Lenders pull BTR mortgages as Bank of England threatens more rate rises

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Landlords have increasingly fewer BTL mortgages to choose from as lenders withdraw products amid a rise in average fixed rates.

Moneyfacts reports that since the beginning of last week, the number available has dropped from 2,748 deals to 2,343 while the average rate on two- and five-year fixed BTL mortgages has surged to 5.61% and 5.52%, respectively.

Finance expert Rachel Springall (pictured) says average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.

“We have seen a few lenders withdraw selected fixed mortgages from the market, at least temporarily. This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing their propositions,” she adds.

Lee Grandin (pictured, below) at Landlord Mortgages believes it’s a temporary situation and that lenders are repricing fixed rates, not withdrawing them for good.

“They may reissue products, but it might not fit many landlords because rates are so much higher – they can’t make it stack on a variable rate and now it’s hard on a five-year fixed rate,” he tells LandlordZONE.

“Maybe funding will have to shrink short term until lenders catch up.”

He adds: “You might find more products coming onto the market from lenders that aren’t PRA-regulated who might stretch the rules.”

Impact

Grandin admits that the current situation could have an impact on investors’ ability to finance their BTL properties. “A landlord doesn’t have much room to increase rent until the annual review, so they’ll have to survive this tight cycle.”

The news follows reports that the UK’s housing market is showing signs of stress. Figures from Nationwide reveal that house prices fell in May at an annual rate of 3.4%, representing the sharpest fall since July 2009 when the British economy was dealing with the fallout from the financial crisis.

Read more about mortgages.

View Full Article: Lenders pull BTR mortgages as Bank of England threatens more rate rises

What do the falling house prices mean for landlords?

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May has brought more bad news for some landlords with the Nationwide Building Society reporting a 3.4% drop in house prices in the year to May ’23 and interest rates that are expected to rise to 5.5.% later this year.

View Full Article: What do the falling house prices mean for landlords?

HMO landlord loses landmark appeal against ban and £22,000 fine

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A rogue landlord has lost a landmark case after she failed to convince an Upper Tribunal to overturn her banning order.

Naomi Knapp, 62, who owns 29 properties in Bristol of which 18 required licencing, was convicted of eight banning order offences relating to poorly managed HMOs last August and was added to the government’s rogue landlord database. One of the orders related to a property on St John’s Lane (main picture).

Following a case brought by Bristol Council’s private housing team Knapp, who has been a landlord for almost three decades, admitted the offences and was fined £22,000 in April 2021 along with £7,000 costs.

A First Tier Property Tribunal made the decision to ban Knapp after it heard about missing or inadequately installed fire doors and damaged and poorly maintained walls and ceilings. Fixtures and fittings in the communal areas of the properties were also damaged and badly maintained, and many properties featured rubbish-strewn gardens.

But Knapp was then granted permission to appeal on six grounds, but each appeal was dismissed in the landmark case; the first time the Upper Tribunal has heard an appeal against a banning order under the Housing and Planning Act 2016.

Seriousness

Judges ruled that the original tribunal had correctly assessed the seriousness of the offences and had also correctly concluded that banning orders were capable of applying to existing tenancies, rather than applying only to the initial act of granting a tenancy.

Her failure to follow up on her proposals to improve issues demonstrated her unwillingness to change matters for the better and her acceptance of the risk that her management of the properties might be below the required standard.

It said: “The Tribunal is satisfied that the Respondent has flouted her legal obligations in respect of the management of her property portfolio and has rented out accommodation which was substandard, and that the Respondent has failed to
follow up on her agreements with the Council to improve the management and conditions of her properties.”

Important case

Councillor Tom Renhard (pictured), cabinet member for housing delivery and homes, says it’s an important case for Bristol Council, and the first of its kind in the country.  

“We are working hard to make sure that people living in private rented accommodation have adequate protections and decent living standards,” he adds.

“We will take action to crack down on criminal landlords who do not meet the legal requirements for a safe and secure living environment.”

Main picture: Google Streetview

View Full Article: HMO landlord loses landmark appeal against ban and £22,000 fine

‘Reform bill misses point – we need more affordable rented homes, not regulation’

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Rent reforms won’t work until the real problem of affordable housing waiting lists is addressed, according to leading property expert Kate Faulkner.

Although MPs are focusing on the PRS, the housing crisis is nothing to do with the private sector, believes Faulkner, who suggests that building at least one million social homes would remove the people on housing benefit and free up homes in private sector.

“What if we could incentivise 50,000 investors to build two homes to hand over to the council each year? We should work with the private sector which is currently taking the strain from a lack of social homes.”

Speaking to Sean Hooker (pictured), head of redress at the Property Redress Scheme, on the latest episode of The Property Cast, Faulkner also voiced doubts that removing Section 21 would make any difference.

“What will happen is we’ll know the main reason it was issued was either for rent arrears, anti-social behaviour or to sell – it will just clarify that it was never a no-fault eviction.”

Too late

She added that the laws in the Renters (Reform) Bill are coming too late, and with no announcement about how extra enforcement will be funded.

“HMO licensing has already been tested – that’s failed and cost lots of money. In London there are 2.2 people enforcing 10,000 PRS properties and enforcement takes too long. As we’ve got so little stock, tenants can come out of a property quicker, but they’ve got nowhere to go.”

She reiterated her belief that the government can only address issues by introducing legislation pre-tenancy, to stop bad landlords, agents and properties coming onto the market in the first place – not post-tenancy.

“For example, if they’d introduced the Regulation of Property Agents legislation as promised to train agents in law…and said properties needed to have an MOT, we’d already have been 75% there.”

Read more about the bill.

ViDEO SHORTS: Watch Kate talking about the Renters (Reform) Bill

View Full Article: ‘Reform bill misses point – we need more affordable rented homes, not regulation’

House prices slip again – interest rates to remain high

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House prices have fallen by 3.4% in the year to May – which is a bigger decline than the drop of 2.7% seen the month before, Nationwide reveals.

The data also shows that prices edged down by 0.1% last month

View Full Article: House prices slip again – interest rates to remain high

Renters choose Netflix over contents insurance

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A study has found that while 53% of private tenants subscribe to a TV streaming service like Netflix, only 51% have contents insurance for their rented homes.

The findings from general insurance provider Paymentshield, highlight that this proportion increases to 60% for those aged between 25-54.

View Full Article: Renters choose Netflix over contents insurance