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Number of tenants Renting Property Set To Overtake Number of Home Owners By 2025

 

Renting To Overtake Home Ownership By 2025

According to a new prediction from the professional services network – Price Waterhouse Cooper, (PwC), the number of tenants in rented properties will outnumber the overall number of property owners with mortgages in less than a decade.

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Will The Housing Crisis Win The Election?

Will The Housing Crisis Win The Election?

The Politics Of Housing

It is still generally acknowledged by all political parties that there is a housing shortage in the UK, and each political party wants to offer the public alternative methods of tackling the problem in an attempt to win electoral favour.

Most political parties see the housing crisis in the UK as a possible election winning issue and each party’s election manifesto promises the general public many things, including further private rented sector (PRS) reforms and the introduction of additional legislation. There isn’t much offered by any political party for landlords, except for the promise to put an end to the private rental sector.

A recent survey by Ipsos MORI research published in January 2015 discovered a confusing conundrum, in that:

  • 75% of the public agree that there is a housing crisis in the UK
  • 48% of the public disagree there is a housing crisis in their locality

The publication of each political party’s election manifesto is intended to give the public a clearer indication of the housing priorities of the UK’s next parliament.

However, despite claims of a housing shortage nationally there are still some UK regions that have large proportions of derelict and abandoned properties, many still in a habitable condition.

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Flooding Spells Trouble For PRS Landlords

Flooding Spells Trouble For PRS Landlords

Post Flood Checks for PRS Landlords
Of Properties Affected By Flooding

The recent flooding observed in the South of England this winter have seen a large number of landlords and home owners properties damaged by flood water with around 6,500 properties damaged by flood water since December 2013.

This has meant that both landlords and tenants have had to put in a great deal of time and effort to put things right, with landlords spending a substantial amount of time contacting their landlord insurance providers to inform them of the situation and trying to arrange repairs.

However, there are some landlords who remain unsure of where to start when it comes to flood damage, so we take a look at what landlords can do if property has been affected by flooding:

  • Wear waterproof clothing, boots and a face mask
  • Get a qualified person to switch off electricity at mains – don’t touch sources of electricity while standing in water
  • Remove water using pump and generator – position generator outside as it produces carbon monoxide fumes which can kill
  • Only pump out water when flood levels outside house start to be lower than inside – this reduces the risk of structural damage
  • Houses can be cleaned and disinfected using ordinary household products
  • If drying property naturally, keep doors and windows open, if using dehumidifiers, close external doors and windows

Severe Flood Damage

Unfortunately, if you own property in the South of England there is a good chance they have been severely affected by flooding, especially if they are located near the Somerset levels or by the River Severn or River Thames.

The Environment Agency (EA) issued 16 severe flood warnings (meaning severe flooding with a danger to life) and 76 flood warnings (meaning immediate action should be taken) in January 2014 for the South West and South East of England.

If your rental properties have been affected by severe flooding then there is the likelihood that the tenants will have already been evacuated.

UK PRS landlords may find that they have to foot the bill to re-house tenants while their property is unfit to live in, and even after the flood waters have receded and it could still take months for damage to be repaired.

It is important for landlords to keep in constant contact with their landlord insurance provider and their tenants in order to make sure the restoration process runs as smoothly as possible.

Traditional brick or concrete walls will generally dry out well so long as they are clear for ventilation.

Wall cavities need to be inspected by an expert to ensure walls are secure and any damaged wall-cavity insulation will also need to be removed.

Internal walls, damaged plaster, plasterboard and wallpaper will have to go. Holes might also need to be drilled through plasterboards or dry linings to drain trapped water and aid ventilation, and timber partitions may rot if not dried properly and property owners are advised not to redecorate for at least three months after walls have dried and repairs have been done.

Modern wiring can withstand a short period of flooding, but if a property has been flooded for more than a few hours, it will probably need rewiring – downstairs at least. An electrician will also need to give junction boxes, socket outlets, light switches and ceiling connections a thorough check to ensure there is no water trapped inside them.

Moderate Flood Damage

Properties have been affected across the whole of the UK, even though properties worst affected by flooding are mainly in the South West and South East of England. Many of these properties are still habitable, however there are a number of other issues that landlords have to deal with.

Flooding can destroy the fabric and structure of property if left and it’s hard to be sure how solid a property’s foundations are after flooding, as some problems may take years to materialise.

There can be subsidence – which causes foundations to “sink”, and heave – which forces foundations upwards. Subsidence occurs when the ground under a building “shrinks” through lack of water, whereas heave occurs when the ground expands because of excess water. There is also the possibility of sinkholes and signs to watch out for are cracks and general movement in the building, but both can often remain undetected for some time.

Other indicators of structural damage include buckling of walls, bulging or dislodged sections of property and new cracks above windows or doors

Tenants will often get in contact immediately if they feel that their property is affected by flood water, and landlords should try to get as much information as possible about the amount of damaged caused.

Small amounts of water in rooms such as kitchens and bathrooms are less disastrous than in carpeted areas such as bedrooms or living rooms, and if it is safe to do so you can advise your tenants on how to contain flood water.

