Three in 10 property purchases fall through

New research from Which? Mortgage Advisers reveals that three in ten (28%) homebuyers have had a house purchase fall through after their offer was accepted, and on average homebuyers were left nearly £3,000 out of pocket as a result.

The survey of 2,000 homebuyers – who bought their home in the previous two years – found that it takes over 4.5 months on average, from starting a property search to having an offer accepted. However, 28% of purchases fell through after that point.

The main reasons for a property purchase falling through were:

  •     The seller decided not to sell their home after all (27%)
  •     The buyer pulled out, as their own property sale had fallen through (21%)
  •     The buyer found somewhere else to buy (21%)
  •     The buyer was ‘gazumped’ (21%)

Of those who had lost money and knew how much they were out of pocket, the average loss was £2,899. This included conveyancing, survey, mortgage valuation or brokerage fees paid and not recovered.

Many homebuyers experience failed transactions due to problems in the ‘property chain’ – the line of buyers and sellers linked together because each is selling and buying a property from another.

For more advice on managing a property chain and keeping things moving, visit Which

Tenant evictions on the rise in England and Wales

The number of households evicted from rental accommodation in England and Wales rose by 5% in the first three months of the year, while the repossession rate for home owners fell to a record low.
Seasonally adjusted figures from the Ministry of Justice show there were 10,732 repossessions of rented homes by bailiffs between January and March 2016, up from 10,253 in the final three months of 2015.
The number of tenants evicted from their homes by bailiffs reached a record high in 2015, according to official figures for England and Wales, which shows that 42,728 households in rented accommodation were forcibly removed.
Housing campaigners blamed welfare cuts and the shortage of affordable homes for the rise in repossessions over the year and more than half the evictions are thought to have been by private landlords.
These figures are echoed by a new report from online letting agent PropertyLetByUs which shows that a quarter of landlords have served an eviction notice to tenants over the last 12 months and 5% have pursued an eviction through the courts. Furthermore, almost half of landlords have also experienced rent arrears over the last 12 months.
‘Landlords are increasingly facing rent arrears, as rent escalation continues to outstrip gross income. They are also facing a financial squeeze due to restrictions on their tax breaks and some may be raising rents to supplement their income. Pushing up rent rises further will put huge pressure on those tenants who are already struggling to pay their rent. We may well see evictions continuing to rise over the next few months,’ said Jane Morris, managing director of PropertyLetByUs.
She pointed out that the statistics highlight the need for landlords to protect their rental income and ensure they carry out thorough references with all new tenants. ‘Times are very tough for many tenants and demand for rental accommodation is soaring in many parts of the UK. Landlords need to extra vigilant when they take on a new tenant. But a few simple checks will help identify if a tenant is in a good financial position or not,’ she added.

Meanwhile, changes to the process of accelerated possession through applying to use High Court Enforcement Officers (HCEOs) to evict a tenant has brought an end the so called seven day eviction which were misleading for landlords as well as increased costs, according to legal experts, Landlord Action.

Source: Property Wire

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Retired renter numbers skyrocket

According to a new poll of private renters, the number of people living in private rented accommodation in retirement has soared by more than 200,000 in the last four years.

Overall, the poll shows that the proportion of retired private renters has grown by 13% since 2012 – approximately 220,000 – as more and more people turn to the private rented sector.

17% of the retired private renting population live in the South East – the area with the highest proportion across the UK. However, just 3% live in London – the area with the smallest proportion area across England and Wales for renting in retirement.

There are almost four times as many retired renters in the North West (15%) compared to the North East (4%), and twice as many retirees rent property in the West Midlands (8%) compared to the East Midlands (4%).

However, the proportion of landlords who let to retired renters has almost halved during the same timeframe, with 9% of landlords saying they currently let to retirees compared to 19% in 2012.

The findings suggest that it could become harder for those approaching retirement to find suitable rented accommodation in the future, especially in high demand areas.

Carolyn Uphill, Chairman of the NLA said: “More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants.


“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the Government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like Central London for anyone without a well-paying job. As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield – leaving communities they have known and contributed to for decades,” said Uphill.

Surge in investors buying student property

New data has found that the first quarter of 2016 has seen a surge in investors acquiring student property, to beat the new stamp duty legislation, which comes into force in April 2016.

