Currently viewing the tag: "EU"

Migrants Expected To Make UK Housing Shortage Worse

A fresh wave of UK immigration is expected when quotas on work permits for migrants from Romania and Bulgaria are dropped under EU freedom-of-movement rules.

Government ministers face an increasing amount of pressure to disclose their official estimate of how many immigrants will pour into Britain next year from Eastern Europe, after remarks were made by Communities and Local Government Secretary Eric Pickles on The BBC’s Sunday Politics Show.

Mr Pickles conceded on TV that a wave of immigrants from Romania and Bulgaria will cause problems in the UK housing supply and admitted that Government officials had already made a forecast of the numbers expected to arrive when border controls are relaxed with the two nations in January 2014 but refused to reveal figures.

Continue reading »

UK Has 3rd Highest Housing Costs In Europe

UK Has 3rd Highest Housing Costs In Europe

New data released by the European Union has been highlighted by the housing and homeless charity Shelter, showing that the UK is the third worst off country in Europe when it comes to housing costs behind Denmark and Greece.

The EU says that 16.5% of people in the UK are financially burdened by housing costs, spending more than 40% of their income on rent or mortgage payments and other property related expenses.

Chief Executive of Shelter, Campbell Robb, said: “These figures are the evidence that the UK housing market is deeply dysfunctional. With so many families spending huge amounts of their income on their rent or mortgage, people will be making daily trade-offs between food bills, filling the car tank with petrol, and paying their housing costs. And this is not set to get better any time soon. While the situation is bleak at the moment, a succession of governments failing to provide much-needed affordable homes means that the future facing our children and our children’s children is only set to get worse. Housing is the largest monthly cost for most people, yet the affordability of housing is not getting the same attention as the monthly costs of other essentials such as food or fuel. We believe all political parties must recognise that solving our housing crisis is as fundamental as health and education.”

Landlords of Buy-To-Let properties are urged to set realistic rental prices for their properties but even they have high running costs to pay for as well as the mortgage.

However, Private Rented Sector (PRS) landlords are in a position to help struggling tenants by offering them a safety net when it comes to being able to pay the rent.

Rent Guarantee Insurance offered by Legal 4 Landlords can ensure that the rental income can continue to be paid should the tenants financial or employment circumstances change.

Click Here To Find Out More

It has been suggested that residential property prices in the UK are unlikely to rise significantly over the next five years, according to one property expert.

While costs are expected to rise slowly across the coming half-decade, the escalation in UK residential property values may not be as marked as some would like to think.

Timothy Lambert, head of investment property at Parallel Investment Management, explained: “It is difficult to predict trends in the current climate of economic uncertainty, observing that although there remains a desire to buy among the general public, many individuals remain wary about the prices they are required to pay. There is also widely believed to be a growing north/south divide in terms of pricing differentiation so people will consider carefully where they are based before committing to buy.”

And while many first-time buyers may be having problems saving the required large amount of money to pay a 25% deposit, other individuals are encountering even more difficulties when attempting to qualify to obtain a mortgage at a competitive rate.

UK Buy-To-Let landlords, on the other hand have the opportunity to reap the benefits of the EU’s monumentous decision not to target Buy To Let mortgages when the European Parliament looks at mortgage lending as a whole in coming months.

EU Decision Good News for UK Buy-To-Let landlords

EU Decision Good News for UK Buy-To-Let landlords

The decision by MEP’s to remove Buy-To-Let mortgages from the scope of a new EU Directive has been welcomed by a host of property professionals including the Residential Landlords Association (RLA) and Legal 4 Landlords.

Under the original European plans, mortgage lenders would no longer have been able to take account of rental income when considering whether to lend to a landlord for a new property, despite the fact that there are specialist insurance products that can guarantee the rent.

The European Parliament committee looking at the Directive has decided that buy-to-let mortgages would be taken out of its scope altogether, after a great deal of high pressure lobbying from a number of sources including the RLA.

Alan Ward, Chairman of the RLA responded to the EU announcement saying: “Today’s decision by MEPs represents a common sense solution to a measure that would have crippled the private rental market in the UK. With a chronic shortage of properties in the sector, the initial proposals would have exacerbated the problem still further, causing further difficulties and higher rents for those looking for rental accommodation.”

Sim Sekhon, spokesman for specialist landlord services provider, Legal 4 Landlords also commented on the decision “It’s good to see that sense has prevailed within Europe, now landlords can get on with providing quality housing for tenants in the private rental sector without worrying that they were going to lose the right to expand their property portfolios. The EU decision to exempt Buy To Let mortgages from the firing line is good business for UK landlords. Rental income is the lifeblood and there are steps for landlords to take to ensure that cashflow remains constant, such as using comprehensive tenant referencing services to make sure you accept the right tenant and rent guarantee insurance to provide a guaranteed income. Having a secure income is vital for any business and property is no exception”.

