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Liberal Democrats Announce Help To Rent Scheme

Liberal Democrats Announce Help To Rent Scheme

Help To Rent Scheme To Support Young Workers 

Liberal Democrat leader Nick Clegg has announced plans for a new ‘Help to Rent’ scheme should his party get elected to power in May. The scheme is intended to support young workers who want to move out of their parents homes and rent their first property in the private rental sector (PRS).

According to some of the latest research it is thought that around two million young working adults still live with their parents because they cannot afford to move into a property of their own, either purchased or rented.

The proposals for the Help To Rent scheme will include a government loan of up to £2,000 (GBP) in London, and £1500 (GBP) in other UK regions to cover the cost of tenancy deposits, with loan repayments staged over 12 or 24 months.

To be eligible for the proposed Help To Rent scheme and secure a loan for a deposit, tenants would need to be in paid employment, aged between 18 to 30 and not be property owners or seeking a tenancy in social housing provided by local authorities. 

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Mortgage Market Review Already Causing Delays For Borrowers

Mortgage Market Review Already Causing Delays For Borrowers

Mortgage Market Review Already Causing Delays For Borrowers

Would be residential property buyers are dismayed about the change of the rules on residential mortgages, with strict lending criteria tightened following the introduction of the Mortgage Market Review (MMR).

Since 26th April 2014, mortgage lenders have been required to carry out much more detailed checks of a borrower’s financial situation to be sure that they can truly afford to purchase and continue to afford the property, both now and in the future.

The introduction of the MMR is supposed to help regulate the residential property purchase market and does not yet apply to buy to let mortgages, but that could happen in time.

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Mortgage Market Review Hits UK Property Market

Mortgage Market Review Hits UK Property Market

Mortgage Market Review Affected Housing Market Before Launch

The new regime for the approval of mortgages came into force over the weekend (26th April 2014) but even before it was officially launched it was having a dramatic effect on applications, with loan offers being carefully scrutinised and the impending process had lenders asking even more questions before approving any mortgage offer.

I experienced the vagaries of the system myself, when taking a call from a lender the day before funds were due to be released, I was asked to provide even more details than ever before on a loan application, culminating in further delay to purchasing, and the details I had to provide and verify could have been done weeks before.

The lender said the additional information was in order to comply with MMR and this was before the official launch date. The property I was purchasing should have completed last week, before the MMR introduction date, but the delays caused by the lender requesting verification of the additional information required to process my loan meant that the loan process was delayed and resulted in dragging things out, until 9am today, when my solicitor called me to say that the purchased had finally completed.

The additional requirements of the MMR will result in the death of quick purchasing by property investors, however, I now know that in order for loans to be agreed that I have to provide extremely detailed accounts, financial projections, and provide verified proof of everything I have ever done in order to prove affordability.

The personal finance industry publication Mortgage Strategy says 7 out of 10 mortgage brokers reckon that it will be harder and slower for prospective purchasers to get a mortgage loan under the new MMR regulations.

For all new mortgage applicants it means not only providing evidence to the lender of all income and earnings including payslips or audited and verified accounts for the self-employed, but also requires providing details of all spending, too.

Mortgage applicants must itemise and cost spending on things they cannot do without, as set out in a list provided by the Financial Conduct Authority (FCA), including food, household cleaning and laundry, all heating costs, water bills, telephone, essential travel and existing property charges such as council tax, buildings insurance, ground rent and service charges for leasehold apartments.

Applicants must also disclose discretionary spending on clothes, household goods, personal goods such as toiletries or leisure activities.

The FCA says mortgage applicants must itemise other debts such as credit card bills, outstanding loans, child maintenance and alimony payments.

Mortgage lenders and finance providers must consider how interest rates are predicted to change over the next five years, to gauge the affect on borrower’s mortgage repayments. If payments are likely to go up then the lender will check that the borrower can afford it based on disclosed financial commitments.

And if mortgage terms extend into a borrower’s retirement, the lender has to check on pension income predictions too, in order to judge continued affordability.

Buy-To-Let Opportunities For Pensioners

Buy-To-Let Opportunities For Pensioners

Buy-To-Let Mortgage Lenders Set To Offer Retiree’s Mortgages

Buy-to-let mortgage lenders are reconsidering their age restrictions following the Government’s announcement to give pensioners unlimited access to their retirement savings.

The move has prompted a specialist mortgage lender to offer pensioners under the age of 70 35-year mortgages, while retired people are being targeted with targeted  by buy-to-let adverts with senior appeal.

Managing Director of The Mortgage Works (TMW), Henry Jordan, said they have recognised that buy-to-let is a popular source of retirement income, stating “The recent budget announcements could see even more pensioners considering buy-to-let as an option for their retirement savings.”

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Bridging Loan Lending Reaches Record High

Bridging Loan Lending Reaches Record High

Bridging loan use by property investors rises again 

Short-term bridging loan finance is at a new all time high, according to new data published by short-term secured finance providers, West One loans.

Annual lending of £778 Million (GBP) meant that short-term second charge lending by consumers reached a new record high over the last year.

At the start of 2013 the gross amount of bridging finance being borrowed was recorded at £549 Million (GBP) and an increase of 42% in business saw an additional £229 Million (GBP) in gross short-term secured lending being sought by property investors in the twelve month period to 2013 in order to reach the new high. 

