Friday, 28 April 2017

NALS wants 'rogues database' extended to include more agents

By Graham Norwood

The National Approved Lettings Scheme has called for the London Mayor’s new rogue agents’ database to be extended to include those agencies that do not display fees or do not belong to a mandatory redress scheme.

Yesterday Letting Agent Today reported on an initiative from Sadiq Khan to create a capital-wide database, published on the Mayor’s website, naming criminal landlords and letting agents who have been successfully prosecuted for housing offences.

Khan says it will give Londoners greater confidence when renting, allowing them to check a prospective landlord or agent before moving into a property, and acting as a deterrent to the minority of landlords and agents who behave dishonestly.

Now NALS chief executive Isobel Thomson wants this to go further.

“NALS fully supports any measures that improve the private rental sector” she says.

“The criminal landlords and agents database will place a spotlight on the inconsistent approach to housing regulation across London. About 80 per cent of housing prosecutions are taken by just five boroughs, while others take no prosecutions. Councils must up their game to tackle the rogue element of the market” she adds.

But she wants the Greater London Assembly and Khan to go further and to consider adding agents who do not display fees or fail to belong to a redress scheme to the database in order to protect consumers.

"It’s vital too that the GLA develop a more consistent approach to property licensing schemes. Every scheme in London has different terms and conditions, criteria and geographical coverage with no consistency in application process or fees. This has to change” Thomson says.

The Association of Residential Letting Agents and the National Landlords Association backs the Mayor’s scheme, but the Residential Landlords Association has criticised the proposal for duplicating pledges made by the Theresa May government.

Top tips to improve your property’s EPC rating

By Marc Da Silva

From the 1st April 2018, it will be unlawful to rent a property which breaches the requirement for a minimum energy performance rating of E on an Energy Performance Certificate (EPC), unless there is an applicable exemption.

But when it comes to improving the energy efficiency of their properties, a concerning 49% of landlords recently surveyed by E.ON said that they do not feel adequately informed about how to do so.

Not only does this mean they may struggle to get their property compliant with the minimum EPC rating regulations, but they also might miss out on other benefits for making a property more energy efficient.

Thankfully, Mike Feely from E.ON has provided a number of tips for landlords looking to improve their properties’ EPC ratings:

 + Don’t underestimate the importance of insulation in making a property more energy efficient. If the property was built before or around 1920, it most likely has solid walls. Solid wall insulation can be installed from either the inside or the outside. If the property was built after 1920 it’s likely to have cavity walls. These have a double external wall with a small gap between which can be filled with insulation.

+ Make a play of your energy savings standards – don’t just think of improving energy efficiency as something for meeting regulations, it’s a commercial decision too. Given most tenants are responsible for paying energy bills, some may be willing to pay more for properties that are energy efficient, so make sure you’re making the most of this as a selling point.

+ Without properly insulated windows, the property could be losing up to 10% of its heat. Double glazed windows make a big difference when it comes to lowering energy bills as well as reducing condensation and noise. Instead of double glazing you could install secondary glazing which involves fitting a pane of plastic or glass inside the existing window recess to create an insulating layer of air. Though not as effective as double glazing, secondary glazing still saves a significant amount of energy and allows you to maintain good kerb appeal by keeping original features such as sash windows.

+ EPC ratings look only at permanent improvements to the fabric of the building so think about long-term upgrades that will help to reduce heat and energy use. Simple things – sausage dog draught excluders and the like – will help keep heat in, but for the EPC you need to find permanent ways to fill the gaps to stop heat escaping through windows, doors, letterboxes and even keyholes.

+ For those looking to bring their properties completely up to date, consider renewable technologies such as solar panels with an at-home battery to store electricity for use even when the sun goes down. Be aware these will contribute to your rating only if they’re helping to heat the house, rather than providing electricity for other uses.

Thursday, 27 April 2017

London house prices: average asking prices in the capital fall at biggest rate in eight years while UK prices hit record high

By Prudence Ivey

The drop in prices is led by more expensive homes in central London, but there's some hope for first-time buyers too.

London house prices have experienced their biggest annual drop in nearly eight years, as sellers of more expensive homes in desirable inner London areas adjust their expectations following years of spiralling price rises.

While house prices in the rest of the country hit a new record high, Greater London saw asking prices fall by 1.5 per cent.

The drop – which equates to an average of £9,400 – was mainly due to continuing dips across prime central London, but there are signs that the price pressure for first-time buyers may also be easing, according to the report released by Rightmove today.

The biggest fall was recorded for large family homes with five or more bedrooms, where average prices are now £1.49-million, 7.3 per cent lower than in April 2016. But Rightmove data found that inner London was also affected, with asking prices dropping in such popular areas as Wandsworth, Islington, Lambeth and Southwark, where average prices range from £630,000 to £800,000.

“Sellers in the capital are having to trim their price aspirations to try to tempt spring buyers to buy their property instead of one down the road,” said Rightmove’s Miles Shipside.

Annual house price changes in London

Source: London Evening Standard graphic:<br> Rightmove House Price Index for April 2017 Created with Datawrapper 
“While the year-on-year fall of 1.5 per cent is the worst for nearly eight years, it needs to be put into the context that overall prices are still an average of only £10,000 below their all-time high. Demand continues to be strong, but at the right price for the right property.”

Asking prices in inner London dropped by an average of £35,500 year-on-year, equivalent to the Stamp Duty payable on an average-priced £803,000 property in the area.


First-time buyer properties in London rose 0.5 per cent compared to April 2016 to £483,592.

While this is still well above widely accepted affordability calculations, the slowing pace of price growth for two-bedroom and smaller properties will offer a degree of respite to buyers whose ability to save towards a deposit has been dramatically outpaced by rising prices.

Although prices recorded an overall annual fall in the capital, the average asking price in outer London went up slightly to £526,000.


However, even some of the cheapest outer boroughs experienced only moderate price rises, with some seeing average prices fall slightly, thanks to declining interest from buy-to-let investors after last April’s Stamp Duty hike on second homes.

In Barking and Dagenham, still London’s cheapest local authority, prices rose by only half a per cent to £304,000, while in the Olympic borough of Newham, home to popular first-time buyer areas including Forest Gate, East Ham and Stratford, they fell 1.1 per cent.

“We’re finding that most of the properties we’re selling are to first-time buyers or upsizers coming from areas like Camden, Islington, Hackney or Bethnal Green. They can sell their flats and buy a Victorian terraced house here for £400,000,” says Rashad Cheema, manager of Spencers estate agent in Newham.

“Investors have eased off because of the Stamp Duty hikes last April. About 90 per cent of our buyers are buy-to-live now and most of those are first-time buyers or upsizers. Before April 2016 at least 60 per cent of our buyers were investing in buy-to-let.”

Suspend or extend: Agents back request over letting fees consultation

By Rosalind Renshaw

A number of influential agents have backed an official request by ARLA Propertymark asking the Government to suspend or extend the consultation on the fees ban.

The agents include Hunters, whose founder and chairman is Kevin Hollinrake, now a Tory MP and regularly touted as a future housing minister.

ARLA Propertymark chief executive David Cox yesterday wrote to the Secretary of State at the Department of Communities and Local Government, Sajid Javid.

Currently, the consultation is due to end on June 2 – just days before the General Election on June 8.

