Cashback on BTL and Residential Mortgage Product Switches

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Are you one of the 1.8 million property owners who have a fixed rate on their mortgage ending in 2024? If so, I hope you will find the following information useful.

Over the last 15 years, we have been spoilt by historically low-interest rates and have all enjoyed low mortgage repayments on our homes as well as our buy-to-let properties.

View Full Article: Cashback on BTL and Residential Mortgage Product Switches

Government pledges to meet its 1 million new homes plan

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The Prime Minister Rishi Sunak has revealed that the Government will meet its manifesto pledge to build 1 million new homes in this Parliament.

Since 2010, the Government says that more than 2.2 million new homes have been built and millions of people have moved into home ownership.

View Full Article: Government pledges to meet its 1 million new homes plan

Gove calls for EPC deadline reprieve to give landlords a break

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Housing Minister Michael Gove has suggested a delay in bringing in energy efficiency plans for the private renter sector.

Citing financial pressures on landlords, he told The Telegraph that the government should relax the pace of changes to EPC targets which is expected to see them forced to obtain a C grade for their properties by 2028. This could include spending thousands on fitting a heat pump, insulation or solar panels, with a national cap of £10,000.

Relax pace

“My own strong view is that we’re asking too much too quickly,” said Gove. “We do want to move towards greater energy efficiency, but just at this point, when landlords face so much, I think that we should relax the pace that’s been set for people in the private rented sector, particularly because many of them are currently facing a big capital outlay in order to improve that efficiency.”

Ben Beadle, NRLA chief executive, says it is more than two years since the government completed its consultation on energy efficiency standards in rented homes. “As a result of the delay in responding to this, there was never any hope of meeting the originally proposed deadlines, as we told the Minister earlier this month,” he adds.

Needs certainty

“The NRLA wants to see properties as energy efficient as possible, but the sector needs certainty about how and when this will happen. Ministers need to develop a proper plan that includes a fair financial package to support improvements in the private rented sector. We will continue to work with all parties to develop pragmatic and workable proposals.”

In June, Energy Minister Andrew Bowie admitted that landlords would have to wait many more months to find out the details of government proposals to raise the minimum Energy Performance Certificate for rented properties.

View Full Article: Gove calls for EPC deadline reprieve to give landlords a break

House prices to drop by ‘double digits’ in a prolonged slump

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Economists have sounded the alarm over the future of UK house prices by forecasting a significant decline of 12% by the end of next year.

The predictions come amidst growing concerns that the housing market will fail to bounce back from the impending downturn

View Full Article: House prices to drop by ‘double digits’ in a prolonged slump

Landlord with OBE to pay £300,000 fine over ‘appalling conditions’ at properties

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A veteran landlord with an OBE has been handed a whopping £300,000 fine after two decades of managing illegally converted houses.

Nirpaul Riat was given one of the largest ever fines in Hounslow for managing 22 properties where vulnerable tenants lived in appalling conditions.

Isleworth Crown Court heard that Riat also illegally converted a property into eight flats and rented an outbuilding in Osterley where the squalid conditions included damp, cramped rooms with limited natural light, a lack of hot water and heating that only working irregularly.

Previous fine

Riat was previously fined £20,000 in 2009 for illegally converting a property in Hanworth into flats, refusing to reinstate it as a single house or to stop using a static caravan as a separate home to rent out.

Riat now faces being sent to prison if he does not pay the new fine.

Hounslow Council says the rogue landlord treated his tenants as nothing more than a commodity – exploiting residents in need of housing for his own financial gain.

Rogue landlords

Councillor Tom Bruce (pictured), cabinet member for regeneration and development, adds: “While these residents were left to languish in these appalling conditions, Nirapaul grew rich at their expense.

“I hope today’s verdict sends a message that we do not – under any circumstances – tolerate rogue landlords in Hounslow and will use the full force of the law to prosecute them.”

Riat was awarded an OBE in 2011 for services to charity after he raised nearly £50,000 for air ambulance services, Thames Valley Crime Stoppers and Great Ormond Street Hospital.

View Full Article: Landlord with OBE to pay £300,000 fine over ‘appalling conditions’ at properties

Extra stamp duty clobbering Welsh landlords with £92 million extra tax take

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Landlords and holiday homeowners continue to be clobbered by a tax grab from the Welsh Revenue Authority.

