News
Missing items cause move out misery for UK tenants, research suggests
Tenants in the UK’s private rented sector could lose thousands of pounds due to items that have been detailed in the property inventory going missing at the end of a tenancy, it is claimed. It is a busy time of the year as student tenancies come to an official end and the Association of Independent Inventory Clerks (AIIC) is urging tenants, landlords and letting agents to take extra notice of inventories as tenancies turn over this summer. The Association points to a recent study carried out by removal firm Kiwi Movers which found that 52% of tenants had experienced trouble with their landlord when it came to the return of their deposit at the end of the tenancy. The survey also revealed the most common reasons for lost deposits with items missing from the inventory the reason a fifth of participants did not receive their full deposit back. Other reasons tenants lost all or part of their deposit included minor repairs, cleaning and unpaid bills. ‘Tenants should be issued with a copy of the inventory at the beginning of the tenancy and I urge them all to double check all the items listed at that time and to ensure that all items remain in the property, in good condition, when moving out,’ said Pat Barber, chair of the AIIC. ‘If there is something missing it can often be cheaper for the tenant to replace it rather than for the landlord or agent to do so,’ she pointed out. ‘For letting agents and landlords, it is important to go through the inventory fairly and thoroughly when undertaking the check-out process it is advised that the services of an independent inventory clerk are used to ensure impartiality,’ she explained. ‘If both sides of the rental transaction hold up their side of the bargain, the amount of deposit disputes can be kept to a minimum this summer,’ she added. Continue reading
European Bank measures risk house price bubbles in UK, Germany and Norway
Quantitative easing by the European Central Bank could drive prices even higher in overvalued property markets in Germany, Norway and the UK, a new analysis suggests. House prices in these countries have risen quickly over the last year and a half and as a result the risk of house prices bubbles have re-emerged, according to a report from Moody’s Analytics. It explains that while the International Monetary Fund’s Global Housing Watch shows prices rising, it is case of a two speed market. Some have rebounded quickly after just moderate price declines during the financial crisis, the other group is still recovering from much steeper price drops. The first group includes Germany, the UK and Norway where house prices have shot up over the last few quarters and where the formation of a housing bubble is a real possibility and QE feeds asset bubbles, the report points out. Since March every month the EWCB has been buying €60 billion worth of euro-denominated assets issued by euro one governments, agencies, and European institutions and the programme will last at least until September 2016. This has seen yields on the government debt of countries viewed by investors as safe fall and this in turn has encouraged investment in property markets which yield higher returns. In Germany, house prices have been steadily rising since the middle of 2009 as its property market is viewed as a safe haven investment in an environment of increased uncertainty. Indeed, Germany was one of the few European countries to avoid a housing market slump during the 2008/2009 downturn, thanks to prudent bank lending regulation. However, the report says that growing demand for German properties is leading to overvaluation, especially given the insufficient supply. Only recently has construction finally picked up. In the first half of this year, German building authorities granted 10% more building permits than in the same period a year earlier. But it will take a few years before supply catches up to demand. German house prices have therefore been rising more quickly than rents and incomes. Although the price-to-income and price to rent ratios are still relatively low compared with Germany’s long term average, the report says that if this trend persists the housing market could overheat. While the outright risk of a housing bubble forming in Germany is relatively low, the Bundesbank is monitoring the situation. So far, it has not intervened. However, in the UK the authorities are doing so. Last year the Bank of England in 2014 warned of a possible housing bubble which could derail the country’s recovery and introduced tighter mortgage loan standards designed to reduce the supply of credit, taking some heat out of the housing market. The UK’s Financial Conduct Authority also introduced stricter underwriting rules for mortgages to ensure that banks assess borrowers’ ability to repay loans after interest rates start to rise. Yet loan standards are still relatively loose, largely the result of the UK government’s Help… Continue reading
CML expected improved mortgage market activity ahead in UK
A benign economic backdrop should underpin a gentle improvement in housing and mortgage market activity in the coming months, according to the latest forecast from the Council of Mortgage Lenders. The CML market review report points out that this follows a softer patch over the past year, which has dragged down our expectations for gross mortgage lending to £209 billion this year, from the £220 billion the CML had expected previously. ‘Several of the government’s fresh housing initiatives will take time to take effect and so do not fundamentally reshape market prospects this year or next, as far as we can judge at this stage,’ said Bob Pannell, CML chief economist. The report explains that with house price levels already elevated and continuing to outpace earnings across much of the country, the upside potential for regulated lending is likely to be constrained by affordability pressures, reinforced by the recent MMR mortgage rules and macro-prudential rules. It also points out that perceptions of the buy to let sector can be distorted by the fact that remortgage activity accounts for a much larger share of overall buy to let lending, more than half, than is the case for home owner loans. ‘Although buy to let business volumes continue to expand, the underlying pace of growth in buy to let activity, both for house purchase and refinancing, has been slowing, following its strong recovery over the past few years. Policy interventions in the buy to let space may reinforce this downward trend,’ said Pannell. ‘We expect a further improvement in arrears and possessions this year and anticipate that the overwhelming majority of borrowers will cope with the modest interest rate increases that start in 2016,’ he added. Overall the CML is slightly more optimistic about housing market developments than it was at the turn of the year and Pannell explained that this is largely because of the continuing resilience of cash transactions, amounting to nearly 37% of all transactions over the past year. He added that regulated house purchase activity has continued to edge down relative to the market as a whole over the past year, and this has acted to drag down our overall mortgage lending total for 2015. ‘We now expect gross lending of £209 billion, compared with our earlier estimate of £222 billion,’ he concluded. Continue reading