Citing the election ‘purdah’, DCLG has already cancelled a series of ‘workshops’ where agents could have had a platform for their views. DCLG has said it may hold workshops after the consultation has closed.

Cox’s letter to Javid says:

“As the UK’s largest professional body for the lettings industry with over 9,000 members, ARLA Propertymark requests that you extend the time limit for the consultation to ban letting agent fees in light of the recently announced General Election.

“We were pleased that a key part of this consultation process, as set out by DCLG, was to engage the sector and host a number of workshops throughout the country to discuss the implementation of the fee ban and proposals in the consultation.

“This was most welcome as it would have allowed agents to gain clarity from officials on some of the points raised in the document and share their views on the proposals.

“However, as it is likely the fee ban will become a manifesto pledge in the coming weeks and therefore a political issue, this work cannot properly take place during purdah; when civil servants will need to take extra care to remain impartial and objective.

“General Election guidance also makes clear that statements which refer to future intentions of the Government should not be handled by a Department.

“Therefore, ARLA Propertymark asks that the Government either extends the consultation for a further period beyond the election, or suspend it until a new government is in place.

“Either way, we request that the consultation does not close until the now-cancelled workshops have taken place; as the Department originally committed to do as part of the consultation process.”

The letter is endorsed by Hunters, plus Belvoir, Chestertons, Connells Group, Countrywide, Dexters, Felicity J Lord, Foxtons, haart, Hamptons,  JLL, Knight Frank, Leaders, Martin & Co, Romans, Savills, Sequence and Your Move. It also has the backing of two of the tenancy deposit schemes, TDS and mydeposits.

Wednesday, 26 April 2017

Spring selling season hots up but house price growth is not matching up

By Isabelle Fraser

Property in Bristol is among the most in demand in the country, according to eMoov CREDIT: GETTY

The growth of asking prices for property has slowed to below average rates for this time of year, but the number of sales has surged as the spring selling season starts heating up.

Rightmove said that asking prices across the country were up 1.1pc in April, below the 1.6pc average, but that the number of agreed sales at this time of year was the highest since 2007. The annual rate of growth was 2.2pc, the lowest level in four years.

But the number of sales are up, 10pc higher than April last year. This is artificially higher because of the surge of landlords snapping up buy-to-let properties before the stamp duty hike at the start of last April, which resulted in a slump for the rest of the month.

The average asking price of a home in the UK has also hit a new record high, eclipsing the sum set in June 2016. It now sits at £313,655.

Miles Shipside, director of Rightmove, said: “It remains to be seen what effect the run-up to the snap election will have, though any slowdown in activity will be counter-balanced by the market’s current fast pace. Indeed, in locations where choice of suitable property is limited hesitation could mean losing out to others who still decide to act.”

It came as it was revealed that just two boroughs in London have seen demand increase for properties in the first quarter of 2017. Across the capital, buyer demand has been falling, except for in Harrow and Newham, according to online estate agency eMoov.

The lowest levels of demand were in the most expensive areas of the capital, such as City of Westminster and Kensington and Chelsea, where average prices have been falling as a result of higher levels of stamp duty.

EMoov said that there has been a general slowdown in demand across the country, which it calculated by looking at the balance between the supply and demand for housing stock in a given area.

The highest level of demand in the country was in Rugby, Portsmouth and Bristol.

Tuesday, 25 April 2017

Equity release market in UK continues to see strong growth

The equity release sector in the UK saw record year on year growth in 2016 and in the first quarter of 2017 it has continues to break new ground, the latest data shows.

It is continuing to experience record numbers of new customers with 8,351 new plans agreed in the first quarter of 2017, a rise of 61%, while the total value of lending reached £697 million, a rise of 77%.

The figures from the Equity Release Council also shows that for the first time since 2003 the market has started a new year busier than it ended the previous one.

Drawdown remains the most popular product type, but the first three months of the year also saw significant growth in lump sum activity which accounted for 40% of new plans agreed and over 6,000 customers with drawdown lifetime mortgages took advantage of reserve facilities.

The market has shown sustained momentum following a record breaking 2016 in which annual lending reached £2.15 billion. The figures are the latest sign of burgeoning supply and demand for products allowing older home owners to unlock their housing wealth in later life in order to boost their retirement finances.

Between the fourth quarter of 2015 and the first quarter of 2016, the number of new equity release plans agreed fell 19% while the total value of lending fell 11%. In contrast, the number of new plans increased 1% from the fourth quarter of 2016 to the first quarter of 2017 while the total value of lending by increased 4% from £670 million.

Comparing the figures over the two years to the first quarter of 2015, the last quarter before the pension freedoms were introduced, the number of new plans agreed in the first quarter of 2017 was 71% higher while the total amount of lending in the first three months of 2017 has more than doubled from £326 million, an increase of 113%.

In the wake of reforms that have given consumers greater access to their pension savings and abolished the compulsory purchase of annuities, the figures suggest older home owners are increasingly looking to their housing wealth as one of a range of assets to use as part of their retirement financial planning.

‘The early months of 2017 have bucked the seasonal trend of a slower start to the year, with both new customer numbers and total lending reaching record levels. Alongside this, the annual rate of growth is also the fastest that the sector has seen, as equity release continues its progress to becoming a mainstream retirement product among older home owners,’ said Nigel Waterson, chairman of the Equity Release Council.

‘Much of this activity is due to increasing supply as well as growing demand. The past year has continued the trend of new providers, products and flexibilities coming onto the market. Regulatory changes, such as the common sense relaxation of affordability rules for interest served products, have also provided more scope for the sector to meet burgeoning demand,’ he explained.

‘Equity release can offer a valuable solution to help meet the many and varied financial demands people face in later life, backed by a host of product safeguards along with financial and legal advice. Consumers continue to find equally varied uses for their housing wealth, including paying off existing debt such as interest-only mortgages, helping younger generations onto the housing ladder, investing in home improvements and improving their lifestyles in retirement,’ he added.

The sector is likely to see further growth in the second quarter of the year according to Alice Watson, head of marketing at Retirement Advantage Equity Release. ‘This is unprecedented growth for the equity release market. These figures reinforce the trend that take-up of equity release is growing at levels unparalleled by other forms of mortgage finance. There appears to be no let up in the number of people recognising the value in considering equity release as part of a more holistic approach to retirement income,’ she said.

‘With continued innovation among lenders looking to expand product ranges providing a more compelling choice for consumers, it’s no surprise that the equity release sector is proving attractive to more people. Retirement Advantage recently introduced two new products to its range, further enhancing our ability to meet the increasingly diverse needs of customers,’ she added.

Fees ban: 'policy may be lost thanks to election' warns trade body

By Graham Norwood

A trade body has suggested that the General Election on June 8 may lead to a government with new priorities, meaning the ban on letting agents’ fees on tenants in England could be abandoned.

Last week we reported that the Department of Communities and Local Government had abandoned the workshops with letting agents and other industry players, which were at the heart of the formal consultation period for the measure.

Although the consultation itself is still ongoing, the scrapping of the workshops has raised questions. Now the policy director of the Residential Landlords’ Association, David Smith, has written on his organisation’s website that “There is now a possibility that the entire policy will be lost if a new Housing Minister has other things which capture his attention more strongly.”

