LATEST: One in three landlords who remortgage will fail affordability tests

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One in three landlords could be forced to sell up after failing their lender’s affordability test to re-mortgage, it has been claimed.

The stark warning comes from buy-to-let specialist Mortgages for Business which says some buy-to-let investors are being forced to accept variable rates as high as 9.5%. Others are disposing of properties because they can no longer afford their loans.

Some lenders are offering landlord borrowers product transfers, a new deal without asking them to pass a new stress test, while others will allow borrowers to re-mortgage back to them at reduced fees, but not all, says MD Gavin Richardson (pictured), who explains it’s a critical time for the sector. 

“We’re seeing landlords coming off rates of 3.5% and being unable to re-mortgage because, according to the lender’s stress test, their loan is no longer affordable,” he adds. 

“Unable to secure a new deal and with nowhere else to go, their loans are reverting to the lender’s standard variable rate which average about 7.5%.

“In the worst-case scenario, they are moving to their lender’s standard variable rate at rates as high as 9.5%. 

“Their only other options are to pay a socking-great fee to secure a more reasonable interest rate, which can cost them tens of thousands of pounds, or they can sell up and go home.”

£1,200 a month

Richardson gives the example of a landlord charging £1,200 a month rent with a mortgage of £225,000 coming off a fixed rate of 3.99% who would now be offered a re-mortgage of £180,893, based on a rate of 5.49%, falling £44,000 short of the loan amount they need. 

“At a rate of 5.99% the shortfall rises even higher to £59,207 while at 6.29% it is £67,114. To be accepted for a re-mortgage of £225,000, the landlord would have to increase the rent by nearly £300 to £1,495.”

Read more about landlord mortgages.

View Full Article: LATEST: One in three landlords who remortgage will fail affordability tests

Are councils acting illegally when telling tenants to stay put?

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Are councils following the law when telling tenants to stay put when they are facing eviction to protect them? Or is the council simply kicking the can further down the road?

The simple answer is – no-one seems to know.

View Full Article: Are councils acting illegally when telling tenants to stay put?

City council urges ‘Awaab’s law’ to cover ALL rented homes

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Planned legislation known as ‘Awaab’s law’ that will make councils and housing associations fix reported health hazards – including damp and mould – within strict new time limits should be extended to private rented homes too, one council suggests.

Oxford City Council is following in the footsteps of Citizens’

View Full Article: City council urges ‘Awaab’s law’ to cover ALL rented homes

WARNING: Landlord takes down video after tenant rant goes viral

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A landlord in London has learned the hard way not to complain about bad tenants on social media after one of her TikTok videos went viral and was featured within The Sun’s website.

The woman, who doesn’t give her name on the social media site but uses the handle @Thefiveamshopper has now taken down her video post after tenants piled into to mock her commentary.

The TikTok-er is one of the 950,000 private landlords in the UK who have one property and she fumed during her video after one of her tenants had left hers in a relatively poor state of repair after three years renting it.

Poor landlord

Complaining that tenants can be portrayed as being treated badly within the PRS, she said: “You know, what about poor me? Poor landlord!”

After the tenant moved out she discovered damage to carpets, spray painting across a fireplace and missing furniture although, as LandlordZONE readers will know, this is the light end of property damage that some buy-to-let owners face.

“I gave her a perfect, beautiful, freshly painted, everything in it proper,” she said.

Whingeing

But The Sun, which is seldom sympathetic to landlords, described her complaints as ‘whingeing’, as did many of the comments on her TikTok video by members of the public.

Some of the fairer comments on the video pointed out that if she had undertaken regular inspections of the property then her tenant’s actions might have been mitigated earlier.

Her video, which is unusual because she normally posts about shopping, holiday and books, makes no mention of whether she deducted any money from the tenant’s deposit.

Picture credit: TikTok

View Full Article: WARNING: Landlord takes down video after tenant rant goes viral

Proof of tenancy for UC?

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Hello, My excellent tenant of 8 years standing wishes to apply for universal credit. The requirements state :

We will only accept the following documents:

• up-to-date tenancy agreement
• letter from your landlord or landlord’s agent
• rent book
• rent receipts

The original agreement made in 2015 was a 12 month AST and is now monthly periodic.

View Full Article: Proof of tenancy for UC?

Remortgaging landlords hit with high rates after failing affordability tests

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Up to one in three buy-to-let landlords are struggling to remortgage after failing their lender’s affordability test, a BTL mortgage broker has revealed.

The research from Mortgages for Business shows that some buy-to-let investors are being forced to accept variable rates as high as 9.5% because they have failed remortgaging affordability.

View Full Article: Remortgaging landlords hit with high rates after failing affordability tests

Tenants with pets should pay higher rent to cover costs, says big agency

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Landlords should consider charging tenants with pets more rent to cover possible extra costs as well as conducting more frequent routine property visits, according to leading letting agency Johns & Co.

