What the Budget mean for FTBs, homeowners and property professionals?

Philip Hammond used this week’s Budget to announce spending spree in what he called “a budget for Britain’s future” – and one which heralds the end of austerity.

Improved deficit and upgraded growth forecasts allowed the Chancellor to loosen the purse strings, releasing more than £100billion to cut taxes and increase spending.

Here, Daniel Owen-Parr, head of professional sector and auction at specialist lender Together looks at what Monday’s Budget mean for first-time buyers, home owners – and professionals working in the property industry.

First time buyers

The abolition of stamp duty for first time buyers purchasing homes worth up to £300,000 was one of the highlights of last year’s autumn budget. Since then, it has helped 121,500 people, the Chancellor announced in this year’s speech, with the number of people buying their first homes at its highest level for over 11 years.

This will now be extended to first time buyers of shared ownership properties worth up to £500,000.
And the tax cut will be backdated to anyone who has bought a shared ownership home since last year’s budget. At Together, we’ll consider shared ownership mortgages for ex-council houses, flats and maisonettes, high rise properties – including those above six floors – properties with poor valuations, and those of non-standard construction.

Home owners

There were two new changes to the main residence relief for people selling their homes. The 18-month exemption from paying capital gains tax has been shortened to nine months, meaning there will be a shorter period for people who are moving house and not being subject to capital gains tax.
Mr Hammond also earmarked an extra £500million for the Housing Infrastructure Fund, to help local councils to build homes as a way of easing the housing crisis. The extra money could build 650,000 extra homes, the Chancellor said.

Property professionals

Perhaps one of Mr Hammond’s most eye-catching announcements – although one which had been predicted before Monday’s budget – was to create more homes on the High Street. As part of his £1.5billion investment to help the UK’s struggling retailers, he announced the creation of a £675million fund to help local authorities. Some of this money could be used to change the use of commercial property into homes.
We’ve worked with developers who we’ve provided with bridging finance to turn anything from disused office blocks and smaller retail units into homes. These often tend to be more complex cases, requiring a hybrid of traditional commercial finance and development funding, wrapped up as one arrangement. Specialist lenders like Together have the experience necessary to be able to help in these more complicated scenarios.


The Chancellor held off targeting the private rental sector again. Pre-budget, there had been rumours that there could be a capital gains tax cut for landlords looking to sell to their tenants, with the saving split between the buyer and seller. However, this didn’t materialise on Monday, but the Government will launch a consultation into further changes at some point in the future.

Original source: Property Reporter

Top tips to protect your home from burglary during darker months

According to new data from Lloyds Bank, there were 35% more claims for forced burglary received during the ‘darker months’ of 2017/2018 versus the ‘lighter months’ of 2018.

This equated to 2,199 claims between October 2017 and February 2018, versus 1,624 between March and July 2018.

The picture was the same in preceding years. 7% more claims were received in the ‘darker months’ of 2016/2017 versus the ‘lighter months’ of 2017. 28% more claims were received in the same periods of 2015/2016.

Tim Downes, Senior Claims Manager, Lloyds Bank Home Insurance, said: “The clocks going back should act as a reminder to protect our homes from burglars during the darker days. In the summer months we receive more claims for ‘unforced’ burglaries as thieves take advantage of open windows and doors, however winter typically sees a spike in break-ins using force. Dark evenings, overgrown hedges and shady corners provide the perfect hiding places for opportunistic thieves.

We’re urging homeowners to remain vigilant over winter and do what they can to protect their home so they can have peace of mind to enjoy those cosy nights in.”

Top tips to keep your home safe as the clocks go back:

Light up: leave a light on in your home when you are out or have a light timer fitted. It’s also a good idea to install exterior security lights at the front and back of your property

Someone is home: leave the radio or the television on to give the impression that the house is occupied
Tech safe: if possible, invest in a CCTV system. You can now also buy cameras that allow you to monitor your home remotely via your smart phone or tablet

Ring the alarm: it’s a good idea to invest in a burglar alarm. Not only do they keep your home safe, but also act as a deterrent to burglars

Lock up: ensure doors and windows are locked, especially at night, and when you go out, and don’t leave valuables on display

Easy access: don’t leave ladders outside your home, or in the garden, making it easier for burglars to gain access to your home

Garden maintenance: make sure bushes, hedges and trees aren’t allowed to over-grow, providing the perfect hiding spot for thieves

Sound alert: having a gravel driveway can be a good deterrent to burglars as the sound will alert homeowners to an intruder.