Smith’s warning comes in an article highlighting other issues which may be delayed or scrapped depending on the result of the election and the inclinations of the new government and housing minister.

One is the Homelessness Reduction Bill which, despite being passed by Parliament, has not received the Royal Assent required for it to become law. “If it is not done before May 3 then a date will not be set until after the election” says Smith.

In addition there are regulations that need to be agreed for the setting up of the Rogue Landlord database and Banning Orders which were heavily publicised by the May government in recent weeks. “Regulations were expected shortly to start the process of making this happen and the IT project that underpins the database was also in progress. Again these are now trapped without a Minister to push them forward for the next month...The October deadline must now be in doubt” suggests Smith.

Finally the Housing and Planning Act also included provisions about Client Money Protection being made mandatory for letting agents. Smith warns: “There were no further consultations expected in these areas but there were working group reports which needed approving and regulations were again to be drafted to implement the reforms. Yet again this will be at risk of delay.”

Monday, 24 April 2017

Housing associations are critically important, but have lost their way

By Steve Hilditch

Homes to buy under construction: but are housing associations doing enough for those looking to rent affordably? Photograph: Andrew Matthews/PA
I recently spoke at a large meeting, organised by Westminster North MP Karen Buck, of angry tenants and shared owners from a housing association.

They fumed about poor repair services, high rents, shoddy standards in new homes, and the enormous salary of their association’s chief executive. They were the embodiment of the issues raised by John Harris in his recent Guardian articles.

Housing associations vary a lot and it is not easy to generalise. Most small and medium-sized associations retain their overriding commitment to meeting housing need and to providing good services to their tenants and residents. But there is growing concern at the attitude of some – I emphasise not all – that have become developers first and foremost.

Ten to 15 years ago, associations started getting into private development as a way of generating surpluses, which could be added to the significant grant they received from central government to provide more social housing and affordable home ownership.

Now what was once the tail wags the dog. The primary interest is maxing numbers of new homes irrespective of who they are for and they have all but abandoned their mission to provide social rented homes for the poorest. One of the worst practices – encouraged by the government – has been to convert homes previously let at a social rent rate, typically 50% of market rates, into so-called “affordable” rent, at up to 80% of market rates, so they can make more money out of them.

In the early 2000s the work of housing associations was brought into the light by a new regulatory regime. Associations that had talked a great job for years were shown to have only “one star” services (out of three) following Audit Commission inspections. External scrutiny led to a fast rate of improvement and by the end of the decade, most had achieved three stars: a great example of regulator and regulated working together for the benefit of the customer.

Then, in 2010, the incoming coalition government abolished the regulator, abolished the Audit Commission, and slashed public support for affordable housing by 60% in the first year alone. The results were predictable: rapid commercialisation, a speedy departure from the traditional mission to house the homeless, a decline in service responsiveness, and a desire to switch every available penny into new development.

Why does this matter so much? Simple: housing associations are critically important institutions. They never replaced council housing, as was once intended, but they provided good homes at genuinely affordable rents and prices to people who could not compete in the housing market. Homeless and badly-housed people depended on them to deliver because no one else would.

There is some hope that London mayor Sadiq Khan will pull big associations back from the brink and make them relevant again. He is insisting on more genuinely affordable homes, including social rent, in new developments and is targeting his budget accordingly.

It is desperately important that housing associations – built on public subsidy and mostly charities – gear up to meeting housing need and providing high-quality services again. We also need a new generation of council housing. If we could get both these things, we would stand a hope of tackling the housing crisis.

Buy-to-let lending ‘unlikely to recover in the near future’

By Marc Da Silva

The UK property market continued to rally last month, with gross mortgage lending surging by 19% compared with February, but it is becoming more ‘complicated’ for buy-to-let landlords to access the finance they need to add to their property portfolios, according to the latest data from the Council of Mortgage Lenders (CML).

Various tax changes have had an adverse impact on the buy-to-let market, as reflected by the fall in transactions in the sector, and the signs are that the market is not likely to pick-up any time soon.

“Buy-to-let lending is unlikely to recover in the near future,” said Paul Smith, CEO of haart estate agents. “The tax changes brought about in April heaped more strain on Britain’s landlord population.”

“We need see the government incentivising home movers, and not just penalising investors,” he added.

Also reflecting on the latest mortgage lending data, John Goodall, CEO and co-founder of buy-to-let specialist Landbay, commented: “Following the recent changes to buy-to-let tax relief and the introduction of tighter underwriting criteria, it is becoming even more complicated for aspiring homeowners and landlords to access the finance they need.”

Goodall believes that some firm commitments from the government are needed to tackle the housing crisis.

“Positive measures aimed at encouraging the development of high quality rented properties will target the lack of supply across both sales and lettings in the housing market,” he added.

Friday, 21 April 2017

Tory-backing agent predicts fee ban may be in Conservative manifesto

By Graham Norwood

A prominent campaigning letting and sales agent predicts that the Conservatives are likely to put their proposed ban on letting agency fees as a manifesto commitment.

Ajay Jagota - founder of the KIS agency and a campaigner against deposits paid to agents - is also the new chairman of the South Shields Conservative Association.

He says the industry should not kid itself that if a Conservative government is re-elected in the June 8 General Election with a bigger majority that policies unpopular with agents, such as the ban on fees levied on tenants in England, would disappear.

“If anything I’d expect to see that in the Conservative manifesto” he warns.

The government has already announced that it is scrapping workshops for letting agents to discuss the ban - although the formal consultation on the proposal goes on until June 2.

Letting agents who had enrolled for the workshops (the first of which was to be held on April 28 in London) have received an email letter saying:

“As we are now in a pre-election period, we sincerely regret to announce that we are unable to continue with the workshops scheduled between April 28 and May 11 to support the consultation on banning letting agent fees paid by tenants.

“The consultation will remain open until 2 June and we continue to welcome your thoughts in this forum.

“Subject to the new government and the consultation responses, additional workshops discussing the letting agent fee ban may be held later in the year. We will email you with details of any such workshops and the website will be used to advise of further updates.

“If you would like to contact the Letting Agents team for further information, you can do so by emailing

“We thank you for your interest in the workshops. Your thoughts on the ban on letting agents’ fees to tenants remain just as important and we do hope that you will continue to engage with the Department through the consultation or via email.

“Our sincere apologies for any inconvenience caused.”

Consultation of letting fees ban in disarray after election called

By Rosalind Renshaw

The consultation on the ban on letting agent fees has been thrown into disarray by the snap General Election.

The series of workshops which the Department for Communities and Local Government planned to hold with agents has been cancelled – but the consultation itself is continuing, even though it ends on June 2, just days before the election itself.

ARLA Propertymark had issued its members with a ‘battle kit’, encouraging individual agents to meet their MPs during surgeries and lobby their cause.

However, Parliament is being dissolved on May 3, so there will be no MPs – much less, constituency surgeries – from then on.

The same message – to talk to local MPs – has been reinforced by industry figure Jane Gardner in a Facebook video –

However, that too does not mention the election.

ARLA Propertymark is now having to re-do parts of its ‘battle kit’.

The announcement, issued yesterday, that DCLG has called off its workshops confusingly says that it might hold workshops AFTER the consultation has closed.

