by admin | Jul 16, 2021 | Investment, Mortgage News
With the Stamp Duty Holiday winding to a close, it’ll soon be time for the housing market to go back to standing on its own two feet. It’s always managed this pretty well in the past. Can it keep ploughing ahead now?
The drivers behind house-price growth
Since July 2020, the UK has seen extraordinary house-price growth. Given the timing, it seems reasonable to assume that the SDLT holiday was a factor in this. The key question, however, is whether or not it was the only factor. If it was, then, at a minimum, house-price growth should stop. If it wasn’t, then house-price growth should continue albeit possibly at a slower rate.
Why were people moving?
Anyone who’s ever moved home knows just how much hassle it involves. What’s more, even with the SDLT holiday, it’s generally an expensive undertaking. The SDLT holiday, for example, did not cut the costs of mortgage applications, valuations and conveyancing. Similarly, it did not cut the costs of physically moving from A to B.
It, therefore, seems fair to assume that the SDLT holiday simply prompted people to get on and do something they were planning on doing anyway. This raises the question of why they were doing it.
Upsizing and downsizing
If you need more space than you have and can’t extend then moving is really your only option. If you have more space than you need, then moving can be an attractive option. Less space generally means less cleaning and maintenance. It can also mean less cost.
Of course, if you’re really short on space or really have too much of it, you will effectively be forced to move. If, however, you’re just about managing, then you may need an incentive to go through the hassle of moving home. The SDLT holiday might have been the boost you needed to get moving.
If this is the case then it’s questionable whether house prices can continue to rise over the near future. Quite simply, if the majority of people who needed or wanted to move have done so recently, who is going to be buying new houses? Of course, it’s to be expected that there will be some activity, for example from first-time buyers, but will it be enough to sustain growth?
Changing location
The need to change location might be forced on you or it might be through choice. In fact, it might even be a bit of both. This might have been the case for a lot of people in COVID19. Remote-working became the new normal. Remote-/hybrid-working is looking increasingly likely to be the new frontier of knowledge work. That has serious implications for the housing market.
Although some employers have spoken out against remote working, many others are interested in it. They may not be prepared to go 100% remote (although some companies are). They may, however, be perfectly happy to switch to a hybrid model. This allows employers to reduce the cost of office space while still maintaining a base for meetings and collaborative work.
It also allows employees to move further away from their work location if they wish. In fact, it may strongly motivate them to do so to get the space for proper home offices. If this is the case then demand may continue after the SDLT holiday ends. Some employees may have been waiting to see what their employer’s long-term policy would be before committing.
Investing
People buying second (or subsequent) homes still had to pay the surcharge but they qualified for the main SDLT holiday. If this was one of the drivers behind the price rises then it’s questionable whether or not price growth will continue.
Investors need to make their numbers add up. It’s hard to see how they can make suitable returns buying houses at high prices without the benefit of the SDLT holiday to offset them.
Please contact us for mortgage advice.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
by admin | Jun 18, 2021 | Investment
Eviction protection for tenants is now running out. The exact date it ends varies by country. In England, it’s the 1st of June. Furthermore, the notice period will be reduced from six months to four. Theoretically, therefore, it’s back to “business as usual” for landlords and tenants. In practice, landlords may still have to move carefully. Here are a few points to consider.
Remember the law extends beyond COVID19 measures
If it’s been so long you can’t remember, here are the key points you need to keep in mind when dealing with any tenant.
You are responsible for keeping the property safe
There is no if, but or maybe about this. For as long as a tenant has legal possession of your property, you have to keep it safe and habitable. If a tenant is being difficult about granting you/your representatives access to your property, then it’s highly advisable to document all steps you take to resolve the situation.
It’s also advisable to contact your local authority. They may be able to help, especially if the issue could potentially have a negative impact on other properties. Realistically, however, the aim of contacting a local authority is generally just to make sure they know your side of the story. Otherwise, they might get a garbled version of events from other sources.
Any eviction proceedings must follow due process
Do not be tempted to take any shortcuts here, not even if they seem to be benign, for example, offering your tenant financial assistance to leave. Follow the process to the letter. It may be frustrating. It is, however, likely to be a whole lot less frustrating than the possible results of trying to work around the law.