Seasonal festivals: with upcoming seasonal festivals such as Diwali, Halloween and Hanukkah. Households might have more expensive items in the home than normal. Make sure you have the right level of cover for these possessions

Stored away: make sure garden tools are stored away safely. Don’t leave them outside where they could be used to break into your home.

Fixer uppers are a way onto the housing ladder for first time buyers

Homes that require major structural work can be purchased for £40,000 less than the market average and could be a way onto the housing ladder for first time buyers, it is suggested.

Research among estate agents by Direct Line Home Insurance found that so called fixer uppers can be bought for around 17% less than the market average.

As a result, these properties can provide a more affordable way for first time buyers to get on the housing ladder, or for property investors houses requiring only minor structural fixes can be purchased for £13,500 or 6% less than the market average for the property.

Estate agents highlight there is still money to be made in flipping properties, with 62% believing buyers can capitalise on price reductions if renovations are required and make a profit even if a house requires structural work.

However, there are considerations depending on the area, as one estate agent located in Bristol reported that there can be consequences with higher value properties as stamp duty has eroded the value of any profits.

When planning to add value to a property, research shows home owners can boost the resale price by £9,980 on average by redecorating every room. The best single room to renovate is the kitchen, which alone can add £9,275 to the value of the property. Renovating the bathroom on a property can add £7,532 to its value.

The research also suggests that renovating original features can add £7,358 to the value, adding modern touches adds £6,071 and refurbishing the exterior adds £4,500.

‘Putting your own personal touch on a home can be fun and exciting but complications could lead to a hefty bill. With this in mind, renovators should ensure they have a contingency fund in place should they come across any unexpected repairs,’ he explained.

The research also found that while some people want a home that is ready to move into, 21% think that fixing up a home is more cost effective than moving into one that has been already done up.

Only 12% thins that the stress of fixing up a home is not worth the hassle of organising a renovation and 35% believe that fixing up a home allows them to add their own personal touch to a property, which they find extremely attractive.

Bristow pointed out that house holders who are planning home renovations should let their insurer know about any changes being made to their house. ‘Any work that involves walls being knocked down, floors being taken up or electrics changed, can result in damage to the property. Having scaffolding erected and builders coming and going with spare keys also increases the security risk,’ he explained.

‘Once the building work has been completed, house holders should also inform their insurer of any changes that have been made to their property, as adding rooms can not only add value to their home, but also change their home insurance requirements,’ he added.

original source: Property Wire https://www.propertywire.com/news/uk/fixer-uppers-are-a-way-onto-the-housing-ladder-for-first-time-buyers/

Planning permissions rise to record levels in year to June

New data released by HBF and Glenigan has shown that planning permissions continued to be granted at record high levels in England in the year to June.

The report shows that for the year up to June 2018 354,646 plots were granted planning permission on 20,076 sites, the first time for a decade that more than 20,000 sites have been granted planning permission in a 12 month period. HBF says that over the course of the past ten years the average permissioned site has increased in size by 58% from 19 units to 30 but that today’s figures reflect the first fall in average site size for annualised planning permissions for almost five years. This, it argues, should assist SME builders and better enable them to play their part in delivering increases in supply.

However permissions granted in Q2 of this year – the latest quarter in the report – are down 15% on last year at 77,704. “While it is difficult to attribute this to any single factor, it may have been, in part, as a result of uncertainty over the future of Help to Buy post-March 2021, as many plots currently being permissioned will be delivered into and beyond 2021,” said HBF. It also cited uncertainty around new planning policies ahead of the publication of the revised National Planning Policy Framework (NPPF), which was eventually published in July, and the local elections which often cause delays at local authorities.

The report also identifies some significant regional variations. Approvals were down on the same quarter last year in some areas including London, but in contrast, approvals were up in Wales (25%), Yorkshire and Humber (23%) and the South West (11%) against a year earlier.

