve qualified for a loan or not. 

2. Credit Score

As with pretty much any type of borrowing, the better your credit score is, the more likely you will be to get approved. 

Therefore, it’s important to keep track of your credit score and make sure it’s looking nice and healthy when applying for a commercial bridging loan. 

While the lender will be basing the bulk of their judgement on your exit strategy, having a poor credit score could hinder your likelihood of being approved. So, being able to show that you’re a low-risk prospect will certainly help your chances. 

3. Significant Industry Experience 

While on the topic of proving you’re a low-risk prospect, showing that you have significant experience in both the buying and selling of commercial property will also significantly aid your application. 

Likewise, your lender will want to see that you are a profitable business with a good track record. Therefore, by showing them your accounts are all in order and outlining any future business plans you have, this could convince them you’ll be able to afford the repayments expected of you. 

How Can I Apply? 

As a slightly more niche type of borrowing, you will need to source a specialist commercial bridging loan broker when applying for a commercial bridging loan. 

They will then have the market knowledge and experience required to not only secure a commercial mortgage for you but also ensure you get the best deal possible for your specific circumstances. 

View Full Article: A Guide to Commercial Bridging Loans

London rents have seen record rises in a very hot spring market

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The latest figures available from Rightmove show that London rents jumped by around 14 per cent in the last year, with some property experts calling it the ‘most competitive market on record’

Matt Hutchinson, a director at SpareRoom, the flat sharing website, has said:

“Rents are climbing across the country and are already reaching record highs in the majority of towns and cities. That’s going to be incredibly unwelcome news for renters, many of whom were already financially stretched and will be wondering how they’ll cope with increased rents, alongside a sharp hike in the cost of living.”

According to Rightmove’s statistics, rents in London are averaging well over £2,000 pcm, a figure that’s up from £1,900 or so last year. This represents the Capital’s biggest annual jump of any region since records began, the leading online property portal says.

In some parts of the capital rents have risen at an even faster rate, with properties in the West End seeing rents rise by just under 35 per cent and Chelsea just under 30% according to SpareRoom.

The Capital struggles through a sever shortage

Like many parts of the UK, the Capital struggles with a severe shortage of rental properties. Landlords are leaving and fewer new rentals are coming onto the market, coupled with a wave of renters coming back into the Capital as the Covid nightmare recedes.

In raw numbers, Rightmove claims that demand is up by around 8 per cent, while supply has fallen by 47 per cent.

All this is happening while the government is threatening major reforms in its Fairer Renting White Paper, reforms which at first sight are proving very unpopular with landlords.

There is a severe mis-match between the number of tenants looking for rentals and the vacancies available: according to Rightmove tenants looking for rentals outnumber the available vacancies by in the region of tree to one.

During the worst period of the pandemic there was a mass exodus from London, particularly among the traditional flat dwellers, young people who had the ability to return to live with their parents. Now, with the virus receding to some extent, and most having had their vaccines, the young renters are drifting back.

From the landlord’s point of view, it’s a complete about turn from when the pandemic hit London – a time of gloom when the market collapsed – and now the renters are returning and finding that vacancies are rare.

It’s got to the stage where in some parts of the Capital bidding wars are developing between tenants desperate to secure the right pad. Estate agents are even holding block viewings where renters are asked to bid against each other, the market is that tight.

However, all is not lost. Rightmove has said there there are signs that more rentals are beginning to come back onto the market to meet the demand. There was a 5 per cent increase in the number of new rental properties becoming available in March over January’s figures, and 16 per cent compared to the shorter month of February.

Demand – supply imbalance

Any increase in supply should start to stabilise rent levels and they may even start to slow the rate of rise next year. Hamptons International’s figures show that buy-to-let landlords are beginning to re-enter the market with over 40,000 homes added to the rental market across the UK in the first quarter, 2022.

Rightmove’s director of property data Tim Bannister has said:

“In the first three months of this year, we’ve seen tenant demand exceed the high levels set last year, which when coupled with the fewer available homes for rent, has resulted in the most competitive rental market we’ve ever recorded. There are several factors affecting supply and demand.

“On the supply side, we’re hearing from agents and landlords that tenants are signing longer leases, which has prevented some of the stock that would normally come back onto the market .”

Rightmove lists Swansea and Cardiff in south Wales, Manchester, Liverpool, Margate in Kent and Grantham in Lincolnshire as particular rental hotspots outside of the Capital.

Savills figures also confirm the exception prices increases with annual growth at around 13.5 per cent, the highest annual growth since 1998, even compensating for losses seen during the pandemic.

