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The Financial Services Authority (FSA), are urging people seeking mortgage advice to ensure they obtain the correct type of mortgage product for their residential property purchase.

The FSA have said that Buy to Let Mortgage applications are rising, but a growing number of applications are fraudulent.

Would be homeowners and borrowers who, for whatever reason are unable to meet the strict lending criteria now demanded for a UK residential mortgage, are attempting to fraudulently use Buy To Let (BTL) mortgages as a means to purchase property, despite having no intention of being a landlord or ever renting the property out to tenants.

Buy to let mortgages are not regulated in the same way as residential mortgages and the borrowing criteria are more relaxed.

This means that buyers who fail to meet the income and credit check requirements of a residential mortgage can still get approval for a similar sized buy to let mortgage.

The FSA believe that intermediaries and financial advisors are involved in the fraudulent applications.

When asked about the rising levels of deception an FSA spokesman commented: “We are seeing anecdotal evidence of unregulated buy-to-let mortgages being used fraudulently as a replacement for regulated residential mortgage contracts, as borrowers and intermediaries seek to circumvent more stringent income and affordability checks.”

Home insurers and the UK’s coalition Government are still arguing over paying for flood protection, meaning Millions of homeowners and Buy-To-Let Landlords are facing uncertainty over house prices, mortgage availability and the validity of their insurance policies.

Buy-To-Let Property Owners In Flood Risk Areas Fear Worst

UK Landlords With BTL Property In Flood Risk Areas Fear Worst

If the UK Government fails to meet the demands of insurers to reinstate flood protection cuts then insurance cover for millions of homes, including buy to let rental properties, could be withdrawn from June this year.

Although insurers pledged to offer insurance premiums for properties at risk of flooding, it was on the proviso that the UK government would invest money in flood defence protection.

The agreement is set to run out on July 1st 2013, but Millions of pounds have already been cut from flood defence budgets earmarked for improving sea walls and river banks.

Insurance policies starting at the end of June 2012 could be withdrawn for properties in high flood risk areas if an agreement isn’t reached, as the policies would be in force after the date the current agreement ends.

Flood defence protection is a priority for all residents living near to waterways, lakes and rivers, many people in flood-prone areas now have the added worry that their properties may be difficult or even impossible to insure later this year.

Some insurers are already warning that property owners in high flood risk areas, might not be able to renew their cover after the end of June this year, because their new insurance policy will extend beyond the 1st July 2013 agreement cut off date.

Not being able to obtain insurance cover will blight property values in many areas, as mortgage lenders may not offer funding and in many cases the properties will be very difficult to sell on.

Many home owners and buy-to-let landlords could also risk breaching stringent mortgage conditions that require them to have buildings insurance in place for the life of their mortgage loan.

Business Development Director for SearchFlow, Richard Hinton, said “Buyers will be able to obtain flood insurance for the next few months, but the long-term prospects of properties at risk of flooding are potentially bleak. Buyers purchasing in high-risk flood areas face the possibility of very high premiums, significant reductions in value, less access to mortgage finance and even action taken by the mortgage lender due to breach of the mortgage agreements.”

Check if you have a property at risk by going to the Environment Agency flood pages

275,000 new tenants flooded the UK Private Rental Sector in 2011 – a 24% increase on the previous year.

275,000 new tenants flooded the UK Private Rented Sector in 2011

Latest Government Figures Confirm What savvy UK Property Investors & Landlords already knew

Latest Government figures confirm the steady decline of UK Home ownership and the social rented sector, (Council Houses), together with the indisputable rise of the Private Rented Sector (PRS) following the credit crunch.

The figures confirm what property investors who have been expanding their rental property portfolios already know, Buy-To-Let in the UK is BOOMING!

The new 2010-2011 English Housing Survey shows that in that period;

  • 66% of households (14.5 Million) were owner occupiers, down 1% from the previous year, continuing the downward trend observed since 2007.
  • The social rented sector last year accounted for 17.5% (3.8 Million households)
  • The private rented sector accounted for 16.5% (3.6 Million households).
  • Thirty years ago, there were over 3 Million more tenants in the social housing sector than in the private rented sector.

