News
UK mortgage brokers report impact of rules change a year ago
A quarter of mortgage brokers in the UK say they have experienced a decrease in volumes since new mortgage rules came into being almost a year ago, a new survey shows. The self-employed and retirees are the most difficult to find a mortgage for and mortgage intermediaries are very much divided on the impact of the Mortgage Market Review (MMR) on business volumes. The research by Paragon Mortgages that covers the first quarter of sought to establish the impact of MMR in terms of intermediaries’ business levels as we reach the one year anniversary of the changes coming into force. Of the 200 intermediaries who took part in the survey, 43% said that in their view there had been no change to their business volumes as a result of MMR and 24% said that business had increased. However, some 25% of those surveyed said they had experienced a decrease and only 3% said there has been no change in business. The majority of intermediaries who said they had experienced a decrease reported this had been up to 30% and only 14% said the decrease in business had been any higher. Looking ahead, 15% of intermediaries said they did not know what the long term impacts of the new regulations would be. Intermediaries were also asked which of their customers are now the most difficult to find a mortgage for. Top of the list were the self-employed at 75%, followed by retired customers at 52% and 51% said it was those customers with complex incomes. ‘The research shows is there is still some uncertainty in the market about the long term impact the MMR changes will have on business volumes. This isn’t unexpected, as with any significant change in regulation there will always be a period of adjustment, but it is important the industry monitors this carefully,’ said John Heron, director of Paragon Mortgages. ‘Looking at the feedback from intermediaries on the underserved areas of the market also provides a valuable insight into what lenders could be doing better. We need to recognise that there is no such thing as the average mortgage customer anymore, people have a greater variety of circumstances and we need to be more innovative in order to meet increasingly varied demand from customers,’ he added. Continue reading
Scottish house prices see biggest monthly jump since 2007
Scottish property prices increased by 1.7% in February, the biggest monthly jump since the 2007 taking the average value to a new record high of £169,742. The latest data from the Your Move Scotland house price index also shows that the annual price growth has now reached 6% and there was a spike in sales of homes worth over £1 million, probably due to the introduction of the new property tax in April. The annual growth is the strongest it has been since August 2010 and Stirling experienced the fastest increase in property values across Scotland during February, with house prices soaring 5.3% while Aberdeen, Edinburgh, East Lothian and Angus all set new house price peaks in February. The index data also shows that overall sales were up 14% month on month but they are still 4% below the same levels seen in February last year. Christine Campbell, regional managing director of Your Move, explained that the monthly growth was much higher than in England and Wales where it was just 0.4% in February. ‘The impressive rise in house prices in February has been influenced by the introduction of the new Land and Buildings Transaction Tax (LBTT) in April, as high end buyers sought to complete expensive purchases under the old stamp duty rates,’ said Campbell. She pointed out that 15 properties priced at £1million or more were sold in Scotland during the month of February, compared to just six the previous month. ‘Tactical tax considerations have helped foster price growth in the Scottish housing market, and are likely to play a significant role in the months to come too,’ she said. ‘Now that the LBTT has come into force, we expect to see a temporary drop-off in the number of properties sold above £750,000, now liable for the top rate of tax, similar to the impact we’re currently seeing in London among £2 million properties in light of December’s stamp duty changes,’ Campbell added. She also pointed out that typically in the housing market cycle home sales ease back in February, in the aftermath of the costly Christmas period but this February moved against the seasonal grain, with completed home sales up 14% on January levels. A breakdown of the figures shows that over the past three months, completed home sales have fallen in every local authority area of Scotland on an annual basis, with Midlothian seeing the sharpest 31% drop. ‘However these year on year benchmarks have been artificially propped up following the extraordinary headway in sales activity over 2014, and as well as having to recalibrate onto a steadier course, the housing market this year also has an upcoming general election to contend with,’ said Campbell, who added that the slowdown in Scottish sales activity is being mirrored south of the border, as all across the UK political uncertainty is infusing home buyers with a new hesitancy. ‘But as soon as there is a… Continue reading
Landlords face bringing draughty UK homes up to scratch
New legislation will see landlords banned from renting out properties in England and Wales that are draughty as part of a drive to cut energy bills and carbon emissions. Landlords with properties rated F and G will be unable to let them out from 01 April 2018 and it also means that from April next year tenants living in F and G rated homes will be able to request improvements, such as more insulation. The landlord will then be legally bound to bring the property up to an E rating. According to government figures almost 10% of the 4.2 million privately rented homes in England and Wales currently fall below the E rating and it is estimated that the new legislation will help around one million tenants, who are paying as much as £1,000 a year more for heating than the average annual bill of £1,265. Experts say that these excessive costs are mainly down to poorly insulated homes, many of which are thought to be the oldest and leakiest rental properties in Europe. Under the new legislation, if a tenant requests a more efficient home and the landlord fails to comply, the landlord could ultimately be forced to pay a penalty notice. Landlords will be able to let out F and G rated properties beyond 01 April 2018 for the remainder of existing rental contracts, but will not be able to renew a contract, or let the property to someone else until it is brought up to an E rating. ‘This legislation will have a significant impact on landlords with older, draughty properties in terms of extra expense and lost rental income, while they improve their properties. However, there will be a range of support mechanisms, such as the green deal and ECO schemes, that could alleviate upfront costs for landlords,’ said Michael Portman, managing director of LetRisks. He pointed out that landlords with F and G rated properties face an increased risk unless they take action soon as buy to let providers will require borrowers to comply with the regulations and valuers are likely to amend their criteria in the run up to 2016, making buy to let mortgage applications more difficult. He added that most insurance policies require landlords to comply with ‘all relevant statutory requirements’ and this may mean that it could be more difficult to get insurance unless landlords comply with the forthcoming regulations. ‘Landlords and agents are running a risk if they have F and G rated properties and they need to manage this by upgrading and improving their properties. If Landlords are carrying out any work that is not routine repairs and maintenance, they should advise their insurers,’ said Portman. ‘Letting agents that have F and G rated properties in their portfolio should be urging their landlords to start work on the properties, to bring them up to scratch. Otherwise, they could face the risk of losing some of their landlords because their properties have… Continue reading
