TURMOIL: NatWest reveals rate rises for fixed-rate landlord mortgages

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­­Lender NatWest has been called out by commentators after it announced significant increases to its landlord mortgages.

The bank, which is till 38% Government owned, announced late yesterday that it was increasing the interest rates it charges on a range of home loans, including products across four mortgages for buy-to-let (BTL) purchases and one switcher range for landlords.

As well as increasing rates, NatWest has reduced the ‘end date’ of two BTL mortgages fixed rate periods, cutting a month off two-year and five-year fixed loan packages.

NatWest has increased its rates across all mortgage types, but appears to believe landlord mortgages are the riskier in the current economic climate, with rates rising most steeply for landlords compared to home movers, first timers and Help to Buy customers.

“Some increases are as much as 1.38% on specific deals, with a more palatable but unwelcome 0.2% increase across their standard products for remortgages and purchases. When will it end?!,” says Justin Moy of EHF Mortgages.

Luke Thompson of PAB Wealth Management adds: “Given these latest rates, it seems obvious that NatWest don’t want to be in the buy-to-let mortgage arena right now.

“My assumption is that they want to see where swap rates will go in the coming weeks and once they have a bit more of an idea on that front they may start to price buy-to-let products more competitively again.”

So what’s going on?

The events of last autumn when Liz Truss and Kwasi Kwarteng frightened the financial markets with their fiscal policy launch, brought the term ‘swap rates’ under the spotlight.

In the case of mortgages, swap rates are used by lenders to acquire funding for a set period of time – usually two, three, or five years, which is used for fixed-term mortgage deals.

Richard Fearson (pictured), CEO of Leeds Building Society, explains: “Swap rates are based on what the market thinks interest rates will be in the future.

“The change in bank base rate expectations meant that swap rates increased sharply – by 0.7 per cent when comparing today’s two-year swap rate to that of 11 May (following the last MPC decision).

“As a consequence, many lenders have had to change the price of their fixed-rate deals. If swap rates move rapidly, as we saw in the Autumn, lenders may have to pause or withdraw products both to manage service, but also because surges in demand use up the funding set aside for the fixed-rate deals that are on offer.”

The next MPC decision is due on the 22nd June.

View Full Article: TURMOIL: NatWest reveals rate rises for fixed-rate landlord mortgages

Rented bedroom with no windows?

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Hello, A friend of mine has been renting a room in London for £1,250 a month and he has just told me it hasn’t got any windows – which I told him is illegal.

What is the best way to handle this situation as he wants to move out before the tenancy ends?

View Full Article: Rented bedroom with no windows?

LATEST: Bailiff freeze spreads to another big County Court in London

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A large County Court in London has written to its legal clients to warn them that some of their scheduled evictions face being cancelled or rescheduled.

The announcement has been made by the Civil and Family Court in Barnet (main picture), one of the major hubs handling evictions in North London.

It says, as the Ministry of Justice (MoJ) press office has confirmed to LandlordZONE in recent days, that the delays are being caused by some court-appointed and paid bailiffs pulling out of ‘high risk’ evictions where they face possible injury to life and limb.

In these cases, the MoJ is struggling to provide personal protection equipment such as stab vests and other body armour and these evictions are therefore being stopped or delayed.

Rebooked

Barnet court says it is “sorry that this may affect your scheduled appointments but will ensure they are rebooked as soon as reasonably practicable”.

While this extraordinary situation would in normal times raise eyebrows, given the already long lead times for many landlords seeking to evict tenants, it has lead evictions expert Paul Shamplina (pictured), founder of Landlord Action, to warn that the bailiff system is now at risk of a severe crisis.

Saying the problems go back many years and that this latest blow is exacerbating existing structural weaknesses in the courts system, he adds: “This is just the beginning and without intervention the problem is going to get worse and worse.

“The historic lack of investment in the courts is now being compounded by changes in regulations and rising interest rates, sparking a landlord panic to exit the rental market.”

Landlord Action is calling on judges at County Courts to start granting leave to transfer more eviction cases with serious arrears to the High Court to share the burden of rising workload, as an increasing number of County Court bailiff evictions are being suspended.

