Deposit-free renting study to be announced by government

Deposit Free Scheme Announced

More renting reform could be on the cards after the government announced a study into the benefits of deposit free renting – to be published within 6 months.

The government’s response to recommendations made in the Housing Communities and Local Government Select Committee’s examination of the draft Tenants Fees Bill, published alongside the final draft of the bill published last week, states:

“We have noted the Committee’s suggestion that Government should encourage innovation in the deposit free renting sector by assessing the merits of alternatives to traditional security deposits and reporting their findings to the Committee. Government will explore the merits of deposit alternatives and reply to the Committee within six months”

News of the study was welcomed by Ajay Jagota, founder of deposit free renting firm Dlighted and head of the #ditchthedeposit campaign.

Ajay had this to say: “The deposit establishment was practically cracking open the champagne last week when the final draft of the Tenants Fees Bill left a system they profit from enormously at the expense of landlords and tenants largely intact, but this announcement shows more reform could be on the cards – and could be with us within months.

The government’s thinking is clear – they’re coming around to the view that deposits are ‘unreasonable’ ‘excessive’ and make entering and moving within the private rented sector ‘financially prohibitive’. They don’t meaningfully ‘mitigate real financial risk’ and the money could be ‘better used in the wider economy’ – and I couldn’t have put it better myself.

We’re talking about a system which sucks £4.2bn from our economy, makes renting unaffordable and costs landlords tenants without adequately protecting them against rent arrears and property damage. Intervention is needed to address these market failures, and it could be here by the end of the year.

Even if this study doesn’t lead to new legislation the final Tenant’s Fees Bill still contains the provision for the Housing Minister to move the 6-week deposit cap whenever they feel like it – and there’s no reason to think that cap couldn’t be set at zero”.

Original Source Property Reporter

First time buyers driven towards new build properties

First Time Buyers Driven Towards New Build

New research from the House Builders Federation has shown that the affordability of the Government’s Help to Buy scheme combined with the energy efficiency and cheaper running costs of new build homes are leading to more and more first-time buyers taking the new build route into home ownership.

The divergence over the past two decades between house prices and incomes, coupled with tighter lending to first-time buyers, has seen fewer young people get on the housing ladder.

But a new generation of first-time buyers are seeing new build homes, for which the Help to Buy scheme is widely available, as the answer to their housing affordability problem. The scheme allows purchasers to buy with just a 5% deposit, but can also mean dramatic reductions in their monthly outgoings.

Around 160,000 new homes have now been purchased using the scheme, 81% whom are first time buyers, paying on average £235k for their home (non London based buyers). This deposit of under £12,000 for a brand new home compares favourably with the average first-time buyer needing to find a 16% deposit.

The scheme, whereby the Government funds a 20% equity stake, reduces a buyer’s monthly mortgage payments by around £350 for someone buying the average priced new home through the scheme

In addition, research shows that new build homes are much more energy efficient to run than second hand homes, saving buyers on average an additional £53 a month. Taken together these savings amount to almost £5,000 over the course of a year.

And the savings don’t end there. With the average second hand buyer estimated to spend up to £45k upgrading their property, new homes, with their brand new bathrooms, kitchens and fixtures and fittings throughout, provide their buyers with considerable savings to their short and long term budgets.

Stewart Baseley, executive chairman of the Home Builders Federation said; “Getting on to the property ladder is proving considerably more challenging for today’s younger people than it was for their predecessors. Deposit requirements have increased as have house prices generally, outstripping earnings and making home ownership nothing but a dream for many. New build homes are proving to be the solution for hard-pressed households with an ambition to move into home ownership.

Over a quarter of a million people are now living in new build homes purchased using the Help to Buy scheme, the vast majority of whom are first time buyers. Help to Buy purchasers are reaping the benefits of smaller deposit requirements, lower monthly mortgage payments and cheaper home running costs provided by today’s more energy efficient new build homes.”

Original Source: Property Reporter

Mortgage arrears fall to their lowest levels since 1994

poll shows people want 100% mortgages

The latest data from UK Finance has revealed that mortgage arrears fell to a new record low during Q1 this year, 8% fewer than in the same period a year ago and the lowest level since 1994 when records began.

According to the figures, there were 78,800 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the first quarter of 2018.

Within the total, there were 24,100 homeowner mortgages with more significant arrears (representing 10% or more of the outstanding balance), 3% fewer than in the same quarter of the previous year.

There were 4,500 buy-to-let mortgages in arrears of 2.5% or more, 6% fewer than in the same quarter of the previous year. 1,200 homeowner mortgaged properties were taken into possession in the first quarter of 2018, unchanged from the same quarter of the previous year.

However UK Finance has raised concerns that the recent changes to Support for Mortgage Interest from a benefit to a loan, as well as any further rate rises, “risk causing a reversal of this trend”.

Jackie Bennett, director of mortgages at UK Finance, commented: “The number of mortgages in arrears is at its lowest level since records began while possessions remain at a historic low. This has been helped by low interest rates and lenders supporting borrowers through periods of temporary financial difficulty wherever possible.