DCLG said yesterday: “It was announced this week that a General Election will be held on 8 June. As we are now in a pre-election period, we sincerely regret to announce that we are unable to continue with the workshops scheduled between 28 April and 11 May to support the consultation on banning letting agent fees paid by tenants.

“The consultation will remain open until 2 June . . .

“Subject to the new Government and the consultation responses, additional workshops discussing the letting agent fee ban may be held later in the year.”

The workshops that have been cancelled had been due to run in London, Manchester, Bristol and Birmingham.

They would have at least given agents a platform to voice their concerns.

However, questions must now be asked whether electioneering candidates (not just current MPs) will be interested in hearing agents’ views on the fees ban; whether they will simply regard it as a vote winner; and why on earth DCLG has, out of fairness, either not simply cancelled the consultation for now, or extended the closing date.

Thursday, 20 April 2017

Build to Rent developers and investors sign up to offer three year tenancies as the norm

Leading members of the Build to Rent sector in the UK have signed a pledge to offer tenants three year tenancies in any of their new developments.

The three year pledge, but together by the British Property Federation (BPF), could mean the start of longer tenancies which research shows people in the private rented sector, especially families, want.

The signatories include 20 of the Build to Rent sector’s most active investors and developers who say they are responding to the recently published Housing White Paper in which Housing Minister Gavin Barwell asked for this new generation of purpose built, professionally managed rented homes to offer family friendly tenancies, such as for three years, for those who want longer term stability when renting.

The BPF and a cohort of the build to rent’s key players have responded and published the pledge to demonstrate the sector’s commitment to providing three year tenancies and working with Government to ensure the sector can play its part in rolling back 20 years of housing undersupply.

The Housing White Paper states that Government said it would be working with the BPF to consolidate this approach across the sector.

The BPF’s pledge says: ‘One of the benefits of the UK’s new Build to Rent sector is its ability to offer longer tenancies to its customers. We, the undersigned, therefore pledge to offer our customers the option of a three year tenancy in any of our new Build to Rent buildings.

‘Our customers will not be under any compulsion to take up this three year tenancy option, and can still opt for shorter terms. To further assist customers with their budgeting, we pledge to review rents no more frequently than once a year or at the end of the initial term, and to set out clearly at the start of the tenancy the basis on which rents will be reviewed. Such tenancies will allow the tenant to break, after a short period of notice.’

According to Ian Fletcher, BPF director of real estate policy, explained that the pledge underlines one of the many benefits of the sector to Government and the sector’s customers. ‘While many Build to Rent providers already offer longer tenancies, our aim is that three year tenancies become a trademark of the sector,’ he said.

The pledge has been welcomed by Barwell. ‘Our Housing White Paper sets out plans to create a bigger, better private rental sector for tenants and landlords, and to give renters a fairer deal. So, it’s great news that British Property Federation members have pledged to offer family-friendly three-year tenancies for renters in build to rent properties,’ he said.

‘This Government has already helped deliver more than 10,000 purpose build private rented homes since 2012. This important move gives additional security to those tenants and their families, as well as encouraging change in the wider market,’ he added.

Momentum improves but outlook for the letting market remains unpredictable

By Marc Da Silva

There was a significant increase in both the number of new listings and properties let last month, but the rental market still remains extremely volatile, according to Agency Express.

Following a slowdown throughout the UK letting market in February, the latest Agency Express Property Activity Index shows that national figures for properties ‘let’ saw a 16.4
% month-on-month rise while new listings ‘to let’ rose 12.2%.

Looking at performance across the UK, all 12 regions recorded by the Property Activity Index reported increases in new listings ‘to let’ as well as homes ‘let’.

March’s top performing region was London, with homes to let increasing by 28.2% month-on-month, marking the capital’s largest rise for the month of March since the index’s first records in 2012.

Various other regions also performed well last month, including the West Midlands, which is actually the only region to record consistent increases since the start of the year, with properties ‘let’ sat at 18.3% and new listings ‘to let’ sat at 8%.

Properties ‘To Let’

+ London +28.2%

+ South East +22.9%

+ Yorkshire & Humberside +19.5%

+ South West +17%

+ Wales +17%

Properties ‘Let By’

+ East Midlands +32.2%

+ East Anglia +31.1%

+ Central England +19.8%

+ London +19.6%

+ North East +18.6%

+ West Midlands +18.3%

Stephen Watson, managing director of Agency Express, said: “Throughout March we typically see an increase in activity across the UK lettings market, and this month figures did surpass those recorded in 2016. However, between the demand for buy-to-let loans seemingly decreasing since the stamp duty hike, and the recent tax relief changes it is difficult to say what the forthcoming months may hold. We may see some landlords selling off their properties as a result of the changes.”

Thursday, 13 April 2017

Borrowing becomes cheaper than ever as lender slashes five-year mortgage deal to below 1.3%

By Rosalind Renshaw

In a move which has elicited genuine gasps in the mortgage world, a lender has slashed rates on a five-year fixed mortgage to just 1.29% – the same as for its two-year fixes.

Atom Bank only launched into the mortgage market in December, and its latest offer went live yesterday.

The digital-only lender is offering five-year rates starting at 1.29% on a 60% loan-to-value mortgage, with the rate fixed for five years. The rate goes up to 1.99% on a 90% mortgage, again fixed for five years.

Would-be borrowers may have to act fast as the offer is available for a limited time, and only through brokers.

Atom director of retail mortgages Maria Harris said: “This move is entirely unprecedented.”

Andrew Montlake, a leading figure in the mortgage industry, said: “Talk of disruption in the mortgage industry has taken many forms, with digital banks such as Atom being at the forefront of this.

“However, this latest move, offering five-year fixed rate products at two-year fixed prices, has really turned the mortgage market on its head.”

Montlake, director of Coreco mortgage brokers, said the deal could be a game changer.

He said: “Customers could really benefit from this new breed of lender.”

There are lower-priced products on the market – Yorkshire Building Society has a 0.99% rate, but this is fixed for only two years.

Atom’s new five-year deal significantly undercuts the opposition: the next cheapest five-year deal is offered by Leeds Building Society with a rate of 2.55%.

While there are early redemption charges with Atom’s new five-year deal, borrowers can overpay by 20% each year without being charged, and the mortgage is portable.

Housing market grinds to a halt as number of homes on market hits record low

By Isabelle Fraser

The average estate agent has just 43 homes on its books
The housing market has slowed further as the number of homes on the market hit a fresh low, according to the Royal Institution of Chartered Surveyors.

Estate agent branches each have on average just 43 unsold properties on their books, and 13pc more respondents reported seeing a fall in new listings of properties rather than a rise in March.

Rics' market survey found that activity in the market was subdued, with new buyer inquiries and agreed sales remaining low as well.

Across the country surveyors were less positive than in previous polls about the prospect of house price rises over the next 12 months: a net balance of 24pc more respondents predicted a rise than a fall, which was lower than the 37pc in February. But there is a consensus that any rise in house prices will be lower than previously thought.

Rics' survey provides a helpful snapshot of the market and is a useful of bellwether for future price changes.

House prices in the capital have been falling for some time, but there is a glimpse of positive news as 14pc more respondents from London forecast house prices will be higher, rather than lower, in 12 months' time. Buyer interest has also started to increase in the capital, as falling prices bring more homehunters to the table.