The London firm advises that potential expenses could include an additional professional deep clean including steam cleaning carpets and some decorative works at the end of the tenancy. 

“They could also consider some replacement furniture items if the property is furnished or part furnished and then add those costs to the rent,” suggests residential director Clynton Nel (pictured).

With tenants due to be given the legal right to keep pets as part of the upcoming Renters Reform Act, landlords need to adjust tenancy agreements accordingly, says Nel, who recommends that they include a pet clause in the lease agreement.

“This way, boundaries are established from the outset. If your tenants agree to the terms, you’ll have some protection if they fail to comply with the agreed terms regarding pets.”

Damage or disturbance

He suggests that landlords and letting agents should request a reference from a potential tenant’s previous landlord, based on their experience with any pets to find out if damage or disturbance was caused, as well as asking for a pet CV. 

“If they are hesitant to provide this for you then it may indicate that they know their pet is unsuitable for a rented property,” says Nel. 

“It’s likely that your concerns about accepting a tenant with a pet stem from the risk of property damage and the financial consequences this may have,” he adds.

“This is a landlord’s risk renting to tenants with or without pets. I have seen properties with serious damage from tenants without pets.”

In January last year the Government introduced a new model tenancy contract that includes provisions for pets.

View Full Article: Tenants with pets should pay higher rent to cover costs, says big agency

Wily landlord wins licencing battle after standing up to city council

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A canny landlord who stood up to council inspectors has successfully challenged a licence condition to install a new fire door at his student HMO.

Roger Braithwaite, a career and expert environmental health officer, was told by Coventry Council that he could only have a licence on the property in Cable Yard (pictured) for two instead of the normal five years.

The authority said this was due to his failure to submit a complete application in time, although the landlord explained he had had problems with the on-line process – and this complaint was partially upheld.

A First Tier Property Tribunal heard that the council also insisted that he fit a fire door at the bottom of the stairs leading to the kitchen.

However, Braithwaite argued that other similar properties in the yard did not have this requirement and stressed that safety standards in the house exceeded those required by HomeStamp Guidance, followed by the council.

An independent building engineer confirmed that the proposed fire door would constitute a breach of building regulations and cause an obstruction.

Not necessary

At the hearing, the council agreed that fire doors were not necessary but then demanded that the kitchen should be compartmentalised.

The tribunal accepted that the compartmentalisation of the kitchen including a door would obstruct the escape route and said it was satisfied the property met the general fire precautions.

It agreed with the landlord and ordered that the HMO licence should run for five years without conditions.

The judge added: “The late change of approach by the respondent [the council] was unsatisfactory and appeared to be something of a rear-guard action to justify its continued opposition to the applicant’s appeal.”

Read more about First Tier Property Tribunal decisions.

View Full Article: Wily landlord wins licencing battle after standing up to city council

1000s of ‘mortgage prisoner’ landlords still need help, says Martin Lewis

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Mortgage prisoners – many of them landlords – should be offered free financial advice and interest-free equity loans from the government to prevent them from losing their properties, a new study suggests.

About 195,000 households are still trapped in expensive variable-rate mortgage products, mostly loans that were taken out before the financial crisis of 2007/08.

These mortgage prisoners borrowed from lenders such as Northern Rock and Bradford & Bingley who went under during the crisis, and whose closed book loans were sold to investment firms that don’t offer mortgage products.

While the borrowers can’t move to a better mortgage with their lender, many find it difficult or impossible to take out new loans with active lenders because they don’t fit the criteria of a viable borrower; they can’t, or don’t know how to, meet current affordability tests for new loans.

It’s estimated that prisoners could now be paying rates as high as 8% on their home loans.

An LSE study into mortgage prisoners, backed by Martin Lewis of MoneySavingExpert, explains that the cost in human terms is high.

“Borrowers face financial pressures that affect their health, and the current economic context means that without help, an increasing number will likely lose their homes,” it says.

“Those households who are still prisoners are the victims of circumstances that were not of their own making.”

Dramatically

The situation facing these mortgage prisoners has become dramatically more difficult, according to the report, whose authors suggest providing free comprehensive financial advice to all 195,000 closed book borrowers, and interest-free equity loans to clear the unsecured element of Northern Rock’s Together mortgage.

The government could offer an equity loan for a maximum of 40% of the value of the property in London and 20% elsewhere – similar to Help to Buy.

It adds: “These will hopefully enable a majority of prisoner households to make progress towards returning to the mainstream and active mortgage market.”

View Full Article: 1000s of ‘mortgage prisoner’ landlords still need help, says Martin Lewis

Landlords are quitting the PRS because of Government ‘indifference’

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A property expert has slammed the government’s ‘indifference’ for the growing crisis in the private rented sector (PRS) as landlords flee and fewer investors step in.

That’s the view of Jonathan Rolande of the National Association of Property Buyers.

View Full Article: Landlords are quitting the PRS because of Government ‘indifference’