Mortgage lenders relaxing their criteria

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Mortgage Lending:

As demand for buy-to-let mortgages has fallen in recent months, due mainly to a penalising tax regime for landlords, but also to a more stringent mortgage approvals regime, competition among mortgage lenders is hotting-up.

Lenders are looking at ways to ease the path for those landlords willing to invest, either with a new mortgage or on renewal. So, those landlords who have been anxious about securing finance may be able to relax a little.

This loosening of the purse strings comes in the wake of changes in the PRS industry: tax reforms which are focussing landlords’ attention on the importance of profit margins; tougher lending criteria; the introduction by government of stricter letting regulations; and more local authority licencing schemes, all of which are combining to professionalise the industry. The upshot is, it gives lenders confidence in those landlords that still want to participate.

Last year there was a fall in buy-to-let lending which led to a 4-year low according to figures produced by the Bank of England. Buy-to-let loans as a proportion of the total have dropped from 21.4 per cent to 12.7 per cent since 2016, thought to be due to a dropping out of “accidental” landlords (those letting their own homes out of necessity for short periods) and amateur landlords.

Lenders now perceive the market to be occupied by a reduced number of landlords; the more business savvy and experienced small-scale landlord who is aware of the risks involved and works to a professional standard. These landlords are risk averse, keeping loan to value rations at manageable levels.

Kent Reliance is one mortgage lender that says it has simplified the way it calculates affordability ratios, making the application process easier for landlords and Nat West has said it is increasing the number of buy-to-let properties that landlords are allowed to own, from 4 to 10. This will also include properties on a landlord’s books having mortgages with other lenders, and increasing the maximum value of total loans for a portfolio from £2 million to £3.5 million.

Lenders in any event will have to carefully assess those landlords with 4 or more properties in their portfolios, and will likely only grant mortgages if they are convinced that the landlord is successful and taking low manageable risks. Each property will be assessed on income yield in its own right, so just one underperforming property could stymie an application. The new MEES regulations could also present a problem after April if any property fails to meet the minimum “E” energy efficiency rating.

Sarah Taylor of Nat West Intermediary Solutions, the bank’s mortgage arm for brokers, has told The Times Newspaper:

“This important step will simplify our buy-to-let policies and means we can help a wider customer range.”

Aaron Strutt of Trinity Financial, a broker, also speaking to The Times Newspaper, said:

“There is a huge amount of competition in the buy-to-let market and lenders want to tempt landlords. There are not as many borrowers looking to buy investment properties at the moment, and this is unlikely to change until they get used to the regulatory and tax changes.”

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First BTL lenders want proof of MEES min E rating

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OneSavings Bank, trading under Kent Reliance and InterBay for Buy to Let, is one of the first lenders to include in its criteria compliance under Minimum Energy Efficiency Standards (MEES) rules.

All new Buy to Let mortgage applications must prove the property which security is being taken over has a minimum efficiency rating of E or an offer condition will be added to make it conditional on the property being brought up to an E rating or better within 3 months.

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Welsh Housing Minister Welcomes NLA Report into PRS

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Renting in Wales:

​The Renting Homes (Wales) Act 2016, when fully implemented, will mean substantial changes for Welsh landlords. This will include using a “standard Contract” made up of fundamental, supplementary and additional terms, including provisions on retaliatory eviction, abandonment, and most notably new requirements on “fit for human habitation”.

This major overhaul will require Welsh landlords to spend time and money understanding the new system of contracts, on top of the tax changes facing landlords in the rest of the UK, and as well as meeting all the other new regulatory requirements.

This torrent of new legislation hitting landlords in Wales, especially after the introduction of Rent Smart Wales, the controvertible landlord registration scheme. It is feared by some that it could be enough to see landlord investment in Wales dry up completely, and for the first time in years, see the rental sector start to shrink.

So a new NLA report, which focuses on ways to bring about positive change in the Welsh PRS, is to be welcomed by landlords. Entitled: “Improving the Private Rented Sector in Wales; making it happen for landlords and tenants”, the report makes 7 key recommendations.

The Welsh Housing Minister, Rebecca Evans has welcomed the report produced by the National Landlords’ Association (NLA) on Private Rented Sector (PRS) housing in Wales which calls on the government to provide more support for landlords.

On his launching of the report in the Welsh Assembly, NLA Chairman Adrian Jeakings, welcomed the support the NLA has been given by partners Citizens Advice Cymru and the housing minister Rebecca Evans in making the publication possible.

Based on evidence gathered at round-table events with the main stakeholders and members of the National Assembly of Wales held last year, the report makes seven key policy recommendations:

1. Ask the UK Government, during the negotiation of the UK’s withdrawal from the European Union, to consider which powers can be devolved to Wales to ensure it has effective control over housing policy.
2. Call on the UK Government to allow Universal Credit payments to be paid directly to the landlord, as they can be in Scotland, if this is the choice of the tenant.
3. Take, alongside enforcing bodies, a more robust approach when enforcing legislation to root out non-compliant landlords.
4. Set up a ministerial advisory group to ensure there is a meaningful and continual dialogue with sector stakeholders on policy developments affecting the PRS.
5. Commit to undertaking an annual survey on the condition of housing in Wales.
6. Explore ways to support landlords in meeting and surpassing energy efficiency obligations.
7. Use Rent Smart Wales as a vehicle to produce and disseminate comprehensive and digestible information on the rights and responsibilities of tenants to help increase their confidence in disputes with landlords.