Simon Rubinsohn, Rics' chief economist, said: “High-end sale properties in Central London remain under pressure, while the wider residential market continues to be underpinned by a lack of stock. This includes rents, with rents away from the capital generally moving higher as demand outstrips supply.

“For the time being it is hard to see any major impetus for change in the market, something also being reflected in the flat trend in transaction levels.”

While sales did rise in a few areas, such as Wales, Scotland and Northern Ireland, it was outweighed by low levels in the rest of the country; those polled said they expected the level of transactions to remain subdued.

Brian Murphy, head of lending for the Mortgage Advice Bureau, said that "the market has found a level that, unless consumer sentiment changes radically, could form the basis of a ‘flat’ market over the coming months".

"This in itself is perhaps not a negative situation, as a calm and steady picture overall would benefit many, particularly given current political and economic factors," he added.

Wednesday, 12 April 2017

Mortgage and stamp duty issues affecting 11% of home buyers in UK

More than one in 10 home owners in the UK have tried to move house but decided against it due to stamp duty or mortgage issues, new research has found.

Overall 11%, equivalent to around 1.2 million home owners gave up plans to move house in the past three years due to financial issues including mortgages, the research from the Nottingham Building Society found.

Some 8% felt the cost of stamp duty was too much while 3%, or 327,000 people, were turned down for mortgages. Younger home movers, hose aged between 18 and 44, were most likely to be put off by the cost of stamp duty and around 14% who had given up buying blamed stamp duty.

But a lack of suitable homes to buy is the biggest moving block, the research also found.
Around 25% of home owners questioned said they had looked but could not find a suitable house.

However around 30% of home owners said they cannot currently afford to move home so are concentrating on improving their house and around one in five say they cannot find a better house to move to.

‘The mortgage market is generally performing well with growth in remortgaging and for loans to first time buyers with strong competition from lenders. There are a wide range of deals and advice available for all types of borrowers but the home moving market is still not expanding which points to wider issues than simply mortgages or stamp duty as the blocks in the market,’ said Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services.

‘Home movers clearly are also struggling to find suitable homes to move to which turns the spotlight on improving their existing homes rather than moving. The key to remortgaging successfully is to search the market for the most appropriate deal and to get advice on options particularly for older borrowers who may need to extend their loan into retirement,’ he added.

Councils want 'tiny' flats banned and jail for rogue landlords

By Graham Norwood

A body representing 370 councils in England and Wales wants the government to close a legal loophole which allows the conversion of houses into multiple tiny ‘units’ which are then let as self-contained flats.

The tactic is reported to have been used by some landlords to secure the maximum level of housing benefit payments which are paid on behalf of tenants direct to landlords.

The Local Government Association claims the loophole abuses legal exemptions and the lack of clarity in environmental health, planning and housing benefit rules to avoid detection, and is resulting in widespread abuse of taxpayers’ money as well as housing tenants in poor and often dangerous accommodation.

The LGA is also calling for more prison sentences for the worst landlords, rather than imposing fines. It says some fines can be as low as £1,000 for serious safety offences and claims these are often offset by profits at the expense of exploited and vulnerable tenants whose lives may be at risk.

The association says private landlords pocketed £9.3 billion in Housing Benefit in 2015, twice that of £4.6 billion in 2006. The micro sub-division of properties - called the Lockdown model - is thought to have contributed to this sharp rise and the loophole which first started in London is now spreading across the country.

Landlords can convert homes into a maximum of six small self-contained studios with en-suite showers and portable cooking equipment, without planning permission, but the LGA says electricity supplied to the different properties is often run on stolen meters or hotwired supplies, creating fire hazards.

Under recently-introduced legislation, councils can issue the worst landlords with fixed penalty notices of up to £30,000 for offences including failure to comply with improvement and overcrowding notices. Councils can also apply banning orders when new government regulations come into force later this year.

But the LGA says the micro-conversion loophole being exploited by rogue landlords is undermining these new powers, and states that councils need streamlined housing and planning powers to stop landlords converting properties into “micro flats” without planning permission to protect tenants.

Tuesday, 11 April 2017

Zero house price inflation is to be welcomed not feared

By Larry Elliott

The ‘sugar rush’ of the government’s help to buy scheme has finally worn off. Photograph: Chris Ratcliffe/Bloomberg via Getty Images

Ready to go house hunting? Tradition has it that no sooner have the hot cross buns been buttered on Good Friday than potential buyers start the search for a new home. Estate agents look forward to Easter the way retailers relish Christmas, but perhaps with less exuberance this year than is customary.

As things stand, 2017 looks set to be the weakest year for housing transactions since 2013. The latest surveys from Nationwide and Halifax show house prices are no longer rising.

In a sense, the lack of oomph in the property market is curious. Home ownership is still much sought after in Britain, where there is a strong feeling that bricks and mortar are a more reliable long-term investment than any other asset. What’s more, it has never been cheaper to borrow.

Even before the Bank of England cut interest rates to a record low of 0.25%, lenders were vying with each other to offer the most attractive home loan packages. Competition has driven down mortgage rates to ultra-low levels. Home ownership has fallen sharply, since peaking in the early 2000s, and is now at its lowest level in 30 years, yet there is no surge of prospective buyers seeking to take advantage of attractive deals.

One explanation is that Brexit has made people wary about taking on financial commitments. Another is that rising inflation has made individuals feel worse off and is having a dampening effect on the housing market.

Neither argument looks entirely convincing. Robust car sales suggest consumers are happy to buy big-ticket items, while the recent rise in the cost of living has been modest by historic standards. Inflation stands at just over 2%; within the past half decade, it has been above 5%.

The likeliest explanation for the muted state of the property market is that houses are simply too expensive for first-time buyers, even with mortgage rates as low as they are. According to the Office for National Statistics, the average house price is 7.6 times the average annual salary, more than double the figure two decades ago. The Bank wants to prevent the sort of excessive lending that took place before the financial crisis of a decade ago and has told lenders not to offer loans that are more than 4.5 times a borrower’s income.

In those circumstances, only one of three things can happen. Earnings growth can pick up while house prices remain steady. Earnings growth can remain modest while house prices fall. Or prices remain high and income growth remains low, in which case stasis ensues.

There seems little prospect of an acceleration in wage growth, currently running at little more than 2%. Equally, the conditions that would normally prompt a sharp fall in house prices – high and rising interest rates and increasing unemployment – are not present. The market will go sideways until such time as demand drops, the supply of homes increases or the Bank relaxes its lending conditions.

While the economy has certainly slowed since the turn of the year, it is not about to plummet into recession. Sharply higher interest rates from the Bank would certainly kill off demand for property, but that doesn’t look likely either. Meanwhile, a good chunk of the homes that are being built appear to be going to overseas buyers who have found their money goes further as a result of the depreciation in sterling.

In short, the economy has reverted to the state it was in before George Osborne gave the housing market a boost halfway through the last parliament. Two policies, Funding for Lending and help to buy, got mortgage lending going again and led to stronger growth.

But this was a sugar rush. There was a limit to how far house prices could rise and that limit has been reached. Many of those who are ostensibly gaining from rising house prices are opening branches of the bank of mum and dad so their offspring can buy their first home.

