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Developers call for land to be set aside in UK for Build to Rent
A group of developers and real estate investors have revealed a three point action plan which they say could see more than 250,000 extra homes built for rent. Called the Better Renting campaign, they have written to the housing minister saying that Build to Rent, where corporates build clusters of homes that are rented and not sold, could help the government deliver its pledge to build a million homes by 2020. The letter claims that traditional house builders are at full capacity and that support for corporate landlords could bring £50 billion of new money into the sector. The letter asks ministers to set aside an agreed proportion of public land for Build to Rent development. Councils and public land owners could generate long term rental income from buildings or land, allowing them to fund under pressure public services. The group also calls on the Chancellor George Osborne not to apply an additional 3% stamp duty charge to professional Build to Rent developments. Last December, he promised to only apply this to buy to let investors, but subsequently reversed this pledge. The group claims the move will dampen investor appetite to build more homes. It could deter further investment which could build more than 250,000 new homes. Finally, the campaign’s letter calls for recognition of Discount Market Rent (DMR) homes as an accepted form of affordable housing. This would allow developers to create subsidised rental homes as part of their development commitments, following successful use of the policy in the London boroughs of Ealing, Greenwich and Brent. A nationwide recognition would deliver more affordable housing. Signatories to the letter include Grainger Plc, Essential Living, LaSalle Investment Management, HUB, Fizzy Living, Real Star, Hermes Investment Management as well as Mishcon de Reya, a leading city law firm. ‘Until we face up to the fact that promoting home ownership at all costs will lead us nowhere, Britain will not overcome its housing shortage. The housing minister has been very supportive of Build to Rent, but what’s crucial is that the prime minister and chancellor recognise the contribution this could make to helping them keep their promises on building a million homes by 2020,’ said Martin Bellinger, chief operating officer at Essential Living. According to Helen Gordon, chief executive at Grainger Plc, pointed out that the form wants to invest in the Build to Rent sector. ‘Our vision is for a better rental market, underpinned by good value for money for our customers, supporting economic growth and housing supply,’ she said. ‘We are looking to invest hundreds of millions of pounds into new rental homes, designed specifically for the renting, which we will directly manage for many years to come. It is important that the Government does all it can to allow us and companies like us to build more homes,’ she added. Chris Taylor, head of private markets at Hermes Investment Management, explained that experience from the United States, Germany and Holland demonstrates the potential capacity… Continue reading
Survey reveals lack of knowledge in UK about home insurance
Some 1.6 million UK home owners have bought home insurance from their lender and many mistakenly believe they cannot switch for a better deal, according to a new survey. Some 30% or 466,200 households believe their home has to be insured with their mortgage lender as a condition of the loan and 6% were told by their lender that it was a mandatory purchase. On top of this 24% think switching away from their lender’s insurance will invalidate their mortgage, according to the survey from Gocompare Home Insurance. Overall it found that 14% of home owners arranged their home insurance through their mortgage lender and 30%, almost half a million home owners, believed that they had to arrange their home insurance through their mortgage lender as a condition of their mortgage deal. And 24% of borrowers who arranged their insurance with their lender think that switching their insurance to another provider will invalidate their mortgage while 12% say they felt under pressure to buy their lender’s home insurance and 6% said they were told by their mortgage provider that they had to. Protecting a property with adequate buildings insurance, typically against fire, flooding, subsidence and storm damage, is as a requirement made by all mortgage lenders. Buildings insurance provides financial protection for the borrower, and ultimately the lender, from damage to the main structure of the home. While most lenders offer home insurance, borrowers are not obliged to buy it for them. However, the practice of compulsory home insurance tied-in mortgage deals was never formally outlawed despite promises to do so in the late 1990s. When questioned why they had opted to buy their lender’s home insurance, the survey revealed a mixture of misunderstanding, misplaced trust in their mortgage lender and consumer apathy. For example, 14% thought buying their lender’s home insurance might help with their mortgage application, 9% said they didn’t realise they could buy cover elsewhere, 22% said that their lender gave reassurances that the product was good value, 50% think that their mortgage lender provides the best value cover for their home insurance and 49% had opted to do so out of convenience. The survey also found that 72% hadn’t compared products and prices offered by other providers and 34% of home owners who arranged cover through their lender didn’t check cover levels and excesses to make sure they were buying the right policy. According to statistics published earlier this year by the Association of British Insurers, the main reasons for household insurance claims being rejected included the claim value being below the policy excess and the incident not being adequately covered by the policy. ‘We were shocked to find that so many people still think that their mortgage offer is conditional on buying their lender’s home insurance, and that a significant minority are essentially in a mortgage linked insurance trap, believing that switching away from their lender’s insurance will invalidate their mortgage,’ said Ben Wilson from Gocompare Home Insurance. ‘We… Continue reading
Confidence among UK private sector landlords remains subdued
Confidence remains low among UK landlords as a result of recent government interventions in the buy to let market but buyers are slowly returning to the market, says a new survey. Overall, landlords report improved buying intentions, growth in tenant demand and yields and confidence is stable but remains at subdued levels, according to the research by BDRC Continental on behalf of Paragon Mortgages. Following an increase in the rate of stamp duty payable on buy to let purchases, and with a staged reduction in income tax relief available on rental income due start next year, landlord confidence remained low in the first quarter of 2016. Asked about expected business in the next three months, just 41% of landlords rated their prospects as being either ‘good’ or ‘very good’. This is down from 65% during the same period last year, prior to the government’s clampdown on buy to let. Indicating that falling levels of confidence may have stabilised however, the figure is just 2% down on the fourth quarter of 2015. Reflecting this, the survey also saw landlords’ property purchase intentions edge above selling intentions, reversing the situation seen in the final quarter of 2015 when more landlords were looking to sell property than were looking to buy. Some 19% of landlords indicated that they intend to purchase a property in the coming year, up from 17% in the fourth quarter of 2015 while 16% of landlords indicated that they intend to sell a property, down from 19% in the previous quarter. Driving this trend was an increase in tenant demand, with 39% of landlords reporting demand as increasing either slightly or significantly, up from 34% in the fourth quarter of 2015. Reflecting this increase, landlords reporting tenant demand as being stable declined from 40% to 36%. The research also shows that yields in the first quarter of2016 also grew slightly on the previous quarter, averaging 5.7%. Despite negativity persisting around business expectations over the short term, rental property as an asset class is still viewed favourably by landlords. Some 38% of landlords polled believe investing in the PRS to be ‘much better’ than other investment options such as stocks and shares. A further 33% believe investing in the PRS to be a ‘little better’ than other investments and just 10% believe an investment in the PRS is worse than other investments. ‘Increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising,’ said John Heron, director of mortgages at Paragon. ‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase… Continue reading