Stewart Baseley, executive chairman at HBF, welcomed the figures: “We have seen a 74% increase in housing supply in four years, and the report shows the commitment of the industry to delivering further increases. The fact that permissions are now running at over 350,000 a year shows that builders are investing in the land, and people needed to deliver more homes. If we are to get to 300,000 homes a year, we need to see consistently high levels of permissions being granted, and then crucially, processed efficiently. We also need to see the new planning system implemented by local authorities as intended and more sites, of all sizes, coming forward. Providing certainty over the future of the Help to Buy scheme, that has been central to the increases in output we have seen, is also key.”

Allan Wilen, Glenigan’s economics director, added, “The residential development pipeline remains strong, despite a second quarter dip in residential unit approvals from the historically high levels seen over the last year. Indeed, the number of projects securing approval was up 17% on a year ago as permission was granted for more smaller sites.”

Original source: Property Reporter

Record number of landlords make profit in the third quarter of 2018

“For those speculating about the future of BTL, the figures supporting tenant demand should help to dispel this myth.”

88% of landlords have made a profit from their lettings activity in Q3, up by 2% from Q2, according to new research from BM Solutions.

Active landlords say they haven’t experienced any increased financial difficulty this quarter and are feeling upbeat when it comes to the near-term prospects for rental yields, the UK private rental sector and their own letting business compared to Q3 last year.

However, they are feeling less confident year-on-year when it comes to the prospect of capital gains and the UK financial markets.

The average rental yield dropped in Q3 from 6.2% to 5.9%, following the 0.4% rise recorded in Q2 when average rental yields were at their highest point since Q4 2014.

Landlords operating in the North West and Wales are currently generating the highest yields at 6.7% and 6.3% respectively. Rental yields are the lowest in Central London (5.3%) and Scotland (4.7%).

Tenant demand also increased to the highest level recorded since Q2 2017, but there are regional variations. The proportion of landlords reporting a drop in tenant demand is now at its lowest point since the end of 2016, falling 8% from last quarter.

A third of landlords raised rents over the past 12 months, representing a slight increase from Q2. There has also been an increase in the proportion planning to increase rents in the next six months, reaching 27% from 24%. More landlords are also seeing rents rising in the areas where they let properties, with an increase of 9% from Q2.

Additionally, four fifths (82%) of landlords expect their mortgage provider to increase their mortgage interest rate due to recent base rate rises.

Phil Rickards, head of BM Solutions, said: “Despite many recent challenges to the buy-to-let market, it’s encouraging that more landlords have made a profit from their buy-to-let properties this quarter, and that landlords are feeling slightly more upbeat when it comes to the near-term prospects for rental yields, the UK private rental sector and their own letting business compared to Q3 last year.

“For those speculating about the future of BTL, the figures supporting tenant demand should help to dispel this myth. Considering the much talked about shortage of housing supply, it is vital that we continue to support a healthy private rented sector and with tenant demand scores improving, or remaining stable across all UK regions, it is clear that the PRS still has a very important part to play.”

Original source: Property Reporter

What exodus? – 2m plan to increase their portfolio next year

A new survey commissioned by investor forum and advice website, The Property Hub, has found that almost 80% of landlords plan to increase their portfolios over the next 12 months, equating to 1.95 million investors.

The data revealed that the vast majority of landlords will buy at least one more property in 2019 while a massive 70% say even a no-deal Brexit would be unlikely to affect their growth plans. Meanwhile, 84% of landlords polled said they had no plans to sell any properties in the next three years, and 66% said even if the government were to announce further tax measures – such as restricting interest relief for companies, they still wouldn’t be selling up.

The figures come amid concerns landlords may be looking to leave the sector following a difficult few years for the sector during which we’ve seen an overhaul of the landlord tax relief system, increased regulation and a Stamp Duty hike.

Rob Dix, co-founder of The Property Hub, says: “There’s been so much talk of a mass exodus of landlords and the death of buy to let, it’s easy for some would-be landlords or, indeed, tenants, to believe the rental market is on its knees. However, it’s clear from our survey that landlords are far from retreating from the market.”

The survey also polled landlords on proposals that could have a significant impact on the industry, including the possibility of three-year tenancies becoming mandatory.

When asked what would need to happen in order for them to support this policy a massive 82% said they’d need a way to remove tenants who fall into rent arrears that is faster than the current fault-based method, 69% said the ability to increase rent would need to be given, and 59% said there’d need to be tax incentives, like the ability to deduct more mortgage interest. Less than 9% percent said they would oppose the policy regardless.