Now the gap is just 200,000.

Last year, a total of 394,000 new households were formed in England

  • 68% were private tenants forming 268,000 of the new households
  • 14% were owner occupiers (55,000 households)
  • 18% were social renters (71,000 households).

One key difference is that couples with no dependent children were the most common type of household in 2010-11 with 35% in the owner occupied and 43% in the private rental sector.

However, the most common type of household in the social rented sector was a single person aged 60 or over (24%).

17% of tenants in the social sector, were lone parents with dependent children, compared to 12% of tenants in the private rented sector with the same status. The figures compared to just 3% of owner occupiers.

In 2011, private sector rent was around twice that of social rents (an average weekly £160 compared to £79).
In the same period, 63% of social renters and 25% or private tenants received Local Housing Allowance (LHA) or Housing Benefit.

Another key difference is in length of tenure: 54% of private tenants had been in their home for under two years, whilst 59% of owner occupiers and 43% of social tenants had been in their home for ten years or longer.

Chief Executive of Countrywide, Grenville Turner, said of the survey: “Successive governments have widely encouraged home ownership but the impact of the recession has led to a structural change in the property market. The impact of this has caused an additional 275,000 new tenants to flood the private rental sector in 2011 – a 24% increase on the previous year. Current demand levels indicate that there will soon be more people in the private rental sector than social housing, which will only add to the already saturated demand and supply imbalance in the market.”

BTL landlords can cash in on the current rental property boom by utilising the wide range of landlord and letting agent services offered by Legal4Landlords.com to ensure thorough tenant vetting and cashflow, including Tenant Referencing, Landlord Insurance, Rent Guarantee Insurance as well as Debt / Rent Recovery and Eviction services.The full report contains information about overcrowding, occupancy patterns, energy use and decent homes and can be found at the link below.

http://www.communities.gov.uk/publications/corporate/statistics/ehs201011headlinereport

UK property repossessions increase

UK Property Repossessions are forecast to increase 22% in 2012

UK Property Repossessions are forecast to increase 22% in 2012

Economists expect the recession and rising unemployment to squeeze the already stretched household finances of thousands of struggling families this year and are warning UK homeowners and landlords of a sharp rise in residential property repossessions.

Record low Bank of England (BoE) interest rates and lower than expected unemployment figures kept property repossessions to relatively small numbers through the worst days of the first half of the recession and they eased again as the country struggled into a tepid recovery.

However, with a double dip recession inevitably looming, workers incomes failing to cover spiralling household costs, the Government’s economic cutbacks and welfare reforms starting to bite whilst the beleaguered private sector fails to replace jobs lost in the public sector, economists are fearing the worst.

The Council of Mortgage Lenders (CML) had already forecast a 22% rise in UK property repossessions for 2012 increasing the annual property repossession figures to around 45,000.

The property repossession figures include private residential properties where mortgage payments have lapsed and Buy-To-Let properties where landlords did not have <a title=”Landlord Insurance” href=”http://www.legal4landlords.com/rent-guarantee/” target=”_blank”>Rent Guarantee Insurance</a> and have been unable to keep up with their buy-to-let mortgage repayments due to their tenants not paying the rent.

Read the full article here

Property Valuations In UK on the Increase

UK Residential Property Values Increase Across the UK

According to Nationwide 9 out of 13 regions in the UK recorded residential property price rises in 2011, with London the best-performing region (+5.4%) and Northern Ireland the worst-performing region (-8.9%).

Property prices in Scotland are down 0.8% on the year, having remained steady in the final quarter of 2011, in Wales prices ended 2011 up 1.5% despite having lost 0.9% in the final three months.

For the UK as a whole, the typical value of home stood at £164,785 in December, following a 0.3% increase during Q4 which helped produce an annual price rise of 1.1%.

However, at 5.2, the average house price to earnings ratio remains above the long-term average of around four, although down from a peak of 6.4 in 2007.