Jessica Tomlinson, a research analyst for Savills, has said:

“A combination of strong demand from those returning to London and a continued lack of stock in both the lettings and sales market, has meant that growth across the prime rental market has far exceeded any losses seen over the past two years.

“However, value increases are beginning to plateau after a huge run in areas that were most popular during the pandemic, with growth now more concentrated in areas that suffered the most over the past two years, which still have capacity for growth.

“Tenants today are much less fixated on the location and more focused on finding the right property – our agents have reported that it’s now not unusual to see prospective tenants looking in multiple locations across London.”

“While the market is certainly less panicked than it was last year, it is still being driven by people looking to secure a property early.

“Agents are reporting seeing students and families looking to find somewhere ahead of the new school term – activity they wouldn’t normally see until the third quarter.”

“A lack of stock remains an issue in the commuter belt, however, with just 31 per cent of agents citing that they have seen more come to market this quarter.

“As a result, when asked where demand was coming from, a third of our agents ranked ‘those who were unable to buy’ in their top two, beating ‘try before you buy’ which is typically a more common reason for renting in this market.”

Landlords are facing challenges ahead

With the reforms promised in the Fairer Renting White Paper, in particular the abolition of the no-fault no blame eviction process known as Section 21, and the up-coming costs involved in meeting more stringent statutory energy efficiency standards – EPC level C or above by 2025 – and further out, rising mortgage interest rates.

View Full Article: London rents have seen record rises in a very hot spring market

LATEST: Landlord group picks apart council’s selective licensing plan claims

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Gedling is going ahead with plans to extend its selective licensing scheme despite not issuing a single improvement notice in the new areas during a four-year period.

The Nottinghamshire council points to the success of its scheme in Netherfield for its decision to move licensing into parts of Colwick, Carlton Hill, Daybrook and Newstead Village (pictured).

However, landlord group EMPO was surprised by the findings of its Freedom of Information request, looking at improvement notices during 2017-2020, particularly as the council believes the scheme will help solve anti-social behaviour such as drug-dealing and quad-bike riding in these areas.

The council also reports that of the 400 private rented properties inspected in Netherfield, 78% needed remedial works to bring them up to the minimum legal safety standard and protect the health and safety of tenants.

Business development manager Giles Inman says its query about this high percentage failed to yield any more details.

“We asked them what the hazards were, but they didn’t have that information,” he tells LandlordZONE.

“It’s disappointing and wasn’t a convincing argument. It also doesn’t help engagement and gives us the impression that it’s a money-making exercise.”

Bad timing

EMPO believes the scheme comes at a particularly bad time during the cost of living crisis as licence fees – ranging from £585 to £700 for each of the 664 properties covered – will inevitably be passed on to tenants.

“We also asked them where the resources would come from to deal with anti-social behaviour but that question also went unanswered,” adds Inman.

At a cabinet meeting, council leader John Clarke said: “We have a duty as a council to our residents. I do not have a problem with this and it will help us with another thorn in our side such as Houses of Multiple Occupancy. It will weed out the ones [landlords] that are not doing their job properly and I think it will save lives.”

View Full Article: LATEST: Landlord group picks apart council’s selective licensing plan claims

BIG FINE: Court tells landlord to pay £25,000 over ‘dangerous HMO’

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A rogue landlord who repeatedly ignored a banning order that stopped him renting out his dangerous HMO has been fined £20,000.

Demetirous Georgiou, whose property is at 83 George Street South, Salford (pictured), was convicted of failing to comply with an Improvement Notice and breaching an Emergency Prohibition Order on the house -which had been converted into seven flats – in a case stretching back six years.

Salford Council housing officers first visited in May 2016 and found that the gas and electricity meters had been bypassed as well as inadequate fire safety equipment.

Suspended

Georgiou was served with an order preventing him from letting the flats until he had addressed the problems, while a suspended improvement notice required him to provide heating, lighting and hot water, move the gas and electricity meters to a more suitable location and repair the handrail and balustrade on the first-floor landing.

A follow-up visit in March 2017 found Georgiou had re-let the flats which meant the tenants had to be re-housed. Another inspection in December 2019 discovered the flats had been let again, but fire safety work and work required in the improvement notice had not been done.

Poorly maintained

Every fire door and doorframe was damaged or poorly maintained and escape routes were blocked.

The landlord failed to attend Manchester and Salford magistrates court where, along with the fine, he was ordered to pay £4,700 in costs and a £181 victim surcharge.

Read more: How to insurance an HMO property.

Lead member for housing, councillor Tracey Kelly (pictured), says the council will continue to monitor the property and won’t hesitate to take further action if it is re-let without the work being completed.