Rob Dix says: “Getting good long-term tenants is the goal for any landlord so it’s not surprising that less than 9% of landlords would be against this policy regardless of any concessions. However, landlords obviously need to be protected too so it’s only natural that those operating in the sector are calling for some reassurance,”

Asked what they’d need to see happen in order to support compulsory landlord licensing 37% said they’d want the removal of any additional local schemes, except those applying to HMOs, 43% said an annual fee that doesn’t exceed £100 per property. 65% want a plan to ensure that it would discourage rogue landlords – such as proof that non-registration could be detected and enforced and 55% said a tax incentive or removal of an existing anti-landlord tax measure. Again, less than 9% said they’d be against landlord licensing completely.

Rob Dix says: “It’s telling that the most popular wish for licensing – more popular even than a tax break – is some reassurance that it will actually work. The majority landlords take pride in providing a good service, and are as keen as anyone for the rogues who give the industry a bad name to be pushed out.

Taken as a whole, the results of our survey show that the caricature of landlords fleeing the sector when the going gets tough isn’t in line with reality. Most landlords are in it for the long term and have sound business plans – they don’t view property as a get-rich-quick scheme.

The Armageddon-style headlines in much of the press over the last two years in no way reflect the way landlords are feeling. Buy to let is far from dead. Are investors operating in a new landscape? Certainly. Is it one they’re unable to navigate successfully? Absolutely not.”

Original source: Property Reporter

Landlord remortgaging now accounts for 57% of all BTL business

According to the latest report from Paragon, the proportion of landlords looking to remortgage is now at an all-time high after rising sharply from 49% in Q2 to 57% in Q3.

In contrast, the proportion of first-time landlord business fell from 14% to 10% and landlords looking for finance for portfolio expansion was down from 23% to 19% of the total.

The proportion of landlords remortgaging first outstripped those seeking funds for portfolio expansion back in 2015 following the announcement of significant tax changes for landlords in the Summer Budget.

Since then, remortgaging has continued to rise almost inexorably and today six out of ten intermediaries say the main reason that landlords are remortgaging is to secure a better interest rate.

In total, buy-to-let represented 19% of intermediary business in this quarter, with the remainder taken up by mortgage applications from owner-occupiers.

John Heron, Managing Director of Mortgages at Paragon, said: “Landlords are investing less in the Private Rented Sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs.

It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”

Original source: Property Reporter

10 things first-time buyers need to know before applying for a mortgage

The typical first-time buyer in London needs 10 times their annual income to afford an average-priced home. Yet the usual income multiple applied by mortgage lenders is just 4.5 times salary.

This explains why the Bank of Mum and Dad has become such a phenomenon, with 80 per cent of parents giving large lump sums to fund the difference between mortgage offer and purchase price, according to analysis by the Institute for Fiscal Studies. The average deposit in London is £72,000.

The bigger the deposit a buyer puts down, the better the mortgage interest rate will be. All lenders demand a deposit of at least five per cent. But if you can put down 20 per cent you will likely pay several hundred pounds less per month.

Despite mortgage rates being historically low, lenders are obliged to “stress test” applications to ensure buyers could afford to repay in the event of an interest rate spike.

But brokers urge would-be buyers not to give up their home ownership dreams as there’s lots of competition in the mortgage market, literally hundreds of deals, mainly trackers —linked to the Bank of England base rate — or fixed-term loans, typically two-, three- and five-year deals.

One of the best rates available is Nationwide’s 1.64 per cent fixed for two years, but this requires a 25 per cent deposit. Yorkshire Building Society requires only a five per cent deposit for its 2.87 per cent deal, fixed until December 2020.

Barclays is offering a two-year fix of 1.84 per cent, with a minimum 10 per cent deposit.

Depending on your circumstances, the only rates available may be higher than four per cent. Shop around first by checking comparison websites such as moneysupermarket.com.

The virtue of a fixed rate is that you know exactly what you will be paying, and can budget accordingly. But remember that once the fixed-rate term is over, the interest rate reverts to the lender’s standard variable rate, which may be as high as five per cent. Borrowers then usually take out a competitive new deal, perhaps with another lender.