The prospect now is a period in which house price inflation hovers around zero, but this is to be welcomed rather than feared. All the major recessions in the economy over the past four decades have come after unsustainable housing booms; the periods when the economy has rebalanced towards manufacturing and investment, such as the mid 1990s, have been when house price inflation has been weak. Growth in 2017 will rely less on the strength of the housing market and more on the ability of UK exporters to take advantage of a more competitive currency and pickup in global demand.

Britain could learn something from other countries, namely that you don’t need rising house prices or even high levels of owner occupation to be rich and successful. Germany has done just fine, even though it has a far bigger rented sector than Britain and has had much lower levels of house price inflation.

Research by Andrew Oswald and Danny Blanchflower shows rising home ownership leads to a subsequent increase in unemployment, because owner occupation affects labour mobility, increases congestion costs and encourages Nimby-style behaviour that means fewer new businesses. The correlation holds true across the developed countries of the Organisation for Economic Co-operation and Development and in individual US states.

There is no evidence that buying a house means you personallly lose your job a couple of years down the line, which suggests Britons will not easily be turned on by the idea of becoming a nation of renters. But the idea that high levels of renting can be associated with a dynamic local economy is supported by the evidence of London, which is thriving even though buying a home is a distant dream for most young people. It may also explain why unemployment was so low in the 1950s and 60s, when councils were building homes to rent.

Sooner or later, a politician is going to be brave enough to say Britain has got housing policy completely wrong. They will say, quite correctly, that there is no future in an economy so heavily reliant on a housing market that lurches from boom to bust. They will demand that the shackles be taken off local authorities so they can tackle a homelessness crisis. They will accept that Britain’s taxation system encourages demand for housing, while the planning system discourages supply, and act accordingly.

That would mean reform of a property tax system that manages to stimulate demand, encourage land hoarding and be regressive all at the same time. It would also mean taking on the biggest vested interest in Britain: owner occupiers who, through luck rather than skill, have amassed considerable wealth as a result of soaring housing prices. Which is why it is not going to happen any time soon.

Accord Buy to Let’s ‘competitive mortgages’ now available to consumers

By Marc Da Silva

Accord Buy to Let, the intermediary-only lender, has announced that it is now accepting applications from borrowers classed as consumers: non-professional landlords who plan to let out a single property where they or their relatives have previously lived.

The lender, which is part of Yorkshire Building Society Group, has opted to make its full buy-to-let mortgage range available to consumer buy-to-let borrowers in response to growing demand for its products, and following the implementation of the European Mortgage Credit Directive.

Chris Maggs, Accord Buy To Let’s commercial manager, said: “We’re pleased to be lending in this market.

“Offering mortgages to landlords that are classified as consumers, in addition to those landlords that specifically invested in property for business purposes, means that we are providing brokers with a more comprehensive buy-to-let offering.

“It also offers homeowners who become ‘accidental landlords’ a wider choice of competitive mortgages to continue to maintain their property even after they or their family have stopped living there.

“Brokers can get in touch with our knowledgeable business development team, or refer to our handy online decision tree to determine whether a case falls under consumer buy-to-let lending.”

Friday, 7 April 2017

More landlords will be affected by UK tax change than the Government thinks

Tax relief for buy to let landlords in the UK is being phased out from today but far more are likely to be worse off than the Government thinks, according to new research.

The measures were first announced in the 2015 Budget and since then landlord organisations have been campaigning and lobbying for the Government to reconsider.

Now a study from AXA reveals that far more believe they will be affected than has been suggested by officials and almost half of landlords involved in the research plan to quit the rental market by 2020, fearing they are being unfairly targeted.

The research shows that more than 40% of landlords believe they will be worse off as a result of the changes. This is despite the UK Government’s assurances that 82% will not have any additional tax to pay.

AXA found evidence that this change coming on top of a raft of legislation aimed at landlords in recent years means that almost half of private landlords will withdraw from the market by 2020.

Indeed, some 21% said they plan to sell all their rental properties, 10% will reduce their portfolio and 7% will switch to commercial property ownership, which is perceived as a safer option. A further 8% say they will transfer ownership of their rental property to their spouse or other family member who is in a lower tax bracket as a way of avoiding extra tax.

As one West Midlands landlord put it: ‘Landlords with mortgages on their buy to let properties are unlikely to make much profit with the new system coming in. People like me may just decide the new system isn’t worth the hassle and sell their properties leaving less accommodation for people to rent’.

Two thirds of landlords surveyed said they feel stigmatised for running a rental business, saying it is a myth that landlords are rich. One pointed out that after mortgage, tax and repairs, he doesn’t make a profit on the two properties he owns.

Just over half directly quoted Government policy as a source of people think landlords are fat cats who do nothing for their tenants. ‘We are being victimised by the Chancellor. Government finds landlords a convenient scapegoat and is shifting the blame for the housing crisis,’ another said.

The reality is that just 4% of private landlords have a portfolio big enough to be able to give up work and live off the proceeds. The average UK landlord makes £343 rental profit each month after expenses and profit levels vary widely across the country, ranging from £297 in the West Midlands to £713 in London.

‘Landlords have been subject to one piece of new legislation after another in recent years, much of it very complex indeed. We see a real confusion as to what the new tax changes will mean, with government and landlords giving very different estimates of the impact,’ said Gordon Rutherford, head of marketing at AXA Insurance.

‘We need to remember that few landlords are professional property tycoons. Two thirds in the UK are accidental landlords. They tend to own just one rental property that they’ve inherited or are finding hard to sell, and they make a modest income once time and expenses are out. They do feel increasingly apprehensive, as we can see from the numbers thinking of withdrawing their properties from the rental market in the coming years,’ he added.

Steve Bolton, founder of Platinum Property Partners, believes that the Government should still make a U change as the new tax changes threaten to seriously damage the UK buy to let market.

‘Landlords will no longer be able to offset all their finance costs against their rental income before calculating their tax bill. In implementing these changes, the Government is breaking an age old taxation practice and is forcing landlords to pay tax on part of their costs despite no other type of business having to follow such rules,’ he pointed out.

‘Landlords play an integral role in today’s property market. Rental demand is at an all-time high, and not just because many have been priced out of buying a home in their desired location. A growing number of people are choosing to rent because they enjoy the convenience and flexibility, and our increasingly mobile workforce requires it. The Government itself admitted in its recent white paper the importance of a fair and affordable rental market: yet by targeting landlords’ profits, these changes will inadvertently make renting more expensive for tenants,’ he said.

He also pointed out that the changes will not only affect higher rate taxpayers, but also an estimated 440,000 additional landlords that will be pushed into this tax bracket because of finance costs artificially inflating their income.

‘Many will find their tax bill outweighs their profits, forcing them to sell properties, increase rents, which are often already below market rates, or leave the market altogether. All of these make renting more expensive for tenants, and they will ultimately be the ones forced to fund this tenant tax,’ he explained.

Bolton believes that the tax changes are based on a fundamental flaw that driving landlords out of the housing market will improve first time buyer levels. ‘This simply isn’t true. Landlords and first time buyers do not buy the same types of properties, and shrinking rental supply won’t suddenly help first time buyers to save for a deposit. In fact, it will do the very opposite as rents become more expensive. The sooner the Government realises this and reverses the changes, the better,’ he added.