However, the recent change to Support for Mortgage Interest from a benefit to a loan, as well as potential pressure on households from a future base rate rise, risk causing a reversal of this trend as the year goes on. Only a small minority of those eligible for the SMI loan have taken it up so far. Lenders will proactively help borrowers in receipt of Support for Mortgage Interest to see if there are other ways to make up their payments if they do not want to take out the loan.

As ever, customers should not hesitate to contact their lender if they anticipate any payment problems and want to discuss what options are available. Repossession is always a last resort.”

Jonathan Harris, director of mortgage broker Anderson Harris, says: “Mortgage arrears are at a record low, which is encouraging.

Yet there is no room for complacency. Possessions may be declining but that can change and borrowers need to be prepared. We suspect that when it comes to their finances there are many people who don’t have a buffer to tide them over should they get into difficulty.

Borrowers must plan ahead and consider how they will cope if interest rates rise. Fixed-rate mortgages are still great value and remain competitively priced. It is also vital that borrowers keep their lender in the loop if they are struggling to pay their mortgage. Lenders are being flexible and showing forbearance but it is much easier and less stressful to come up with solutions early on than further down the line when options may be much more limited.”

Mark Pilling, managing director of Spicerhaart Corporate Sales, had this to say: “It is encouraging to see the number of mortgages in arrears is at a record low and possessions are continuing the downward trend that we have seen since the financial crisis hit a decade ago.

This is most likely because lenders are now making much more of a concerted effort to help those who are struggling to pay their mortgages get back on track – rather than moving to the repossession route – combined with a prolonged period of low-interest rates which has kept mortgages more affordable.

However, we could now see things start to shift. Many of those who took out interest-only mortgages are coming to the end of their terms with no way of paying off the capital. And with house prices falling in many regions, they will find they have less equity in their homes than they had hoped. This could cause problems as they try to sell or remortgage to pay off the debt.

There is also the Support for Mortgage Interest (SMI) issue. Last month, the SMI benefit stopped and was replaced by a loan. Around 124,000 homeowners were part of that scheme, and only a small number have signed a new loan agreement, so will have lost their payments. This could mean that thousands of homeowners may struggle to make their mortgage repayments in the coming months, with many even going into arrears.

With this in mind, combined with the threat of a base rate rise and the fact wage growth remains stagnant, lenders need to be keeping a close eye on their clients’ ability to keep up their repayments and engage with third parties to look after every borrower’s best interests.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “These figures are interesting because they show a housing market which, although softening, is unlikely to collapse anytime soon, despite all the gloom and doom we have seen over the past few days in Halifax and RICS data.

One of the precursors of a more significant correction in property prices is more forced sales and clearly we are not seeing, or likely to see, that at the moment, particularly while mortgage rates are so low, wages are actually creeping up ahead of inflation and employment numbers remain strong.”

Original Source: Property Reporter

New property supply sees it’s fifth consecutive monthly rise

Landlords looking to expand

The latest data and analysis from has found that April saw new property supply rise for the fifth consecutive month, up 0.8% versus March.

According to the research, there has been no significant Spring bounce in new sellers so far this year though, as the figures revealed that across 100 major UK towns and cities, 68,500 new properties were marketed by estate agents in April, compared to 67,931 in March. However, new property listings last month were 43.8% higher than in April 2017, the month after Theresa May triggered Article 50.

Across the 100 towns and cities, more than half (57%) saw a drop off in new stock being marketed in April versus March. Huntingdon in Cambridgeshire, saw the biggest uplift in new property listings last month, up 98.3% on March, with Dundee (40.3%) a distant second, up 40.3%.
New supply in April was down more than 30% compared to March, in Durham (37.6%), Lichfield (34.3%) and Chichester (33.0%).


In London, new property listings were up slightly on the UK average, with supply rising 4.4% in March compared to February. Newham saw the most dramatic rise in listings last month, with new sellers up 45.1%.

Sam Mitchell, CEO of online estate agents, comments: “Although we haven’t seen a significant Spring bounce to date, supply has been moving in the right direction since the start of the year. And we are seeing completely different Spring conditions to last year, when Article 50 disrupted the market, and sellers stalled on listing their properties until they had a clearer economic picture.

Now that the weather has improved markedly, we are expecting to see strong seller activity in May and June. Buyers are showing real intent to purchase, especially with no sign of an interest rate rise in the immediate future and some extremely competitive mortgage deals on offer.”

Original Source: Property Reporter

What does the profile of a modern landlord now look like?

The profile of the typical modern landlord is evolving, shifting towards dedicated professional landlords focused on growing and diversifying their portfolios – while accidental landlords with one property look to exit the market.

New research on the ‘Emerging Landlord’ has been published today by Simple Landlords Insurance. They surveyed 500 landlords, ranging from people who let an inherited property, to full time landlords with portfolios of 10 or more properties.

The results reveal a polarisation in attitudes towards the private rented sector, with accidental and part-time landlords feeling most negative about legislative changes and their future. Those with larger portfolios however, felt far more positive about the future and plan to increase their property investments.