Download the report here

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Litigant in person online court portal

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After a smooth successful pilot project, the LIP (litigant in person) portal is set to go to public beta mode as soon as next Monday 26th March This will mean that the service will be available to all litigants in person to use.

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Charter for rent cheats

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PLANS to cap security deposits for private rented housing to six weeks rent risk creating a charter for rent cheats warns the country’s leading landlord body.

Research by the Residential Landlords Association’s (RLA) has found that 40% of private landlords have faced tenants not paying their final month’s rent in the past three years.

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HMRC and s24 advice – How lazy can you get?

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The financial year end is almost upon us so I phoned HMRC and asked the question in claiming interest do I do the calculation myself – input 75% of my interest paid or do I input all the interest I have paid and their system will do the calculation.

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Latest UK House Price Index shows annual increase of 4.9 per cent

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House Prices:

The UK House Price Index (UK HPI) published 20^th March shows that house price changes for England, Scotland, Wales and Northern Ireland are down since December 2017, but the annual rise (year-to-date) is positive at 4.9 per cent.

The January 2018 data shows:

• an annual price rise of 4.9%, which makes the average property in the UK valued at £225,621
• on average, house prices have fallen by 0.3% since December 2017

Data for England alone shows:

• house prices have fallen by 0.5% since December 2017
• an annual price rise of 4.6% takes the average property value to £242,286

The regional data for England indicates that:

• the South West experienced the greatest monthly price rise, up by 1.4%
• the North East saw the most significant monthly price fall, down by 5.5% and
• London experienced a monthly price rise, up by 1%

The chart below (Source: HM Land Registry) gives a region by region breakdown of average house prices (January 2018) and price changes since December 2017:

Repossession Sales in England 

Figures for repossession sales by volume for England show the lowest number of repossession sales in November 2017 was in the East of England, with the highest number of repossession sales occurring in November 2017 was in the North West.

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Deposit Cap will be charter for rent cheats claims RLA

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Rental Deposits:

Plans to cap security deposits for private rented housing to six weeks rent risk creating a charter for rent cheats warns the country’s leading landlord body.

Research by the Residential Landlords Association’s (RLA) has found that 40 per cent of private landlords have faced tenants not paying their final month’s rent in the past three years.

The new cap is proposed in the Government’s Draft Tenant Fees Bill and the RLA is calling for this to be increased to eight weeks to cover the costs if the final month’s rent is not paid and to ensure there are sufficient extra funds to deal with any major problems some tenants leave behind.

The RLA is also warning that the Bill risks becoming a missed opportunity to improve the position of tenants. It is calling for proposals to enable tenants to transfer deposits from one home to another rather than having to raise fresh funds each time they move as they wait for their last deposit to be paid back.

It also wants the tenancy deposit process to be brought into the 21st Century by enabling papers confirming that deposits have been protected to be sent to tenants electronically which currently cannot happen.

The Office for Budget Responsibility has again warned that plans to ban letting fees paid by tenants could lead to rent rises as a result of fees being passed on.

Commenting, David Smith, the Policy Director for the RLA said:

“Ministers need to address the problem of tenants failing to pay rent every bit as strongly as rogue landlords. It is not unreasonable that landlords should have the security to know that funds are available to cover the unacceptable practice of those tenants who do not pay their rent at the end of the tenancy and, in some case, leave the property in an unacceptable state.

“In a quest for quick popularity, the Government’s plans risk becoming a missed opportunity for fundamental reforms to improve tenants’ ability to access rented housing.”

The research findings are contained within a report by the Residential Landlord Association’s (RLA) research exchange, PEARL. Almost 3,300 landlords responded to its questions.

The Residential Landlords Association: The home for landlords

• The RLA represents the interests of landlords in the private rented sector across England and Wales. We’re home to over 50,000 landlords nationwide, with a combined portfolio of over a quarter of a million properties.
• RLA PEARL’s report, The Impact of Taxation Reform on Private Landlords, is available here – Page 23 notes: “The next question asked landlords whether they had ever experienced their tenants not paying their final month’s rent in the past three years. The majority of landlords responded that they had not experienced this (60%), however, at 40% of landlords who have experienced this, this is still a significant issue.”
• The Office for Budget Responsibility’s Economic and Fiscal Outlook for March 2018 can be accessed here – Page 94 notes, “it is possible that a ban on fees would be passed through to higher private rents. If this was the case, it could affect our housing benefit spending forecast.”
• The RLA’s written evidence to the Housing, Communities and Local Government Select Committee inquiry into the Draft Tenant Fees’ Bill can be accessed here

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Conveyancing Service

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Buy, Sell or Remortgage with our online conveyancing service

We understand that purchasing or selling a property can be one of life’s most stressful experiences.

That’s why we promise to make sure your home move is as quick

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Stoke-On-Trent petition to reject Selective Licensing

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North Staffs Landlord Association (NSLA) have started a 38 Degrees petition “We urge Stoke-On-Trent City Council to reject Selective Licensing.”

The NSLA have reported that: “Every rental property in the designated streets will have to have a licence

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