“Fire safety systems are there to protect tenants’ lives. Landlords cannot ignore that and put people at risk,” she adds.

Read more news about Salford’s HMO plans.

View Full Article: BIG FINE: Court tells landlord to pay £25,000 over ‘dangerous HMO’

Despite resigning, Boris appoints new secretary of state for housing

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Landlords have a new secretary of state for housing to deal with after Boris Johnson appointed Greg Clarke, MP for Tunbridge Wells, to the role.

This followed the PM’s sacking of Michael Gove from the position late last night for ‘disloyalty’.

Many within the sector were disappointed to see Gove go after he brought a more considered and proactive attitude to the reform of the housing market – albeit his White Paper has not been popular with many landlords.

But the ministerial vacancies remain at the Department of Levelling Up, Housing and Communities (DLUHC), with posts still unfilled following the resignation of Andrew Stuart.

For a time, just Eddie Hughes, who has kept quiet during yesterday’s multiple resignations, was the only housing minister at the DLUHC.

Previous experience

Clarke has experience of housing policy having served at the department briefly during David Cameron’s government before becoming Secretary of State for Business, Energy and Industrial Strategy, a post he held until 2019.

How long he keeps the job is debatable – the PM has spent the past few hours appointing new ministers to replace those who have departed in recent days despite an expected official resignation announcement expected later today.
Reports indicate that Johnson is to become a caretaker PM until his party elects a new leader – but a new PM is unlikely to stick with his choice of ministers.

Hughes spent much of the past few days keeping his head down, except to give a speech at an affordable homes conference in London held by CapitalLetters, and chipping in a solitary but supportive tweet.

At the conference, during which he announced £14m in funding for the homeless housing organisation, no mention of the poisonous political backdrop was made.

View Full Article: Despite resigning, Boris appoints new secretary of state for housing

Online vs. Traditional Auctions: How do they work differently?

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Auctions have become one of the most popular ways to buy property quickly, thanks to the speed at which auction purchases can be completed and the opportunity to grab a property at a bargain price. Whether online or otherwise, property auctions can be useful for seller, buyers and estate agents alike. But how do online and traditional auctions differ?

How do traditional and online auctions work?

Properties for a traditional auction are typically advertised in newspapers, via estate agents and auctioneers, and online. They can range from standard residential homes to properties that have been repossessed or that are un-mortgageable. Auctions have become a popular way for investors to buy a property at a lower price, particularly with house prices soaring. The benefit of a traditional auction is that it’s a social event where buyers and sellers can communicate directly. 

The completion process is quick and easy, and buyers can enjoy the satisfaction of exchanging much faster – often on the day of the auction. UK finance brokers Finbri explain that “Bridging loans are used by those in the property development business who need to make large secured payments at short notice such as auction purchases.” For buyers who need a quick transaction, a traditional auction is very appealing. Bridging finance is often used to speed up the process, instantly taking a property purchase from months to days.

Online auctions follow similar principles to traditional auctions, but there’s far more flexibility involved. There’s no physical location to the auction taking place, so buyers can purchase a property from anywhere. The timeframe for an auction is also more flexible, with auctions taking place over days, weeks or months, giving buyers the chance to place their bids. Once a bid is accepted, sales are completed within 28 days, although it can take longer if it’s a conditional auction. However, there are no costs associated with a traditional auction, so it’s a less expensive option for sellers and just as convenient. 

What are the key differences?

One of the primary differences between online and traditional auctions is speed – once the gavel falls at a traditional auction, contracts are exchanged immediately and completion takes place 28 days later. Online auctions are closer in style to an eBay auction, where bidders bid online only, and the accepted buyer has 28 days to exchange and a further 28 days to complete. 

But security also plays a factor – many buyers choose auction properties because they’ve experienced a property purchase fall through or because time is of the essence. Property buying is a stressful process for anyone, and having a smoother, quicker and more secure process is beneficial for all parties. 

Once the bid has been accepted at a traditional auction, neither buyer nor seller can pull out, meaning the risk of the purchase falling through is removed entirely. However, with an online auction, there are still 28 days to exchange and so the buyer can still pull out since there’s no legal obligation to complete. 

When it comes to the price, sellers are naturally going to seek out the best possible price, while buyers are looking for a bargain. Both traditional and online auctions aim to satisfy the needs of the client, though since a traditional auction doesn’t require a fee from the buyer until the exchange has taken place whereas online auctions require a reservation fee since the exchange and completion process takes longer which is usually up to 4% of the purchase price and included in the stamp duty. 