Some 38% of the landlords with two or more properties said they plan to buy at least one more in the next year – dwarfing the 11% of landlords with single properties who are planning to expand.

Meanwhile, 30% of single property landlords plan to sell, compared with just 8% of landlords with more than two properties.

Tom Cooper, Director of Underwriting, Simple Landlords Insurance, said: “From Section 24 to Right to Rent, increased stamp duty, capital gains tax, regulation and licensing, you’d be forgiven for thinking it was all doom and gloom in the private rented sector. But our evidence shows there are landlords adapting to the changes and emerging like phoenixes from the ashes. We wanted to find out more about them.

The research reveals it is the landlords positioned at the larger end of the market – or aspiring to get there – who are least fazed by changes, and best poised to take advantage of increasing demand, bargain stock being sold off, and stable house prices.”

Who is the Emerging Landlord?

The emerging community of landlords is generally young, well-informed, deliberate investors. Out of the 500 surveyed, the average number of properties held decreased with age: for the 25-34 bracket, the average portfolio size was 2.16, while for 45-54 year olds, it dropped to 1.48.

The number of accidental landlords is also on the decline, falling from 18% in 2016 to 15% in 2017, widening the gulf between them and more professional investors.

Carl Agar, Founder of the Home Safe Scheme and Managing Director Big Red House, says: “Times change. Markets change. But property can still be a way to make money if you change too. There’s a clear difference between the big players and the dabblers, the old school landlords and the new kids on the block.

Your ‘traditional’ landlord is seeing all of these new rules imposed and their returns drop. Meanwhile those new to the market are comparing those returns to what they’d get putting their money into a savings account – and it actually looks pretty good. They’re seeing opportunity, and building the rules, regulations and changes into their business model.

Personally, I’m looking forward to a more professional and more prosperous private rental sector, driven by a new breed of landlord investor.”

How are they investing?

As well as being bigger, younger and more professional, the emerging landlord is also investing differently, and diversifying their portfolio. The classic 2-up 2-down home for families of working tenants is no longer where landlords poised for growth are investing.

The report reveals that holiday lets and flats are very attractive options for new landlords seeking to spread their risk, with holiday lets attracting the highest proportion of new entrants to the market – 22% of these are landlords in their first year, with flats right behind with 16% new entrants.

The owners of HMOs in particular are also feeling optimistic, with 43% in buying mode and just 4% planning to shrink.

Tom concluded: “At Simple, we believe the right insurance can be the safety net that allows landlords to develop their strategies and their businesses for the future. Financial services need to keep up with the market and develop products that can grow with the landlords set to survive and thrive.”

The full report can be viewed at

Original Source:Property Reporter

What are the features and facilities Brits are willing to pay more rent for?

What will tenants pay more for

Throughout the last ten years, house price inflation has outpaced wage growth in many parts of the UK, scuppering the prospect of home ownership for many first-time buyers.

As a result, large numbers of Brits have had no choice but to opt for the private rental market as an alternative way to get on the property ladder.

With over 25% of UK households predicted to be privately rented by 2025, more and more Brits are treating rental properties as a ‘long-term’ rather than a ‘temporary’ or ‘imperfect’ solution to their living requirements. Therefore, it’s important for landlords/developers to consistently keep in mind how they can enhance tenant’s satisfaction levels outside of just meeting basic expectations when providing properties for rent. analysed findings from ‘LSL Property Services’, who surveyed over 3,000 tenants to find out what features and facilities they would like to be included in their rental property and how much extra they would be willing to pay for them on top of their normal monthly rent.

The research found that tenants would most like pets to be allowed, with 28% willing to fork out an average of £24 more per month to have their furry friends stay with them in their rented accommodation. Thereafter, high-speed internet was a priority, with 21% of tenants happy to pay an average of £19 extra each month for it.

On the other end of the scale, a concierge service would garner the least interest, with just 3% prepared to pay an additional £20. Slightly above, 4% of renters would spend £12 a month to have storage space specifically for their bike(s).

Moreover, tenants also revealed the communal facilities they would be willing to pay more for when renting. Showerstoyou found that tenants would prioritise a gym the most, with 41% glad to pay an average of £20 more every month to conveniently exercise and stay fit on-site. Followed closely behind was a laundry facility, where 34% of renters would be content with spending an average of £10 each month to wash and dry their clothes in an allocated room.

Fascinatingly, with a lot of rental properties (particularly in cities) not having any green space – a communal garden is something 32% of tenants would be interested in having at an average cost of £10 more per month on top of their normal rent. Surprisingly, only 27% of renters would welcome the idea of a recreational or games room to relax and socialise in.

Martin, Managing Director of commented: “Property prices have certainly been unattainable for those looking to get on the property ladder over the last few years. Brits therefore have had no option but to rent. As a result, individuals have been applying similar criteria’s to renting as they would when seeking a property to buy. This research shows that there are features and facilities that renters really want and would pay a premium for. Whilst some features/facilities are prioritised over others, they all provide great indications for landlords/developments as to what tenants are expecting from rental properties going forward”.

Original Source: Property Reporter