Research, conducted by The Mistoria Group – student property investment specialists, reveals investors have been flocking to complete their student property purchase by the end of this month, to avoid the 3% stamp duty surcharge coming in for second homes.

The research shows that sales of student property in the North West have leapt by over 30% between January-March 2016, compared with the first quarter of 2015.  More than 50% of student property investors are from the South, while a third are overseas investors.  The remaining 20% of investors are from the Midlands and the North.

Over the last few years, student housing has undergone a significant amount of change, with rising rents and a higher level of expectation from the occupying students, many of whom are looking for high-spec accommodation with luxuries like plasma TVs, Wi-Fi and built-in white goods.  The removal of the cap on student numbers have also triggered many universities to anticipate an increase in enrolment over the coming years, which is driving demand for more high quality, affordable student accommodation.

Mish Liyanage, managing director of The Mistoria Group comments: “We have seen a rush of investors wanting to purchase student property over the last quarter and we anticipate that demand for student property will continue to grow significantly in 2016 and beyond.

Since the birth of the buy-to-let mortgage 18 years ago, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK.

Over the last five years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in Salford and Liverpool.  Our research shows that the North West provides greater returns than any other city in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 (HS2) high-speed railway between London Euston and the North West to be completed in the next 15-20 years.

A HMO (House in Multiple Occupation) property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation.  The average gross cash rental yields for the student property sector in the North West of England were 8.1% for the 2015.”

Help with housing costs isn’t aligning with rent for private tenants, says CIH

New research from Chartered Institute of Housing (CIH) reveals tenants face an increasingly widening gap between the Local Housing Allowance (LHA) they receive to help with their housing costs and the actual rent they pay.

Analysis conducted by CIH looked at LHA rates since 2012 and found that in some parts of the UK, people are only able to afford to rent in the bottom five or 10% of the private rented sector (PRS) market. However, the LHA rates were originally intended to ensure that people could access 30% of the market. The situation is set to worsen as LHA rates freeze for four years from April 2016.

The cash shortfall affects tenants across the UK, the study has found. In Aberdeen, Scotland, there are very severe cash shortfalls in every LHA category, and in Northern Ireland, 80% of LHA rates have already fallen below the bottom 30% of the market – second only to England. In Newport, South Wales, the LHA shared accommodation rate would need to be set at £29 per week more for people under 35 to be able to afford the whole of the lowest 30% of the market. In England, the LHA rate for Chesterfield’s broad rental market area is even lower than the lowest rent that the rent officer could find in their market evidence data – in other words, there’s no shared accommodation available at the LHA rate.

CIH chief executive Terrie Alafat CBE said: “We are becoming more and more concerned by the lack of correlation between LHA rates and rents, and our research shows that people are going to find it difficult to continue renting in the PRS.”

She added: “CIH is calling on the government to review LHA rates for all categories of accommodation, to make sure everyone is able to access a safe, affordable home.

(Read more)

Build-to-rent hailed as a solution for property market

Landlords are turning away from the rental market as prices rise, but build to rent could be the future of the market.

At the start of this year, it was believed that the build-to-rent market was the single biggest sector in the future of British property. A shining light, build-to-rent was going to see investment flood into the rental sector nationwide thanks to the fact it side-stepped the Stamp Duty levy, making it cheaper for investors, and offered tenants exactly what they wanted and needed for a rental home.
Millions of pounds were committed to the sector by a number of large companies, and things looked good, until the chancellor announced that build-to-rent would not be exempt from the tax changes after all. But is this really a hindrance, or does build-to rent have the inherent strength to overcome this setback? We take a look at the positives that make it still the perfect option for investors looking to get themselves onto the property ladder.

Below market value prices
The build-to-rent sector was dealt a blow in late March, when the chancellor revealed that it would not be, as had been expected, exempt from the 3% levy. However, that’s not all build to rent had up its sleeve, and it still has more to offer investors in its below market value pricing.

Guaranteed returns
Any property investment is a risk, and at a time when the chancellor has increased the cost of getting onto the rental ladder from an owners’ point of view, chances are that this risk looks even more unwelcome than ever before.