Stamp duty surcharge has cut level of rental growth - claim

By Graham Norwood

The speed at which rents across are growing has more than halved since a three per cent stamp duty surcharge on second homes came into force 12 months ago.

Research by lender Landbay says annual rental growth slowed to just 0.9 per cent last month, well under half of the rate of 2.27 per cent seen at the end of March 2016.

The average rent paid in the UK has now reached £1,191; £1,880 in London and £752 outside of the capital.

Although at a slower pace than they were a year ago, rents are continuing to rise in the rest of the UK but in London the average rent paid fell for the 11th consecutive month in March, falling by 0.7 per cent.

Rents in England (outside of London) have seen the most substantial growth over the last year, growing by 1.86 per cent, followed by Wales growing 1.41 per cent and Scotland on  1.25 per cent.

Just Northern Ireland saw rental growth below the UK annual average, growing by 0.07 pr cent over the last 12 months.

Thursday, 6 April 2017

New built homes in London set to reach record levels in London in 2017

The number of new homes in London will reach record levels in 2017 but what is being built currently does not match the demand, new research has found.

And while the majority have sold off plan, more homes will complete unsold this year than at any time over the past decade, according to international property adviser Savills.

Total net completions, including sub-market and intermediate housing provision, are expected to peak at 46,500 this year, ahead of the minimum 42,000 homes a year target set by the London Plan.

But this is still well short of real housing demand, which Savills puts at 64,000 homes per year. Lead indicators suggest that 41,000 homes were completed in 2016.

However, the Savills report points out that what is being built currently does not match the shape of demand. Savills estimates that 58% of demand is for homes costing less than £450 per square foot, which accounts for just 15% of the five year build forecast.

It explains that over the past five years, private house building starts have raced ahead of completions, supported in large part by rising volumes of off-plan sales, which assist cash flow and give certainty to funders and are therefore vital to the current delivery model.

But, over the next few years, private sector completions are forecast to fall sharply, the result of rapidly falling home starts, as developers adjust to lower rates of sale. Policy intervention is required, Savills says, in order to reach the level of development needed and shift the focus to the lower value end of the market.

Sales have started to slow, meaning more homes will remain unsold on completion, particularly in the prime market. Between 2013 and 2016, some 13,500 more homes were started than sold and Savills estimates that unsold, finished homes will total 2,800 this year, up from 1,000 last year.

The oversupply issue is particularly acute above the £1,000 per square foot price point. While the mainstream market has been constrained by stretched affordability and changes to the taxation of buy to let investors, there were 1.6 starts for every sale above the £1,000 per square foot price point during 2015 and 2016, accounting for nearly half of the 13,500 overshoot.

The report explains that since the peak of 2015, development starts have fallen sharply. Savills expects starts to total just 21,500 this year and fall to 18,000 annually over the next two years.

In turn, completions are forecast to fall to just 18,000 by 2021. While this will allow high levels of supply in the private market to be absorbed, assuming sales rates are sustained at 2016 levels, it will leave London chronically undersupplied in new homes.

An expected increase in large scale private rented sector deals and a marginal increase in overseas buyers attracted by the currency play will support volumes at current levels, but developers will need to adopt pragmatic sales strategies, particularly where land was bought at peak values. Sales are expected to run slightly ahead of start volumes from next year, ultimately allowing the market to correct.

‘To a large degree, the fact that London almost hit its official new homes target last year should be seen as a massive success, but these figures suggest we are at the limit of what can be built under the current delivery model,’ said Edward Green, Savills research analyst.

‘This year may present some harsh realities for a number of developers, but the bigger issue remains that of a city chronically undersupplied in the homes it desperately needs. An additional model for housing delivery is needed, that adds to the output of major housebuilders and the market sales model,’ he added.

Savills also suggests that more Build to Rent and a strengthened affordable housing programme are part of the answer. But in order to increase delivery in the market segments it is needed most, there need to be further changes to the way in which land is brought forward, including greater public sector land release.

The report adds that there is a real opportunity to boost supply if the Government and GLA implement measures to unlock investor appetite for PRS. Pro-active planning, proposed in the Housing White Paper, is a useful early step, but other policy measures are required, especially from the Mayor.

Landlords, get receipt savvy for the new tax year

By Mike Parkes

With the new tax year upon us - it’s time for some of you to start getting into better habits to help ensure you only pay the tax that you owe and not a penny more.

Whilst small receipts for fixtures and fittings seem minor at the time, losing multiple receipts like these can accumulate to affect your tax bill in the long run.

Keeping, storing and filing receipts has to be one of the most tedious jobs for the self-employed and SMEs. And let’s face it, many of us are guilty of losing receipts (or putting them in the wash in our jeans pocket). But did you know that for every £100 of lost or damaged receipts you will lose around £29 in reclaimable tax? That figure soon adds up over the course of a year.

So, what can you do to be more receipt smart?

Scan receipts as you receive them

The new tax year starts today, presenting an opportunity for a fresh start in how you manage receipts.

Lots of self employed people and SMEs sit on paper receipts, allowing just a few receipts to become an out-of-control mountain. This can prove to be a paper-based nightmare when submission deadlines arise. Rooting through drawers, pockets and folders is the last thing you want to be doing for your self assessment tax return. It’s far better to go digital, choosing a platform that ideally scans and uploads receipts as you receive them.

2. Re-check every expense

Tax breaks on business expenses are vital for the self-employed and SMEs, so make sure you’re not missing out on what’s rightfully yours. It’s worth checking again to see what expenses are allowable.

Double check all your receipts and look back to HMRC’s expense claim guidelines to reveal where you could be claiming back money. Consider everything: hardware, office space, stationery and printing costs… there are dozens of avenues to a legal tax break, providing it helps your business succeed.

3. Use online software

There have been huge advances in technology, and the established financial institutions aren’t too happy about it. That’s because the hole an accountant might fill has been plugged with real-time, automated software.

Wednesday, 5 April 2017

No way out of the renting gap

By Kate Hughes

Renters will remain the poor cousin to homeowners until politicians change their attitudes, experts warn

Renters will be worse off than owners by at least £400,000 over the course of their lifetime, as the latest report warns of growing barriers to social mobility PA
If there’s one thing that’s sure to stretch the intergenerational chasm just that little bit further, it’s property ownership stats.

The latest figures points to what we already know – that home ownership among the UK’s youngest adults is plummeting.

Data and analysis from a triumvirate of august institutions reckons that back in 1990 more than 60 per cent of 25-29 year olds – the very last of the fabled baby boomers - were homeowners. Today it’s just 31 per cent.

Even among those lucky few, the report – from Cambridge and Anglia Ruskin universities in partnership with the Social Mobility Commission – suggests, the bank of Mum and Dad is playing a key role, with 34 per cent of first time buyers now receiving a pot of cash to help secure a home (up from 2 per cent just 7 years ago).

“Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder,” says Alan Milburn, chair of the Social Mobility Commission, who adds: “The way the housing market is operating is exacerbating inequality and impeding social mobility.”

In fact, those with help can typically afford to buy just two years earlier than those without help – albeit rising to more than 4.5 years for Londoners. But those few years can make all the difference.