The latest figures show revenue from the higher rate of stamp duty – Land Transaction Tax (LTT) – increased by 50% from £61 million in 2020/21 to £92 million in 2022/23 – albeit down from £97 million the previous year.

The Welsh government caused outrage among landlords after it hiked stamp duty by 1% for anyone buying a property that is not their principal residence including second homes and buy-to-let properties in December 2020.

New data reveals a total of 59,560 transactions for LTT from April 2022 to March 2023, which pocketed the authority £287 million for residential transactions. This included £92 million additional revenue raised from higher rates and £95 million tax due for non-residential transactions.

Reduced

Adam Al-Nuaimi (pictured), head of data and analysis, says there was a marginal increase in residential LTT revenues despite lower numbers of transactions towards the end of the financial year, which was likely to have been influenced by wider economic conditions.

He adds: “In the year to March, we have seen reduced activity for residential higher rates in some areas of Wales, particularly in some of the western or northern areas.

“Possible reasons for this could include the impact of wider economic conditions or second homes policies beginning to impact upon transactions.”

The maximum level at which local authorities can set council tax premiums on second homes and long-term empty properties was increased to 300% in April as a way to help people find a home where they grew up.

Read more about LTT rates in Wales.

View Full Article: Extra stamp duty clobbering Welsh landlords with £92 million extra tax take

Is the Private Rented Sector heading back to the 1970s?

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Strikes, rocketing-interest rates and high demand for housing. You would be forgiven for thinking that we were back in the 1970s!

Fashion may have changed drastically since then but with housing affordability at its worst in decades, renters and homeowners now face heading back to the past.

View Full Article: Is the Private Rented Sector heading back to the 1970s?

Will the looming PRS reforms make evicting badly-behaved tenants more difficult?

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After years of campaigning and lobbying by tenant groups the Government has committed to huge changes for landlords when evicting tenants.

This includes most controversially binning Section 21 notice evictions, which enable landlords to give notice to tenants without naming a ‘fault’, commonly known as no-fault evictions.

These are used most often to remove tenants who have stopped paying the rent and built up significant arrears, or who are behaving badly or breaking their rental contracts in other ways.

Rishi’s promise

Rishi Sunak recently promised to ensure that landlords will still have the ability to remove tenants who behave badly as part of his campaign to stop anti-social behaviour in our wider society.

But what will all this mean for private landlords once the Renters (Reform) Bill goes live next year, and will evicting rogue or badly behaved tenants become more difficult?

Answering these questions in the latest ThePropertyCast episode are experts Paul Shamplina and Paul Sowerbutts of Landlord Action, along with HFIS chief executive officer Eddie Hooker. Listen in here or watch them on Youtube below.

View Full Article: Will the looming PRS reforms make evicting badly-behaved tenants more difficult?

Rents hit new high as landlords deal with ‘queues of prospective tenants’

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Tenants are feeling the squeeze as new rents outside of London have hit a new record high of £1,231 – that’s 33% or £300 more than pre-pandemic 2019.

Renters in London are now forking out £2,567 for a new tenancy with rents 28% or £559 higher than in 2019.

View Full Article: Rents hit new high as landlords deal with ‘queues of prospective tenants’

OPINION: A fall in inflation bodes well for property, but we’re not out of the woods yet!

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The FT reports a surge in property stocks as inflation falls, and bricks and mortar property values could soon follow stocks?

The latest Office for National Statistics (ONS) measure of inflation and prices, which includes consumer price inflation, producer price inflation and the House Price Index, rose by 7.9% in the 12 months to June 2023, that’s encouragingly down from 8.7% in May. It indicates a clear trend.

The indication is that CPI may have peaked and is on the way down, certainly encouraging news for mortgage borrowers. What’s more the governor of the Bank of England Andrew Bailey had said at a recent Mansion House speech recently that inflation will fall “markedly” over the rest of the year.

[Source: ONS]

The rate of price increases, thinks Andrew Bailey, will come down due to lower energy costs, which should result in falling food bills for shoppers.

BoE forecasts

The Bank has been criticised for its previous inaccurate inflation forecasts and for not taking action to bring down the rate of rising costs sooner, so the jury is still out on these predictions.

Under recent rigorous questioning from MP members of Treasury Committee, Mr Bailey said in May that there’s “a lot to learn” about operating monetary policy in a world of big shocks, such as the war in Ukraine and the COVID-19 pandemic.