But it doesn’t need to be that way. With investments in many build-to-rent developments, investors can get themselves a guaranteed return of 7% for three years, which takes away the element of risk that might be acting as a little voice telling them not to invest in the market.

Long-term sustainability
The main driver of growth in the market at the moment has been generation rent; those who rent because they want to and not because they have to.


Build to rent sits perfectly when it comes to this rise in generation rent. Young people who choose to rent want to get their hands on homes that are located well in terms of transport and lifestyle, as well as being purpose-built for their needs. The build-to-rent sector serves this better than any other area of the property market, and as such is set up well for long-term success.

Source: Property Wire

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Abandonment issues – new laws to help landlords

Over a third of UK landlords have had a property abandoned by tenants before, according to new research from the National Landlords Association (NLA).

The problem was worst for Northern Landlords, with over 51% having experienced the problem – with more than half of North Eastern landlords (58%) having experienced an abandoned property.

A much lower 31% of landlords in the South West have had a property abandoned before, and a mere 33% in London.

Abandonment is when a tenant vacates a property before the tenancy is over, but fails to inform their landlord. As the tenant often leaves without paying outstanding rent, this poses multiple problems for the investor – compounded by the fact that it’s a criminal offence for the landlord to take any steps toward preventing the continuation of the tenancy, because the tenant still has the legal right to return and take up residence at any point.

Instead, the landlord is forced to go through a lengthy legal process in order to regain the abandoned property, which can take months.

The new Housing and Planning Act, which contains measures that aim to tackle the problem, recently received the Royal Ascent. The new measures also contain proposals allowing local councils to keep hold of the proceeds from prosecuting rogue landlords, as well as introducing more rigorous penalties and banning orders for serious or repeat offenders.

CEO of the NLA, Richard Lambert, said: ‘The process of recovering an abandoned property is too long, frustrating, and costly for landlords at the moment. Many people will be shocked by just how common this problem is, and landlords will be relieved to know that the Housing and Planning Act will create a new process to deal with the issue, giving them far greater security and peace of mind when recovering properties they believe to have been abandoned.’

New property investment platform launched to bring investors and property developers together.

New property investment platform launched to bring investors and property developers together.

A new online property investment platform, InvestSure, has been launched to bring together professional investors and property developers to help address the chronic lack of available finance in the UK property market.

InvestSure says it will allow property developers to access a diverse range of funding for projects, where previously traditional banks have been unable to provide it. InvestSure explains that better access to funding will be a vital component in helping Britain solve the housing crisis.

InvestSure differs from ‘peer-to-peer’ entrants into the space in that it is only open to professional investors, reducing risk and making it the first ‘pro-to-pro’ network of its kind. The platform has been launched to address the increasing two-tier nature of the UK property development market, in which small to medium sized developers are struggling to acquire funding on favourable terms thanks to tight banking restrictions.

Developers using the site will benefit from being able to quickly and efficiently secure funding for projects without being dependent on a small number of investors for equity, thus retaining greater control and improving margins.

On the other side of the equation, the platform will provide the cash-rich professional investor community with a wide range of attractive investment opportunities at a time when returns are difficult to find elsewhere.

Janine Lewis, CEO and founder of InvestSure, commented: “The UK property market has been seriously dysfunctional for some time. Since 2007, bank lending has been limited to 65% loan-to-cost at best, leaving developers to bridge the gap. This prevents them from moving quickly, and as a result activity has been opportunistic and sporadic. It has also placed an inordinate amount of power in the hands of investors, diminishing profits. The InvestSure platform will rebalance this relationship, allowing developers to gain exposure to numerous investors competing to fund projects, making the process quicker and more efficient.

“This is sorely needed. We are in the midst of a housing crisis, one that cannot be solved by large developers alone. The money is out there: there are plenty of professional investors out there willing and able to fund these projects. InvestSure can connect these two groups together in an efficient, convenient, and mutually beneficial way.”

The InvestSure platforms covers all forms of property investments across the UK, including development projects, assets, land and bonds covering every asset class. Development opportunities are only viewable by investors (not other developers), and investors are able to search and filter opportunities to match their investment profile. Brokers and intermediaries are also able to use the site, splitting fees with InvestSure. Projects can also be funded through syndication.