Landlords should keep in regular contact with tenants in the worst hit areas to monitor the situation and make preparations to re-home them if necessary.

Minimal Flood Damage

Rental properties built on high ground, away from lakes and rivers, will probably be unaffected by flooding. However, with the high winds and increased rainfall over the past few months there is still a danger of damage, so landlords need to make sure that basic checks are carried out to assess the damage when they are able to.

Roof tiles, chimney stacks, gutters soffits, and window frames can be adversely affected by strong winds and continuous heavy rainfall. If left in unchecked these minor issues can become major problems in the future.

Tenants may have noticed small leaks in garages and lofts during heavy rainfall, which should be treated as warning signs.

Unfortunately, nearly every landlord across the UK right now needs to have some sort of plan in place in case their properties are affected by flooding; otherwise they could find themselves in a difficult situation.

The Environment Agency website is updated on a regular basis with information concerning flood warnings and what to do in an emergency.

The new “Flood Re” proposals intended to replace the current statutes of the Water Bill will leave landlords high and dry as insurance companies withdraw insurance for rental properties in areas prone to flooding.

Beware Of Serious Maintenance Issues When Purchasing Investment Properties

Beware Of Serious Maintenance Issues When Purchasing Investment Properties

25% of properties for sale in the UK
have serious maintenance issues

New research by Halifax home insurance has revealed that home owners are far from proficient at keeping their property well maintained.

The research found that whilst 28% of home owners claim to be DIY enthusiasts, almost a third of people surveyed said they only had basic skills and knowledge to carry out basic cosmetic improvements, such as painting and decorating, grouting tiles or assembling furniture rather than tackling bigger property maintenance issues such as cleaning gutters and repairing fixtures and fittings or repairing cracks in plaster.

lacking the confidence to undertake even straightforward maintenance which could prevent problems such as damp in the longer term,

The research found that property owners in Aberdeen had the best maintained properties in Scotland, while Peterborough was the top region in England, and Newport came out top in Wales.

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More Home Owners Move To Private Rental Sector

More Home Owners Move To Private Rental Sector

Many new tenants in the private rental sector are former home-owners who have opted to become tenants due to the increasing financial pressures associated with home ownership.

In fact more people are quitting home ownership to become private tenants, than are leaving the private rental sector to become home-owners.

The “Generation Rent” trend was identified by the English Housing Survey, which estimated that there were 22 Million households in England in 2011/12.

The trend underlines the fact that home ownership levels in the UK have continued to fall over recent years as the number of households in private rental sector accommodation has increased.

  • 65% of property in the UK is owned by the occupiers
  • 17% are private rental sector properties
  • 17% are social housing

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Interest Only Mortgages Are A Ticking Time Bomb

Interest Only Mortgages Are A Ticking Time Bomb

Over 1 million landlords and homeowners with interest only mortgages could face financial difficulties when reach the end of their tenure and they have to pay them off, according to the Financial Conduct Authority (FCA).

The FCA estimates that around half of the 2.6 million or so UK property owners with interest only mortgages, which represents about a third of all UK mortgage holders, will not have savings or other funds to cover the final bill.

With these mortgage holders only paying enough to cover the monthly mortgage interest on the amount borrowed, the average shortfall is £71,000 (GBP) per person, according to FCA research.

The FCA, the successor of the Financial Services Authority (FSA) as the sector’s watchdog, commissioned research to give a clear indication of what borrowers face when mortgages mature between now and the year 2041.

Market research firm GfK NOP questioned 1,103 interest only mortgage borrowers to consider how prepared they were to repay their loans.

The study found that 37% of borrowers with an interest only mortgage faced a shortfall in their plans to pay back the lump sum of the home loan, based on their own calculations.

But the FCA believes that many people have seriously underestimated the severity of the financial problem and believe the true percentage to be around 48% of all residential property owners with interest only mortgages will face a shortfall.

The vast majority of interest only mortgages were taken out by property investors and residential homebuyers before the financial crash, according to Martin Wheatley, Chief Executive of the FCA, who stated: “It’s just that people were optimistic about the future. My advice to borrowers is not to bury their head in the sand. This report is a call to action.”

The interest-only mortgage time bomb is a serious problem for property investors without an exit strategy and potentially terrifying for homeowners who have no means in place to repay the capital of the original loan.

The media have already stirred up a fervour of anguish with overemphasised coverage on the negative aspects of taking out an interest only mortgage, almost as if they are acting in the interests of the mainstream mortgage lenders attempting to get property owners to switch to repayment mortgages immediately.

The media coverage suggests that interest-only mortgages are a disaster waiting to happen for property investors and residential homeowners with at least 60,000 borrowers facing capital repayments by 2020 without any means of being able to pay back the loan and another 260,000 facing the same financial crunch over the next 30 years.

Graham Lock of House Network said that the FCA is guilty of scaremongering, stating: “People use interest-only mortgages to get on the ladder and they can choose to switch to a repayment option at any time once it becomes affordable. Wage inflation will take care of most of this added with the fact that most of us will work until we’re 70 means there is plenty of time to switch to repayment in the future.”

