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UK landlords can choose from record number of buy to let mortgages
Record number of buy to let mortgages are now available in the UK with landlords able to choose from 817 different products, up 16% quarter on quarter, the latest index shows. Lower LTV fixed rate mortgages are now cheaper than equivalent tracker products, even before rates rise, according to the latest Buy to Let Mortgage Costs Index from Mortgages for Business. Mortgage charges have fallen further for lower LTVs while landlords at higher LTVs pay extra fees. However, the cheapest mortgage rates and lowest fees have been reserved for low loan to value ratios. ‘This unprecedented pick up reflects the huge increase in demand as well as the wider importance of the buy to let industry,’ said David Whittaker, managing director at Mortgages for Business. ‘Looking at total lending in 2014 the trend is clear. For a second consecutive year the value of the buy to let market grew by almost a quarter. We anticipate further growth in 2015 but at a slower rate as the market takes an inevitable breather after such a huge sustained spurt,’ he added. The research suggests that fixed rate mortgages are proving to be better value than their respective tracker counterparts, particularly for lower loan to value borrowers. Low LTV mortgages now outperform their tracker equivalents at two, three and five year periods. Likewise, at medium LTVs, the costs for a two year fixed rate is 4.4% compared with 4.7% for the tracker equivalent, while for three year products the costs are the same and only 0.3% higher than the tracker products for five years. Even for fixed rate high LTV mortgages, the current cost of borrowing is only marginally higher than tracker products. To fix for five years at a high LTV is just 0.4% more than the corresponding tracker. Only one in a hundred landlords now opts for a one year initial mortgage term. More widely, the popularity of short term mortgages continues to wane as 52% opted for a two year deal, down from 57% six months ago despite the very attractive two year rates on offer. By contrast longer term mortgages are growing in popularity, with the proportion choosing five year mortgages rising from 15% in the second quarter to 18% in the fourth quarter. ‘It’s astounding that fixed rate mortgages are already better value than their respective tracker counterparts. Again the real advantage is for the ‘safest’ landlords with the lowest LTV loans. But even though tracker products are a little bit cheaper at higher LTVs, in these cases too it soon won’t be enough to compensate for the likely increase in cost of trackers when rates inevitably rise,’ said Whittaker. ‘If customers are paying only a few percentage points above the negligible Bank base rate, then if this jumps it could mean a huge proportional increase in future costs. Capital markets are still reeling from tumbling inflation and a dovish outlook from the Bank of England that no one would have predicted… Continue reading
Rental redress scheme in UK sees increasing number of complaints
The UK’s Property Redress Scheme (PRS) is seeing an increasing number of consumer complaints being made against lettings, property management and estate agents who are members The PRS is one of three consumer redress schemes authorised by the government whose role it is to provide fair and reasonable resolutions to disputes between members of the public and property agents. By law, all agents must be a member of one of these three schemes. The number of complaints raised with the PRS is increasing month on month. Of the complaints raised so far, 44% were by landlords and 41% were by tenants, with the remaining 15% being raised by buyers and sellers of property. The complaints have varied widely in content, with the top three grievances being unfair or excessive fees at 21%, non return of holding deposit at 18%, and perceived poor service or lack of communication at 18%. Agents are also resolving complaints directly with consumers when they are notified of the issue proving that the PRS is having a positive effect on service offered and that some complaints can arise from simple miscommunication between parties. Grounds for non-acceptance of complaints have included consumers that had not yet attempted to raise a formal complaint with their agent but had instead gone direct to the PRS. Others were declined as the complaint involved on-going court action. An example is a landlord who served notice on her agent two months before the end of the tenancy. The agent acknowledged this notice but pointed out that a charge would be made for withdrawing from the agreement, as per the terms of their contract. The agent claimed that this charge was because they had found the tenant that rented the property. As the initial introduction of the tenant retains value, the agent believed they would be materially disadvantaged if the tenancy was renewed under a different agent and wished to seek compensation for this introduction. This information was supplied to the landlord via email but was only received weeks later when the landlord found in her junk email folder. Her lack of response was taken by the agent as tacit agreement and they proceeded by withholding this fee from the last month’s rent. The landlord contacted the agent to explain that she had in fact sold the property and therefore the tenant was not remaining in the property after the expiry of the tenancy. She debated this fee and made further claims that the terms of their agreement were contradictory. However, the agent maintained they would still be applying what they saw as legitimate charges for the cancellation of the agreement. This resulted in a breakdown of communication between the landlord and agent, with both seeking legal representation to try and resolve the issue. Following a thorough review of all the evidence provided,… Continue reading
Rental home loan deposit scheme for certain employees in UK widened
The UK government has announced wide support for a new rental deposit loan scheme that will become available to thousands of potential tenants. Housing Minister Brandon Lewis said that the aim is to create a bigger, better private rented sector through a scheme that offers deposit loans to Whitehall staff looking to take up new tenancies in the private rented sector. The scheme, which works in the same way as a staff season ticket loan, will allow employees to borrow some of their salary upfront in order to pay for rental deposits, which is then repayable from salary payments over up to a year. It is available to be taken up in both the public and private sectors. The Department for Communities and Local Government last October became the first government department to roll the scheme out to its staff, with ministers pushing other parts of government and the public sector to follow suit. The department is working with the Department for Business Innovation and Skills to increase availability across the private sector. ‘This move will mean thousands of people will be offered a helping hand to rent privately through season ticket style loans from their employers. I hope to see more employers in the public and private sector joining the scheme in the near future,’ said Lewis. The scheme was created by the homelessness charity Shelter and the Greater London Authority was another public body to introduce the scheme for its staff. The tenancy deposit scheme can be adapted by different employers to suit their needs, but generally employees are offered interest free loans to pay their deposits when they move into a privately rented home, which are then paid back through their salary over the course of up to a year. Continue reading