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More Tenants Face Eviction Over Bedroom Tax

More Tenants Face Eviction Over Bedroom Tax

Bedroom Tax Blamed For Increasing
Eviction Numbers

The apparent shortage of 1 and 2 bed properties in either the social or private rented sector means that more tenants are facing eviction for non-payment of the Bedroom Tax because there are no suitable properties available for them to move into.

Mark Rogers, Chief Executive of the Circle Housing Group, one of the UK’s largest housing associations managing 65,000 residential properties, has warned of a rise in tenant evictions because of the government’s new under-occupancy penalty, more commonly known as the bedroom tax.

Mr Rogers said “It is inevitable that there will be a long-term increase in the number of people failing to pay their rent as there are simply not enough vacant smaller properties for people affected to move into to avoid the charge. Circle Housing Group are offering tenants financial advice and encouraging those affected to look at a house exchange scheme, which has seen a 26% rise, but an increase in evictions is also to expected. The under-occupation charge is hitting a lot of people very hard, as you would expect. They are losing money and by the very nature of being on benefits, they are on very low incomes. People can’t down-size because there aren’t enough properties for them to move in to. We did a survey and one finding was that if you let every single bedroom that came vacant, and you housed an under-occupier there, it would take eight years to clear the backlog. Our view is that  for the vast majority the transfer system is untenable. We won’t evict someone if we can’t find a solution for them. If they don’t take that solution that we offer, then we will evict, but we see it as our job to make sure we don’t go down that route. If that happens we see it as a failure; it is expensive to the local authority, it is expensive to the person, traumatic for the person, often not good for the community. We see evictions generally as a last resort. From our perspective I think as time goes on they will go up a little but our plan is that by using our solutions we minimise the impact.”

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Green Deal Is A Joke

Green Deal Is A Joke

Bad Business Practices, Long Term Debts, Unqualified assessors – Green Deal getting bad press

The Government heralded the launch of the “Green Deal” in January this year as a groundbreaking flagship initiative that would help struggling families cut energy bills, however, it appears that the general public are 99.9% against the idea.

The intention of the Government was to encourage millions of UK home owners to take out “Green Deal” loans in order to pay for money saving improvements to properties, such as; loft insulation, double glazing, boilers and other energy efficient measures with the aim of cutting a typical family’s energy costs by as much as £50 a month.

The loan would be repaid over an agreed timescale of up to 25 years, but the debt is attached to the property rather than the current owner, which means the debt could be passed on to any new buyer. As a result, property vendors could face demands from prospective buyers to clear any outstanding debt, which could also see them facing a charge or early repayment penalty of up to £6,000 (GBP).

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New Affordable Housing Guarantees Funding Is Intended To Deliver

New Affordable Housing Guarantees Funding Is Intended To Deliver
Thousands Of Affordable Properties

New Affordable Housing Guarantee Funding Is Intended To Deliver Thousands
Of Affordable Properties

On the 24th July 2013, Government ministers announced a multi-million pound boost to build thousands of new and affordable residential properties in the UK.

69 different housing associations and developers will each receive a share of £220 million (GBP) to deliver almost 14,000 new and affordable residential properties outside of the London area.

Work on the new residential properties will be started by March 2015 and will be expected to be completed by 2017.

The move is part of wider government efforts to get Britain building, which will lead to the fastest annual rate of affordable house building for over 2 decades.

The increased funding is part of the expanded £450 million (GBP) Affordable Housing Guarantees which will support up to £3.5 Billion (GBP) in government debt guarantees to deliver thousands of new homes.

Of the almost 14,000 homes this money will help deliver, the majority will be available at an affordable rent with 2,000 of those available to buy through shared ownership.

Housing associations and developers who plan to use the guarantee scheme will now work with the Affordable Housing Finance to finalise the details of the loan funding that will work alongside today’s grant allocations.

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Top Economist Warns Of Fresh House Price Crash

Top Economist Warns Of Fresh House Price Crash

Disastrous House Price Crash Could Be Caused By
Government’s Funding for Lending Scheme

One of the UK’s leading economists has warned of a potentially disastrous house price crash and points the finger at the Government home buying scheme for being the cause of another unsustainable property bubble.

Chief Economist at the Institute of Directors (IoD), Graeme Leach, said the introduction of the new Help-To-Buy scheme, under which UK taxpayers are underwriting thousands of new mortgages for property purchases, means the world must have gone mad.

Mr Leach said “The Funding for Lending scheme is very dangerous because it will drive up property prices at a time when it seems likely that (property) prices are already over-valued.”

The scheme is one of Chancellor George Osborne’s financial initiatives where the Government will underwrite mortgage loans allowing new and first time borrowers up to 20% of a property’s value as part of their deposit, effectively giving the Government a proportionate stake in the value of the mortgaged property.

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Is There A Dark Side To The Help-To-Buy Scheme?

Is There A Dark Side To The Help-To-Buy Scheme?

Is There A Dark Side To The Help-To-Buy Scheme?

The Government’s Help-To-Buy Scheme was intended to allow first time buyers to get on the property ladder with the hope that this would kick start the UK property market and it appears to be having the desired effect with increasing property transactions and the slow rise in property prices.

However, the Government intervention in the UK residential property market could have disastrous consequences for property owners and could even cause another property bubble.

The Government are spending huge amounts of money to aid first time buyers to get on the property ladder by offering low deposit, high loan to value, mortgages that are underwritten by the Government, effectively giving them a second charge on the property for a period allowing the owners to repay at a set rate per year.

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