A recent study by homelessness charity Shelter, which divided people into those who had been able to buy their first home before 30, those who bought after 30 and those who remained in rented accommodation after age 35 found, predictably, that there was a long-term financial divergence between those who own and those who don’t.

But the numbers are far greater than we might expect.

For a family with a child, for example, those who bought before 30 will be £146,300 better off over their lifetime than families who have to save and buy later, when parents were 30-plus.

Compared with families who never manage to buy, early buying families will be £561,200 better off. This was thanks not just to rising property prices, but also ownership related life decisions including the impact of taking career breaks to start families at different times to renters and pursuing higher paid jobs to cover the mortgage, as well as renters spending an average of £44,000 more over a lifetime on lost housing costs.

Nor are the benefits of owning purely financial. A separate study by digital mortgage broker Habito, points to a clear psychological link between owning and social status.

“We’ve seen repeatedly in our customer focus groups that for first time buyers, acquiring a mortgage is seen as a step up that reinforces a sense of belonging to their social group, catching up with their friends and being “in the club” of homeowners,” says CEO Daniel Hegarty.

“Home ownership can be an integral part of supporting social mobility, not least due to the fact that home owners are more likely to remain in a property longer than the average renter,” adds Mitesh Patel, CEO of property technology firm Engage.

“For renters this creates a feeling of disconnect with their neighbours and local community.

“Millennials, who have been confirmed as the generation destined to rent for longer, are feeling the impact stronger than any other group. Our own research recently revealed over a third (36 per cent) of millennial tenants feel disconnected from their communities – more than another age group.”

“The UK’s housing crisis, which has priced millions out of owning a home of their own, will continue to fuel the UK’s social and economic divide unless we start to provide renters with the same sense of ‘belonging’ as home owners. If this issue is not addressed by landlords, it could leave more people feeling disconnected simply because they don’t own their home.

None of this means there aren’t benefits to renting of course.

They aren’t obliged to put all their savings into what we often forget remains a relatively high risk financial basket for example, nor are they restricted in terms of mobility as they develop careers, says Michael Ball, Professor of Urban and Property Economics at Henley Business School, who points to examples of very positive attitudes towards renting in countries like the USA and Germany.

“But we have two very British issues,” he warns. “Entering home ownership is much cheaper than renting and because renters tend to only stay in one place for 18 months, landlords have high administrative costs that are passed on to their tenants along with the taxes they pay.

“There are huge tax breaks for homeowners, who don’t pay anything against the equity in their home or the rise in prices. They’re the biggest tax breaks anyone will receive over the course of their life.

And with no changes to the tax system or a significant increase in house building on the cards, this is only going one way, he suggests.

“If income rises, demand for housing goes up. But with no houses being built, real house prices rise by around 3 per cent a year over time. Homeowners – resisting suburban expansion despite the fact that just 1 per cent of England is covered in housing excluding gardens – are locked into that [expectation].

“That means the growing number of renters will continue to pay progressively higher rents.

“The financial divergence will continue unless politicians change their attitudes towards both house building and the tax system.”

Tax reform will ‘put many agents out of business’, warning

By Marc Shoffman

The rolling back of mortgage interest relief is just days away but campaigners are still having a stab at raising the unfairness of the changes dubbed the tenant tax.

An “awareness week” – so far little publicised – is being run by the Tenant Tax coalition with a website calling on supporters to contact their MP. It also provides a calculator so landlords can work out how much their costs will increase by in the coming years.

Highlighting why lettings agents should be concerned, a message on the Tenant Tax website warns: “With rents increasing, it is likely that rent arrears will rise too.

“However, the longer-term consequences are likely to put many agents out of business.

“In the first instance landlords will perhaps question whether they can afford to continue paying the agent’s fees and consider taking the properties under their own management.

“Many landlords will be forced to sell their properties or they may be repossessed, leaving the agent with much reduced stock, and therefore income.”

The website also warns that activity could fall in the sales sector, adding: “Estate agents will initially be affected by the serious downturn in the buy-to-let market.

“Currently 15% of mortgage approvals are for buy-to-let and this market is set to disappear. That will lead to the house builders scaling back production, thus there will be far fewer new-builds to market.”

There hasn’t been any major publicity and no press releases have been issued for the ‘awareness’ campaign but you can view a video interview by Vanessa Warwick of Property Tribes with the campaign founder Steve Bolton.


Meanwhile, ARLA Propertymark has raised its head above the parapet to highlight the latest change to face the private rental sector (PRS).

David Cox, chief executive of ARLA Propertymark, said: “It has been a year since the Government inflated Stamp Duty costs for landlords to 3%, and it has already made the Treasury £1.3bn.

“That is more than changes to mortgage interest relief are expected to make in its first three years. This will only further squeeze the sector and make buy-to-let a less attractive investment for landlords.

“Our monthly PRS report shows that since the Stamp Duty reforms came into effect last April, letting agents have seen the supply of rental stock decrease. In February, 44% saw supply fall as a direct result, while only 9% saw it increase.”

He also warned that the impending letting agent fee ban will make buy-to-let investment less attractive as costs are passed on through “inflated agents’ fees which landlords pay”.

Cox added: “A quarter of landlords are expected to stop increasing their portfolios as a result and a fifth plan to sell some of their properties.

“We’re facing a severe housing shortage at the moment, and if the supply of rental stock falls any lower relative to demand for housing, we’ll find ourselves in the midst of a real crisis.”

Even lenders are predicting a decline in activity. The Council of Mortgage Lenders (CML) said remortgaging rather than purchase lending is currently boosting buy-to-let activity.

An article on the CML website said: “Over a relatively short period, we have seen the introduction of a raft of fiscal and regulatory measures that bear down on landlords and buy-to-let lending.

“The combined effects have resulted in a significant reduction in new property purchases by landlords, which can be clearly seen from our data. Some of the measures have also encouraged landlords to sell existing rental properties.

“It is still too early to predict long-term effects of all these measures on the balance of tenure. But we may already be beginning to see the reversal of a long period of expansion of the private rented sector.”

The article also highlights its own research from last June showing that a net 5% of landlords expected to reduce their holdings over the next year, with the proportion rising to 11% over the next five years. Just over one-third said that higher taxes were a motivating factor.

However, separate research among 200 landlords by Paragon Mortgages suggests there isn’t yet a rush to the exit.

The lender’s PRS Trends Report for the first quarter of 2017 shows landlords are taking on less mortgage debt, with the average loan-to-value decreasing by 2% to 35% since the end of 2016.

Two thirds of landlords now have borrowings of less than half the value of their investment property portfolios and average gearing has dropped from 42% in the second quarter of 2012.

However, the survey found no evidence yet of a large-scale sell-off.

The size of the average portfolio is 13 properties, unchanged from the end of 2016, while 46% of landlords believe tenant demand will increase over the next 12 months.

John Heron, managing director of Paragon Mortgages, said: “Average gearing is low and getting lower, and this long-term de-leveraging demonstrates just how financially conservative buy-to-let landlords are.

“Looking ahead, it’s realistic to expect this downward drift in gearing to continue as the Prudential Regulation Authority’s new buy-to-let underwriting standards take effect.

“Our report indicates a resilient sector but as the mortgage interest rate tax changes filter through between now and 2021, landlord confidence may be eroded further which could well result in a reduction in the supply of property to the sector and, in turn, higher rents.”