Daren Simcox, CEO of High Court Writ Recovery, a private bailiff firm specialising in High Court writs and evictions across the UK, says the number of County Court bailiffs employed by courts to attend evictions has been waning as government policy has affected team sizes, meaning some bailiffs now cover multiple courts resulting in unmanageable workloads.

View Full Article: LATEST: Bailiff freeze spreads to another big County Court in London

MARKET: High rents consign younger tenants to the house of mum and dad

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First-time renters accounted for just 4.6% of new tenancies during the first five months of the year, as more would-be tenants rely on the hotel of Mum and Dad.

With average monthly rents topping £1,000, young adults can save £12,290 by living rent-free with their parents each year, according to Hamptons, which reports that rising rents mean the share of tenants leaving the family home has been steadily falling in Great Britain since 2015.

Then, first-time renters made up 6.1% of all tenants who moved into a new home – equating to 71,860 new rented households in England – while during the first five months of 2023, this fell to 4.6% – about 43,280 new rented households.

Hamptons estimates that if young adults continued to move from the family home into rental accommodation at the same pace they did eight years ago, it would mean there would have been an extra 104,550 households looking to rent in England between 2016 and 2023.

Staying at home

As rents have risen, would-be tenants are staying at home for longer to build up their savings to afford a larger home or rent with friends. 

It says 32% of tenants who moved out this year rented a studio or one-bed in Great Britain, down from 37% last year, while the proportion who left the family home and rented a prperty with at least two bedrooms rose from 63% in 2022 to 68% this year.

Aneisha Beveridge (pictured), head of research, says young adults are staying at home for longer to save up, with some skipping the rental market entirely and going on to buy a home instead.

She adds: “The good news for tenants is that rental growth is starting to cool, and we expect that to continue throughout the remainder of the year.”

Read more about rising rents.

View Full Article: MARKET: High rents consign younger tenants to the house of mum and dad

Landlord defeats HUGE rent repayment claim by tenants who owe HER £17k

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A landlord in Dartford has batted off a huge rent repayment order (RRO) claim made by her tenants after a judge dismissed the case during a virtual Property Tribunal hearing.

Manjit Sanghera, who co-manages the family detached property on the outskirts of the Kentish town with her husband, had faced an RRO claim of £14,400 despite the tenants owing her nearly £17,000 in rent.

The tribunal’s three judges heard claims by tenants Osaretin and Oghomwen Osagiede that Sanghera and her husband had ‘harassed’ them during their tenancy, which commenced in June 2020.

The tenants said their landlord’s frequent and unannounced visits to the property were interfering in their right to ‘quiet enjoyment’ of the property, although only two instances of unplanned door knocking were evidenced – one of which was a welcome chat and the other a visit to assess the repair of a damaged garage door.

The tribunal, after hearing detailed evidence from Sanghera and her letting agency as well as the tenants, dismissed the RRO, noting that the tenants had failed to prove their landlords’ ‘bad behaviour’.

“On the basis of the evidence before the tribunal the [tenants] have failed to satisfy it beyond reasonable doubt that the [landlord] carried out acts likely to interfere with [their] peace or comfort of the property,” the judges said.

Eviction

Sanghera attempted to remove the tenants including issuing them a Section 21 notice of eviction in June 2021, which they contested over the serving of a How To Rent Guide and Gas Safety Certificate, and a Section 8 has now been issued after the rent arrears built up.

The judges sided with the Osgiedes on one point – that their boiler had not worked properly for many months despite requests to fix it and that on several occasions they were without hot water for themselves and their son.

But the tenants have not paid any rent since January 2022 and Sangera highlighted how she had been forced to use her savings to pay her own bills after the Osagiedes stopped paying rent, which was one of her major sources of income after her husband retired.

The tenants have until next week to appeal the decision.

Read more about RROs.

View Full Article: Landlord defeats HUGE rent repayment claim by tenants who owe HER £17k

Good landlords have nothing to fear – Polly Neate

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Polly Neate, the chief executive of the housing charity Shelter, says that good landlords have nothing to fear from the Renters’ Reform Bill which could ‘transform the lives of millions’.