Keep the Equality Act 2010 in mind
These days, it’s not just enough to avoid discrimination on the basis of protected criteria (direct or indirect). You need to be able to demonstrate that you have avoided discrimination on the basis of protected criteria. Effectively, this means that you don’t just need an audit trail of what you did but a log of why you did it. This will show that you use a legally-robust process to reach your decisions.
Lender forbearance also extends beyond COVID19 measures
A lot of the “COVID19 support measures” were essentially just variations on standard lender-forbearance requirements. In fact, the only real difference was that people could self-certify rather than having to go through a lender’s standard approval procedure. That is now ended and hopefully, it will not need to be brought back.
There is, however, still support for people who need it. That includes landlords who are struggling to make their mortgage payments for any reason. If the reason is due to a tenant not paying rent, then the lender would be expected to work with the landlord to come to an arrangement everyone can manage.
If you’re having issues with a tenant (or anything else), it’s advisable to contact your lender as early as possible. Remember, it’s in their interests to work cooperatively with you. Leaving aside the regulators, they have public opinion to think about, especially after 2008.
Landlord forbearance should also extend beyond COVID19 measures
Just because you can now evict your tenants, it doesn’t mean that you should. If a tenant is generally “low-maintenance”, then it may be in your best interests to give them some breathing space to get back on their feet.
After all, if you evict them, then not only will you have the eviction expense but you could also have a void period. What’s more, there’s no guarantee that any future tenant will be an improvement on the current one, at least not over the long term.
The reality is that the UK economy is probably going to need some time to recover from the pandemic (and Brexit). Until then, any tenant could potentially struggle for a while. In most cases, learning to work with this will prove better than resorting to evictions.
Please contact us for any more information
by admin | Jul 12, 2019 | Investment, Mortgage News
If you’ve been paying attention to the financial news, you’ll probably have noticed that there have been numerous articles highlighting the increasing challenges faced by property investors in general and buy-to-let property investors in particular. The fact still remains, however, that the UK has a high demand for property and especially for high-quality rental property. This means that there are still very respectable profits available to astute property investors who operate in the right way. If that sounds like something which would interest you, then here is a beginner’s guide to property investment.
It’s not just an old joke, location really does matter
If you’re planning on managing a property yourself, then you’re probably going to want to look for properties which are within practical travelling distance of where you live. These days, however, property investors, especially beginners, might want to give serious consideration to using a lettings agent to ensure that every aspect of their buy-to-let business is managed in total compliance with the law. This does add to costs, but it also means that investors can look at a far greater range of locations since they will not need to travel to them personally (or at least not often).
Teamwork makes the dream work
For “hands-on” investors, having an address book full of useful contacts (such as reliable and proficient tradespeople) can make life go so much more smoothly. For “hands-off” investors, a good lettings agent can be more than worth their fee. In either case, having an accountant on board is not just a convenience from the point of view of managing your tax returns with minimal hassle, but an investment from the point of view of minimizing the amount of tax you have to pay. You may also want to have a lawyer on your side, particularly if you are a “hands-on” investor. As previously mentioned, the UK buy-to-let market is becoming increasingly regulated and penalties for non-compliance, even inadvertent non-compliance, can be very severe. You might also want to consider becoming a member of relevant associations and other networks as a handy way of keeping on top of developments in the property market and of benefitting from other people’s experience.
Make sure your portfolio is built on solid foundations
A rising tide floats all boats and a rising property market effectively gives property investors some leeway to make mistakes and escape unscathed (or with very little damage done to them). When the property market is stagnant or falling, property investors need to tread more warily. This has always been the case but recent developments have made it even more important that investors get their sums absolutely correct right from the off. In this context, there are two changes which are of particular note. The first is that Mortgage Tax Relief is in the process of being abolished, which could have significant implications for investors on higher incomes. One way to deal with this is to hold property within a limited company, however, this carries a number of implications which need to be clearly understood before a property investor can make an informed decision as to whether or not this is the right approach for them. It’s also worth noting that if you are a new property investor and choose to go down this road, you almost certainly want to buy your property through the company right from the start to avoid the costs of transferring it into the company further down the line. Secondly, the government has now finally banned landlords charging additional fees to tenants, which means that it is now utterly vital that property investors have a clear view of all the expenses they can reasonably be expected to incur (and ideally a margin of safety) so that these can be incorporated into the rent tenants pay.
Your property may be repossessed if you do not keep up repayments on your mortgage.
The FCA does not regulate some forms of buy to let mortgages.
The FCA does not regulate tax planning and we act as an introducer for it.
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