Due to continued property price falls, Northern Ireland is now the cheapest UK region in terms of average prices, and also the most affordable relative to average earnings.

The North remains the most affordable English region, while annual price growth of 5.4% has consolidated London’s position as the least affordable region, with a house price to earnings ratio of 7.4.

In 2012 the market is likely to be dominated by fears over rising unemployment, the squeeze on household incomes and the Eurozone finance crisis.

Forecasts for 2012 are for property values to remain stagnant at best.

Shortage of suitable property supply should continue to underpin the market, although Halifax recently reported that there were only 187,000 First-Time Buyers (FTB’s) in 2011 – the lowest annual total since the lenders’ records began in 1974.

Homes built before 1919 have risen in value more than any other type of property over the past 25 years.

The report by the Halifax says pre-1919 homes are popular because there are fewer of them, and they tend to be in the best locations.

Over the past quarter of a century, the report reveals, homes falling into this category have risen in price by more than 450%.

This is equivalent to an average increase of more than £500 every month for 25 years, a price rise which has not been matched by any other type of property.

In 1986, pre-1919 homes had an average value of £33,619, making the category the cheapest of the four ‘ages’ of property.

By 2001, the average had increased to £117,990 and today it is £188,473, an increase of 461%, or £516 every month.

The other three ‘ages’ of property are 1919 to 1945, 1946 to 1960 and 1960 onwards.

Martin Ellis, housing economist at the Halifax, said it was easy to see why pre-1919 properties were now more expensive than any other. “The age of a property often determines its size, its style and location. Properties from the Victorian or Edwardian era tend to be in higher demand. This is because there are fewer of them. They are often larger, situated in desirable locations, and have a popular style”.

The cheapest properties are homes built between the end of the Second World War, which triggered a building boom, and 1960.

They cost an average of £144,988, and have risen in value by only 249% over the past 25 years.

As the study highlights the popularity of older properties, it raises concerns about the Government’s moves to encourage people to buy new-build homes.

The Prime Minister has said he wanted ‘everyone in this country’ to experience the ‘magic moment’ of getting the keys to their first flat. But the Government scheme, which allows people to buy with only a 5% deposit, is available only to those who want a newly-built home.

And it is this type of property which has plunged in value over recent years amid fears of further falls. Since the credit crunch began, the Halifax figures show, homes built after 1960 have dropped by nearly £40,000 in value.

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British property owners are still throwing extra cash at their mortgage debt, encouraged by continuing BoE record low interest rates and the slowdown in the UK housing market.

UK mortgage debt fell by a record £9.1 Billion (GBP) in the second quarter of 2011 as consumers decided to improve their financial position amid uncertainty about the health of the economy and job fears, this trend continued into the 3rd Quarter of the year as well.

With savings accounts offering small returns thanks to the Bank of England (BoE) keeping base rate at a record low of 0.5% yet again, UK property investors, landlords and homeowners have used any available spare cash to make inroads into their mortgage debt.

The number of people drawing on the equity in their homes has fallen every quarter since spring 2008, with the second and third quarters seeing housing equity withdrawal hit its highest negative figure since records began in 1970

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A Channel 4 TV programme is set to reveal the scandal of over 1 Million empty residential properties in the UK

There are 2 Million people on housing waiting lists – and yet 1 Million properties are still remain empty or uninhabitable.

Along with landlords from hell, the empty property debacle is one of the issues being aired in Channel 4’s new ‘Great British Property Scandal’ season which starts on TV tonight.

Tackling the 1 Million empty residential properties across the UK is one of the top priorities of the Government’s new housing strategy and a key feature in the drive to increase the provision of affordable housing.

Channel 4’s decision to address the nation’s housing shortage in a season of four programmes this week seems prescient, coming hard on the heels of divisive Government housing initiatives – in particular, the drive to restart council house sell-offs

As yet there has been no mention of agents or individuals in any of the publicity material released by the television company, but the series does promise to be uncomfortable viewing for many UK landlords.

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