Naturally, given the process of bidding, online auctions offer the possibility of buying a property from any location. But for some, that can be a downside – some people enjoy the atmosphere of the bidding room and the face-to-face contact that it offers. The choice between traditional and online auctions tends to fall to speed and convenience, but as we can see there are various factors that differentiate the two. 

Final thoughts

There are pros and cons to each option when it comes to buying a property at auction. While a traditional auction offers more security since the exchange takes place almost immediately, making it legally binding on the day, an online auction offers more flexibility and is a more convenient solution for individuals who are buying or selling property in a different location to where they live. However, both methods enable the seller to secure the best price for their property. 

View Full Article: Online vs. Traditional Auctions: How do they work differently?

What now for the Renters Reform White Paper?

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Instead of resigning along with 50 plus and counting other ministers, Gove was actually sacked as Secretary of State for the Department for Levelling Up, Housing & Communities.

The big question for landlords is where does this leave the progress of the Renters Reform White Paper?

View Full Article: What now for the Renters Reform White Paper?

Equity Release: How to Fund a Buy to Let Purchase

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In light of the ongoing cost of living crisis, the fastest rise in UK house prices since 2007 and concerns over an incoming recession, economic uncertainty is the current talk of the town. 

As such, investing in buy-to-let property through some of the more traditional means, like taking out a loan or mortgage, can be a lot more difficult than it was before. And, because of this, many prospective buyers are now looking for alternative ways to fund their property purchases. 

One such example comes through equity release – a means of taking cash out related to the value of the home – with a huge number of Google searches recently questioning whether buy-to-let purchases can be financed through this process. 

Well, we’re here to tell you that yes, they can. And here’s how you can do it.  

Equity Release on Residential Properties: A Quick Overview

If you are looking to release equity from a residential property to fund the purchase of a new buy-to-let property, the process should be relatively plain sailing – especially when using a specialist mortgage broker. 

However, as with any type of equity release scheme, there are a few set criteria you will need to meet in order to qualify. 

“To qualify for equity release, you will need to be over the age of 55 (or over 65 for a home reversion plan) and own your own home,” says Mortgage Broker and MD, Pete Mugleston from Online Mortgage Advisor. “Most equity release providers will cap the amount they will offer at somewhere between 20% and 50% of the property’s market value. Some go higher than this and others lower.” 

Once you meet these criteria, the money you choose to release from your property can then be used in any way you wish – from funding a dream holiday to financing your buy-to-let investment – without any further hoops to jump through. 

Equity Release on Buy-To-Let Properties: A Quick Overview

If you are looking to release equity on a buy-to-let property you own, while it is entirely possible to take out an equity release mortgage, the process tends to be a bit more difficult than on residential properties. 

This is because most equity release mortgage providers refuse applications where the capital to be released is from an existing buy-to-let property. In fact, only a small minority of providers will even consider applications for these types of properties. 

Therefore, it’s generally recommended to use an experienced broker when trying to source the best possible deal. In doing so, they will be able to identify the best course of action, offer professional advice and ensure that releasing equity is actually the right financial decision for your circumstances. 

What’s more, releasing equity on an existing buy-to-let property offers a much more attractive means of raising funds over simply selling the property. This is because selling typically incurs capital gains tax, which could have a huge impact on the amount of money you actually take from the sale. 

How Much Equity Can Be Released? 

The amount of equity you can release from your property will vary from landlord to landlord and will depend on a number of factors.

If, for example, you are looking to release equity from your main property of residence, taking out a lifetime mortgage (the most popular form of equity release) will typically allow you to borrow around 20% to 60% of the home’s overall value. 

On the other hand, if you’re releasing equity from a buy-to-let property, the loan to value percentage you can borrow will largely depend on your age; the maximum amount starts at 19% for 55 year olds and increases to a maximum of 44% at 80 years old. 

However, funds can be released from several buy-to-let properties at the same time. So, if you have a portfolio of buy-to-let properties already set up, you can release a larger amount of equity from these without affecting the rental income you are already bringing in. 

Summary

Whether you are looking to invest in your very first buy-to-let property, or are trying to expand on a pre-existing portfolio of buy-to-lets, taking out an equity release mortgage could help turn those dreams into a reality. 

However, as with any form of borrowing, releasing equity isn’t something you should take lightly. Therefore, it’s important to know as much as you can before agreeing to anything you’re unsure about. 

A professional mortgage broker will be able answer any questions you might have, helping you determine whether equity release is the best way to fund your first – or next – buy-to-let property purchase. 

View Full Article: Equity Release: How to Fund a Buy to Let Purchase