The whole thing could easily go into reverse at any moment with the unpredictability of the war in Ukraine, economic and military threats from China, and for example Russia’s recent failure to sign another grain deal, which could have knock on effects for food prices yet again.

Core inflation more important

Perhaps of more interest to the City, and the main reason for the surge in stock prices, is the underlying inflation trend. The annual core inflation rate in the United Kingdom decreased to 6.9% in June 2023 from May’s 31-year high of 7.1%, compared to earlier forecasts of 7.1%

The core CPIH (includes owner occupiers’ housing costs) annual inflation rate was 6.4% in June 2023. This is down a modest amount from 6.5% in May 2023, which was the highest rate since November 1991, when it also stood at 6.5%. Owner occupiers’ housing costs (OOH) rose by 4.4% in the 12 months to June 2023, up from an annual rate of 4.2% last month and 3.2% a year ago.

The US data is even more encouraging. There the annual core consumer price inflation, which excludes volatile items such as food and energy, fell to 4.8% in June 2023, the lowest level since October 2021, from 5.3% in the prior month and below market expectations of 5%.

UK property

That UK property stocks drove a FTSE 100 rally after these inflation figure falls at least offers the prospect of an end to the recent bout of monetary tightening – hiking interest rates – by the Bank of England.

This policy has really hammered the property sector of late, putting intense pressure on the commercial property sector as their re-financing deadlines approach, also households as their mortgages renewal dates draw near, and the consequent knock on effects for rents.

Housebuilders will also breath a sigh of relieve if this trend continues as their construction programmes, many of which are in danger of going on hold, at a time when more homes are desperately needed, are extremely rate rate-sensitive. Not only that, a housebuilding slowdown would have a serious knock on effect to the resent of the UK economy.

UK Landlords

The UK property sector has gone through a challenging few months to say the least as the Bank of England has raised interest rates on 13 consecutive occasions since December 2021, in a bid to bring inflation closer to its target of 2%.

So far, the impact has been limited as it takes a long time (often 12 to 18 months) for changes to these rates to feed through the economic system and have any effect on the inflation figures. So these early indications of a fall in inflation are a sign of early optimism, very good news for hopes that mortgage rates will gradually come down and house prices stabilise.

Not out of the woods yet…

Barratt the house builder told the FT that demand for new homes had dropped by almost one-third in the year to June 30, and house builder Berkeley Group had said that sales of its new properties decreased 15 per cent for them on a like-for-like basis in the year to the end of April.

The 13 successive rate rises by the Bank had, “reduced buyers’ spending power, weakened sentiment in the UK property market and acted as a drag on activity”, that’s according to Chris Druce, a senior research analyst at property agents Knight Frank.

The modest reductions in inflation may be a good sign, but it’s perhaps unlikely at this stage to change a great deal. Mr Druce said: “Nerves are unlikely to be calmed and the outlook improved until buyers can gauge where the new peak in the bank rate will be.”
Others are warning that the Bank Rate has further to climb before the Bank can be satisfied that inflation has been squeezed out of the system and the inflation rate is definitely on the way back down to its target rate of 2 per cent. Some are predicting that mortgage rates could top 7 per cent before we’re done.

House prices & rents

According to the Halifax, a major mortgage provider, in June this year house prices fell at their fastest annual rate since 2011. An average rate on a two-year fixed mortgage just last week reached 6.66 per cent, the highest level since 2008.

The Office for National Statistics’ (ONS) latest data shows that private rental prices in the UK increased by 5.1 per cent in the 12 months to June 2023, the largest annual percentage change in data gathered by the ONS since January 2016.

[Source: ONS]

This puts tenants under increasing pressure as new tenancies reflect the latest market rent level. This result is, as the rental agent’s body Propertymark says, a “worrying mismatch” between demand and supply, which has added a lot of pressure to the rental sector in June 2023. There are, says Propertymark, an average of 13 new prospective tenants registering per available property.

Propertymark’s CEO, Nathan Emerson, says that:

“In terms of lettings, the number of properties available to rent is 19 per cent lower than last year, while the number of new prospective tenants registering per member branch is up 27 per cent over the same period.”

The small fall in the UK’s inflation data bodes well, and barring the intervention of extraneous events, this could be the watershed moment, but the turnaround won’t be fast and there could yet be more interest rate increases before inflation is fully under control.

View Full Article: OPINION: A fall in inflation bodes well for property, but we’re not out of the woods yet!