Some lenders say young would-be buyers can beat affordability restrictions by opting for a mortgage with a term length of 30 years and fixing the interest rate for five years or more, for which less strenuous stress tests apply.

Do not focus solely on the interest rate. Lenders typically charge an arrangement fee, possibly £995 or more, though this can be added to the mortgage. Sometimes there are free legal and survey fee deals. Halifax is offering £1,000 cashback.

Make yourself attractive to lenders by showing them you can manage your regular finances. Also cut back on unnecessary outgoings. Tougher mortgage affordability rules mean it’s not just what you earn that matters, but how much of it you spend. And check your credit report to make sure it’s accurate and up to date.

You are more likely to get a mortgage if you have a good savings record, even if that is a modest amount each month. First-time buyers can save towards their home with a tax-efficient Help to Buy ISA.

You can deposit £1,200 in the first month and £200 a month thereafter. As well as earning interest, the Government will boost the balance when you come to buy.

To stretch affordability, lenders are extending the mortgage term up to 40 years, which lowers the monthly repayment.

But in the long run you end up paying back much more, and are saddled with a mortgage for almost a lifetime. So once you are up and running with your new mortgage, use any disposable income you can spare to overpay on the loan each month.

This will cut the outstanding amount and give you more equity —and buying power — when you move.

Original Source: https://www.homesandproperty.co.uk/mortgages/10-things-firsttime-buyers-need-to-know-before-applying-for-a-mortgage-a125001.html

Equity release product numbers trebled in 2 years research showa

Equity release referral service, Key, has found that the number of equity release products has grown by 206% in the last two years – prompting calls for customers to receive specialist advice.

The analysis shows that the number of products available has trebled in the past two years to 144 from just 47 in October 2016 with more product features than ever before.

Currently, 81% of all plans (117 products) allow ad hoc penalty free repayments and 15% explicitly allow interest to be paid. This is a significant increase in the last two years when you consider that in 2016, just 7% (3 products) allowed people to make interest repayments.

Other major product innovations include the increasing inclusion of downsizing protection with 73 plans – more than half the market – offering the feature. More than half (55%) of products have fixed early repayment charges compared with nearly a fifth (19%) in 2016.

Jason Ruse, Head of Key Partnerships said: “Equity release lenders have embraced innovation and have expanded the options available to customers in response to growing demand. Unlike some other markets, the growth in product options has been driven by existing lenders looking to meet evolving customer needs rather than new providers entering the market.

While the transformation in choices available is very welcome, it highlights the need for independent experts able to advise on the whole market and to find the solutions that suit clients’ particular needs.

Advisers who do not regularly provide support for clients looking to make the most of their property wealth could through no fault of their own find their advice is not up to date as innovation is constantly increasing and expanding the options available.”

Original Source:Property Reporter

The average 5 year Buy-To-Let rates fall to new record low

mortgage approvals continue to rise

According to the latest data released by Moneyfacts, average five-year fixed buy-to-let rates are now at a record low of 3.40% after falling from 3.55% in April.

The data suggests that a turbulent market and fierce competition in the sector are the most likely cause for the drop.

Charlotte Nelson, finance expert at Moneyfacts, said: “The buy-to-let market has been on a rollercoaster ride in recent years, with not only two base rate rises to contend with, but multiple regulation and tax changes thrown into the mix. With all these elements, many would have assumed that rates would rise as a result. However, the opposite appears to be the case, particularly for the long-term fixed rates, with the average five-year fixed mortgage rate falling by 0.05% in just one month to reach the lowest on record.

There has been a lot of upheaval for landlords and many are taking a step back, with the number of buy-to-let property purchases down 11.1% year-on-year in July 2018 (the latest month for which data is available). In response, providers are doing their best to re-engage borrowers by making their deals more attractive, absorbing some of the cost themselves in order to keep rates low.

As a result, competition in the buy-to-let market remains high. In the aftermath of August’s base rate rise, many buy-to-let borrowers will be looking to remortgage from their standard variable rates, with several of these landlords potentially considering longer-term options to act as a buffer against any future rises. It is this extra business providers are wanting to attract.

Not only would a five-year fixed mortgage protect landlords from future rate rises, but savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates. This could be yet another reason why competition is now homed in on the five-year fixed rate mortgage market.”

Original Source:Property Reporter