Until the end of 2016, investors and property developers can become members on the platform free of charge.

Source: Property Wire

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Home-owner house purchase lending in Wales up year-on-year

Home-owner house purchase lending in Wales up 25% year-on-year in first quarter says Council of Mortgage Lenders (CML).

  • Home-owners borrowed £850m for house purchase, down 16% quarter-on-quarter but up 29% year-on-year. They took out 6,600 loans, down 16% on the previous quarter but up 25% on quarter one 2015.
  • First-time buyers borrowed £330m, down 20% on the fourth quarter 2015 but up 22% on the same period last year. This totalled 3,000 loans, down 19% quarter-on-quarter but up 20% year-on-year. The average age of a first-time buyer is now 29 years old.
  • Home movers borrowed £530m, down 12% on the fourth quarter 2015 but up 36% compared to a year ago. This totalled 3,600 loans, down 14% quarter-on-quarter but up 29% year-on-year.
  • Remortgage activity totalled £420m, down 2% quarter four but up 20% compared to a year ago. This came to 3,700 loans, down 3% quarter-on-quarter but up 12% year-on-year

Julie Ann Haines, CML Cymru chair, commented:

The first quarter of the year typically sees a seasonal lending dip, but the year-on-year growth in activity in all lending types is encouraging. That this is the best first quarter performance for all lending types in Wales since 2007 suggests a growth period for the market. With affordability improving this quarter, supported by a generally favourable economic backdrop, we would expect further growth in lending as we go into the summer months.

Wales house purchase and remortgage lending in the first quarter

While seasonal factors generally cause activity to be lower this period, this is the highest number of loans and the most borrowed for house purchase in the first quarter of the year since 2007. This was also the case for first-time buyer, home mover and remortgage activity.

[Read more here]

Lenders helping investors bridge the finance gap

There was a 56% rise in bridging lending activity during the first quarter of this year as more investors secured short-term loans to finance property deals.

Bridging finance was once perceived as a ‘last resort’ lending option but it has been crucial to helping many investors buy property.

From development and investment properties to homes with short leases that may be difficult to secure a mortgage on, bridging can be appropriate in a wide range of circumstances, but it is most commonly used in the residential sector to acquire properties at auction.

Data from Bridging Trends confirmed another strong quarter for bridging volumes, with contributor lending reaching £125.35 million in the first quarter of 2016 – an annual increase of 56% (£80.47m), and a 3.4% increase on Q4 2015 (£121.21m).

Joshua Elash, director of bridging finance lender MTF, said: “It is positive to see an increase in the gross lending volumes and although there has been upward movement on both the weighted average interest rates and loan-to-values, both continue to suggest that the market is healthy for consumers and is behaving responsibly.”

Bridging Trends is a quarterly publication conducted by bridging lender MTF, and specialist finance brokers: Brightstar Financial, Enness Private Clients, Positive Lending, and SPF, to monitor the general trends in bridging finance.

Unregulated bridging loans continued to outperform regulated bridging loans, though the number of regulated loans transacted by contributors increased from 35.9% in Q4 2015, to 42.5% in Q1 2016.

The growing popularity of bridging finance in the residential property sector is owed largely to the fact that a bridging lender can come up with the required funding for a purchaser to buy property in as little as 24 hours, something which mainstream mortgage lenders generally cannot do.

For the fourth consecutive quarter, mortgage delays were the most popular reason for accessing a bridging loan, at 42% of all lending in Q1 2016, dropping slightly from 44% during Q4 2015. Refurbishment was the second most popular reason for getting a bridging loan, contributing to 21% of all lending.

“Once again the biggest reason for someone taking out a bridging loan is because of delays with their long term mortgage,” said Kit Thompson, director of Bridging Loans at Brightstar. “This is shocking and causes unnecessary costs for borrowers.”

He added: “It is always a surprise to me that a mainstream mortgage takes such a long time to complete given that so much of the process is now automated at so many lenders, whereas a bridging loan which is underwritten individually on a case by case basis can be completed in under forty days.  While it is full credit to the bridging industry that they can rise to the challenge to ensure that people do not lose the opportunity to buy their new home, it is surely time that mainstream mortgage lenders did likewise.”