Executive Director of the Intermediary Mortgage Lenders Association (IMLA), Peter Williams, added: “By confirming that nine in every ten interest-only (IO) mortgage borrowers have a repayment strategy in place, the FCA’s research should put an end to misguided reports of a mis-selling scandal when the market boomed between 2002 and 2007. Having said that, as both the Experian report for the FCA and the GfK report shows, there are issues for the industry to deal with.”

UK residential property prices are

expected to continue rising during 2013

 

UK Property Market Confidence Grows As Prices Rise

UK Property Market Confidence Grows As Prices Rise

UK residential property owners are expecting house prices to rise by 4.5% within the next six months, according to new research by the property search portal – Zoopla.

The property portal based its findings on replies from 4,116 people in the last week of March 2013, of whom 3,485 were residential property owners.

This is the biggest predicted UK house price increase by home owners in more than three years, the property search site said.

The proportion of home owners who think that residential property prices will increase this year is also at the highest level for almost three years, with 74% predicting house prices in their area will increase, the most since the second quarter of 2010.

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Property industry reaction to 2013 budget

Property industry reaction to 2013 budget

George Osborne’s spring 2013 budget included new measures to help more people purchase their own homes and this news has been generally welcomed by property industry professionals.

The Chancellor of the Exchequer firmly believes that the measures announced in the spring budget will provide a major boost for the UK economy, despite calls for an economic U-turn from the Labour opposition.

Mr Osborne told the press that there were far more difficult decisions still to be made regarding the nation’s spending in order to get the overall deficit down, however, the government are taking measures to help people buy their own home.

The Chancellor announced that the FirstBuy scheme which was aimed at First-Time Buyers (FTB) on an income of up to £60,000 (GBP) per year, is being replaced with a ‘Help to Buy’ equity loan scheme available to all buyers looking to purchase a new build home up to a value of £600,000 (GBP), with a deposit of just 5%.

A new mortgage guarantee scheme was also announced during the spring budget, which extends the previous NewBuy Guarantee initiative to include older residential properties as well as new-build homes, which he hopes will result in a sharp rise in lending to potential homebuyers, thus kick starting an upturn in the UK property market. The new scheme will start in January 2014.

Buy to let mortgages are not going to be included under the new scheme, however it remains unclear if existing property owners will be able to purchase property without selling leaving them with an income producing property asset when they offer their old home for rental.

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Avoid Property Fraud

Avoid Property Fraud

There has been a great deal of stuff and nonsense bandied about by the media concerning property fraud over recent months, however, most of it has been fairly erronious.

To mark the launch of the UK Land Registry’s “Property Fraud Hotline” earlier this month, here are a few tips to help landlords and property owners to protect the registration of their assets.

  1. Property fraud can happen in many ways. Fraudsters may attempt to acquire ownership of a property either by using a forged document to transfer it into their own name, or by impersonating the registered owner. Once they have raised money by mortgaging the property without the owner’s knowledge, they disappear without making repayments leaving the owner to deal with the consequences.
  2. The property fraud line on 0300 006 7030 is available from 8.30am to 5pm Monday to Friday. An online reporting form is also available at http://www.landregistry.gov.uk/contact-us/report-fraud or customers who prefer to email or wish to contact Land Registry outside business hours.
  3. The line is not a substitute for reporting allegations of fraud to Action Fraud on 0300 123 2040 (who will pass your report on to the police) or for taking independent legal advice.
  4. In 2011, half of the 52 claims paid out by Land Registry for fraud and forgery were by non-family members. Of these, 22 involved properties with an absent owner and amounted to £1.5 Million (GBP) out of the total £7.2 Million (GBP) paid for fraud and forgery claims.
  5. Two publications for property owners are available free from Land Registry – Public Guide 17 How to safeguard against property fraud and Public Guide 2 Keeping your address for service up to date.
  6. With the largest transactional database of its kind detailing over 23 million titles, Land Registry underpins the economy by safeguarding ownership of many billions of pounds worth of property.
  7. As a government department established in 1862, executive agency and trading fund responsible to the Secretary of State for Business, Innovation and Skills, Land Registry keeps and maintains the Land Register for England and Wales. The Land Register has been an open document since 1990.
  8. For further information about Land Registry visit www.landregistry.gov.uk

The UK Land Registry’s trial of a free restriction for absent owners is being continued, so far around 5,000 properties have been protected in this way since the trial began in February 2012.

Designed to help prevent forgery, the restriction requires a solicitor or conveyancer to certify they are satisfied that the person selling or mortgaging the property is the true owner.

There is no Land Registry fee for property owners who wish to register this restriction as long as they do not live in the property, (i.e landlords).

Owner occupiers will have to pay a small fee.

Millions Regret Not Buying Property In 2012

Millions Regret Not Buying Property In 2012

A significant number of UK adults regret not buying property last year, new research by First Direct has shown.

Around 1.5 million people have responded to a banking and mortgage survey stating that they regret the fact they did not buy property in 2012.

The study revealed 3.6% of adults in the UK feel this way, which represents more than 1.5 million individuals.

Among the 25 to 34-year-olds, this proportion rose to 8%- the equivalent of almost 600,000 people.

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