Writing in the Sunday Times, Ms Neate says that since the deregulation of private renting in the Housing Act of 1988

View Full Article: Good landlords have nothing to fear – Polly Neate

The perfect storm for landlords and tenants has arrived

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A financial expert is predicting misery for the property market in the months to come with rising interest rates hitting both landlords and potential first-time buyers.

Sarah Coles, the head of personal finance at Hargreaves Lansdown, says that with house prices and sales falling

View Full Article: The perfect storm for landlords and tenants has arrived

How we restructured to become debt free and super tax efficient

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On paper, my spouse and I were worth £3,000,000 but the reality was that we had no savings, no money whatsoever to live on after paying our tax bills, and this was despite having rental income of £300,000 a year coming in.

View Full Article: How we restructured to become debt free and super tax efficient

Quitting landlords could fuel further drop in house prices

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Buy-to-let landlords will influence house prices if a large number choose to sell up, according to rating agency Moody’s.

The firm is predicting that prices will fall by 10% in the next two years due to persistently high inflation and the recent spike in lending rates.

Rental income

Landlords can pass on the costs of complying with regulatory requirements to ensure rental income supports mortgage payments, but for an average mortgage, this would mean raising rents by almost 20%, according to Bank of England estimates, says Moody’s. Rents are currently increasing by about 5% while it points to anecdotal evidence that landlords are choosing to sell properties instead, putting additional downward pressure on house prices.

The turbulent mortgage market has seen HSBC announce a removal of all its new business residential and buy-to-let products, with the deals set to be available again on Monday, with potentially higher mortgage rates. Amid fears of a further interest rate rise, it follows a similar announcement made by Nationwide, which raised fixed rates for new borrowing to maintain sustainability. Nearly 10% of mortgages have been taken off the market due to concerns about increasing interest rates, according to Moneyfacts.

Limited edition

Meanwhile, Paragon Bank has launched a range of limited edition buy-to-let mortgages. Nil fee five-year fixed rates are available for those purchasing or re-mortgaging single self-contained properties, with rates starting at 6.35%, or HMOs at 6.60%. Alternatively, landlords can choose a five-year fixed rate with a flat fee of £2,995, with rates starting at 6.05% for SSCs, or 6.30% for HMOs. The five-year fixed-rate deals are available at 65% loan-to-value on loans up to £500,000.

Commercial director Louisa Sedgwick says: “We’ve listened to brokers who have told us that nil and fixed fee options should appeal to landlords wanting higher loan amounts, up to £500,000, alongside the certainty of fixing rates for five years.”

View Full Article: Quitting landlords could fuel further drop in house prices

Holiday home owners top the rental income chart

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The average annual holiday let income exceeded buy-to-let income for the first time in 2020-21, reaching £15,600 compared with £13,400, according to HMRC.

Ten years ago, holiday lets generated about £9,600 a year compared with £12,800 for buy-to-let but the gulf has grown wider, pushing holiday let income up by an average of 63% in the past decade compared with just 5% for buy-to-let.

Available data

A Freedom of Information request by Hamptons reveals that 63,000 individuals (rather than a company) received income from 65,000 furnished holiday let properties in the UK according to the latest available data — up from 46,000 receiving income from 50,000 properties in 2011-12.

It also wanted to test the theory that some longer-term landlords had moved across to the short-let market because it was more lucrative. The results show that while some have, the numbers are still fairly small – just 1.5% of all landlords are also holiday let owners, up from about 1.3%.

However, the figures will no doubt fuel critics’ argument that investing in holiday properties is driving up prices in rural hotspots and creating a chronic shortage of rental properties. Six mostly Labour MPs are sponsoring an Early Day Motion that would establish a Short Term Holiday Let Licensing Scheme across England.

Business rates

For a property to qualify as a self-catered holiday let in England – let for at least 70 nights a year and available for at least 140 — owners can switch from paying council tax to business rates. However, if their annual business rates bill is less than £12,000 and they only rent out one property, they pay no tax.

David Fell, a senior analyst at Hamptons, says the number investing in holiday lets rose dramatically during the pandemic because so many more people were confined to staycations as a result of international travel restrictions. “While Covid undoubtedly distorted the market, the longer term upward trend in revenue predates Covid, and it’s a trend the government has been increasingly worried about,” he adds.

View Full Article: Holiday home owners top the rental income chart