The Turkish government have passed a draft bill allowing more foreign investment in the country’s real estate, increasing the temperature of the country’s property market, meaning Turkey property is ready to roast!

Turkish property has long been a popular choice for lifestyle property buyers in the UK and Europe, but has only so far been available to countries that allowed Turkish buyers to invest there in return.

This restriction, which primarily affected investors from the UAE and other countries, left buyers needing to register a Turkish company first, adding red tape and extra costs to their investment.

But property purchasing agents are now saying that is about to change, thanks to the country’s acceptance of this new law, which is expected to bring a gold rush of buyers back to Turkish real estate.

Fresh investment is expected from the Middle East and countries within the EU, as the government bill also increases the amount of real estate a foreigner is permitted to own, from 25,000 square metres to 300,000 square metres.

The Turkish government have also reported that tourism revenue is continuing to heating up due to the fact that Europe is still plagued by a financial crisis. Turkish Tourism Minister Ertugrul Gunay predicted that 31 Million visitor arrivals in 2012 would remain stable, but profits from overseas visitors would be expected to rise from $23 Billion (USD) to $25 Billion (USD).

As income increases from both holidaymakers and foreign property investors, Turkey’s property market appears ready to roast and the $2.5 Billion (USD) currently invested by foreigners in Turkish real estate each year is expected to double to $5 Billion (USD).

The predicted rush of foreign investment will see the Turkish property market become even stronger as the country opens its doors to more and more investors from different countries.

Many people are already looking at this already popular holiday hotspot to purchase a second home, pushing real estate prices up over the next few years, making the holiday destination an even better place to invest and Turkey property a mouth-watering prospect.

Europe want control of UK mortgage lending

European Union Want To Regulate UK Buy To Let Mortgages

Eurocrats no longer concerned with the current Eurozone financial crisis, are sticking their noses into the UK Buy-To-Let mortgage market, with the proposal of a new EU Directive on credit agreements relating to residential property, formerly known as responsible lending and borrowing.

UK Landlords who had been investing in property prior to the 2007 credit crunch have witnessed the dramatic fall in the number of buy-to-let mortgage products made available since the peak of the market in July 2007.

Today (NOV 2011), investors only have access to a paltry 15% of the 3648 buy-to-let mortgage products that were available before the full impact of the credit crunch.

Now, to make matters worse, the European Union want some form of control for the UK Buy-To-Let mortgage market, as part of their proposed directive on credit agreements, reducing the already limited range of UK BTL mortgage products available still further.

The EU has set out plans to include UK Buy-To-Let mortgages with this regulation, changing the way property investors and landlords are assessed by lenders for their BTL mortgage loan.

Currently in the UK, the affordability of a Buy-To-Let mortgage is measured individually, by assessing the rent generated by each property against financing costs.

Typically a mortgage would be considered affordable by the lender if the gross rent covered between 120 – 135% of the finance cost of the mortgage.

This excess cover is meant to ensure that even if the interest rate rises or the landlord suffers a rental void they are still be able meet their mortgage obligations in the medium term.

In general it is a sensible system that aligns the affordability of the finance to the cash generative qualities of each investment property.

It also allows landlords on modest incomes to be able to purchase a property without having to rely on a substantial personal income to prove they can manage their investment.

This method of measuring affordability was only introduced in the mid 1990’s thanks to a number of lenders getting together to introduce the Buy-To-Let initiative to the property investing public.

Now, Europe wants us thrown back into the pre BTL lending dark ages.

The European Directive proposes that BTL lending will be regulated in the same way that residential lending is at present.

Under the new proposals, lenders will no longer be allowed to take into account rental income when assessing the affordability of a buy-to-let loan. This would have massive implications for the 1.3 million small landlords, many of which could face difficulties in refinancing their loans under the revised criteria.

The proposals are to be voted on in early 2012 and would become law by 2013 but who is the legislation trying to protect?

The latest figures from the UK buy-to-let mortgage market show that the current system is actually resulting in a lower rate of arrears on buy-to-let loans than on residential loans. (Currently 2.14% compared to 1.91% for buy-to-let loans).

These new European directives go against current UK thinking, with the Council of Mortgage Lenders, (CML) against regulation and institutions such as the Building Society Association are completely against the new European proposals. Even the UK Treasury examined the need for Buy To Let regulation 2 years ago and decided against taking any action.

The new European Union mortgage directive is primarily concerned with the protection of consumers and including buy-to-let is unjustified.

A buy-to-let mortgage is a commercial transaction and most landlords have enough knowledge and experience to make business decisions without protection from the law and without evidence of detriment to the consumer it is unnecessary to impose such a limiting European regulation.

 

There Will Never Be A Better Time To Invest In Property

MyPropertyPowerTeam.co.uk helps property investors and landlords build their own property power team to enable them to profit from property - Visit our main site now!