Overcoming pre-application delays in the equity release process – Wilson

Overcoming pre-application delays in the equity release process – Wilson

The amount of equity released from homes in 2021 is set to top a record £4bn by the end of the year, according to Key. However, in order to facilitate this surge in consumer interest, advisers are having to improve practices and spot the process speedbumps before they cause delays for clients.

With More2life’s own research recently showing that over £750m in housing equity has been delayed by the simple fact that advisers have instructed non-specialist solicitors who are less knowledgeable about the process, it’s clear that even small factors can have a huge impact on the timeline.

So what do advisers need to know about the pre-application period in particular to overcome potential delays?

(E)valuation of the situation

Firstly, it is important to remember that a client may not understand how much their property is actually worth, and therefore the amount that they would be able to release. Unrealistic expectations that aren’t addressed at this pre-application stage can cause significant delays later, should a client be surprised by the amount available to them when it comes to filling in the application.

A background knowledge of valuations can be a great tool to spot and manage unrealistic expectations. A ballpark figure for a property’s value can be easily ascertained via publicly available benchmarks for a given street and it is often valuable to engage with colleagues, surveyor contacts and lenders to establish whether a client’s expectations are accurate.


Spotting the pitfalls early

However, property value is not the only aspect of applying for equity release where clients may have unrealistic expectations. How ‘mortgageable’ their property is will also play a role, and this is an area where even clients with an accurate assessment of their property’s worth may be less well-informed.

Common reasons for an equity release application to be declined can range from proximity to commercial property to having a large proportion of the property covered by a flat-roof. A deeper knowledge of these common reasons can help advisers spot ‘mortgageability’ issues with a property early on in the application process.

Thankfully, providers and chartered surveyor firms have a wealth of educational material that is freely available for advisers to draw from, including underwriting fact sheets and educational videos on the comparable valuation model used by surveyors.

Ultimately, the best way to manage client expectations and avoid delays at this step of the customer journey is to develop a deeper understanding of the equity release process – and with the market growing at its current rate, this also allows advisers to tap into a growth area with more confidence.

Reaching out to lenders to gauge the educational materials they have available, or even for a discussion over the phone, will pay dividends in the long run and could speed up future equity release applications.

This will allow advisers to spend time more efficiently and help clients to unlock their housing equity with less stress.

L&G Mortgage Club partners with Harpenden BS to offer holiday let exclusive

L&G Mortgage Club partners with Harpenden BS to offer holiday let exclusive


The two-year discounted mortgage has an initial rate of 2.59 per cent with a £100 application fee, an £800 completion fee which can be added to the loan, and scaled valuation fees.

An early repayment charge of two per cent applies for the two-year period. The product is offered up to 80 per cent loan to value (LTV) on a repayment basis or 75 per cent LTV on an interest-only deal.

There are no upper age restrictions and up to four borrowers per application are accepted.

The deal can be used by borrowers who are purchasing a property as a holiday let that would have previously been labelled for consumer buy-to-let.

The Harpenden will assess the borrower’s financial profile to make sure they have enough funds to afford the mortgage and running costs for up to three months if the property is empty.

There are no restrictions on the location of the property giving prospective buyers wider purchase options within England and Wales. Properties can be adjacent or above commercial premises. Gifted deposits from a family member are accepted and a personal usage allowance of up to 90 days has been introduced.

Danny Belton, head of lender relationships, Legal and General Mortgage Club, said: “Demand for holiday let investments is still surging and we are proud to partner with Harpenden Building Society to respond to this growing appetite in the market with our latest discounted exclusive.

“This exclusive offers advisers welcome access to another competitively priced product, widening the choice they can offer to borrowers looking for holiday let solutions. The Harpenden is a longstanding partner of Legal and General Mortgage Club, and we are pleased to be continuing to expand our offering to advisers with the building society.”

Pepper rolls out shared ownership mortgages for impaired credit buyers

Pepper rolls out shared ownership mortgages for impaired credit buyers

The range is available on the Pepper 36 product tier. Lending is offered up to 75 per cent loan to value. Borrowers with county court judgements and defaults registered 36 months ago are eligible to apply.

Rates for tier 36 deals start from 3.15 per cent.

The launch into shared ownership mortgages is part of Pepper Money’s growing affordable home ownership proposition and follows the launch into Help to Buy last month.

Paul Adams (pictured), sales director at Pepper Money, said: “At Pepper Money, our primary objective is to promote greater financial inclusion to a diverse range of customers. In line with this, we have been working hard on developing a dedicated proposition to provide competitive specialist lending to customers looking to access the property market through affordable home ownership schemes.”

Adams said the pilot programme with The Mortgage People (TMP) had allowed the lender to refine its processes and ensure the launch of the range did not impact on its service levels across the company.

He added: “As with all of our mortgages, our shared ownership proposition will be supported by expert underwriters who take an individual approach to assessing every application on its own circumstances and merits.”

Base rate rise necessary but impact on vulnerable is concerning – industry reacts

Base rate rise necessary but impact on vulnerable is concerning – industry reacts


Today’s bank rate increase from its historic low of 0.1 per cent to 0.25 per cent took many by surprise.

A base rate rise was expected last month. But November’s Monetary Policy Committee (MPC) vote of seven to two in favour of holding rates at 0.1 per cent prompted speculation that no action to raise rates would be taken until the New Year due to the uncertain economic impact of Omicron, the latest Covid-19 variant rapid spreading in the UK.


Caught off guard

The MPC voted decisively, however, to raise the rate by 0.15 percentage points to 0.25 per cent in its latest committee meeting. The vote was eight to one in favour of an increase. It is the first time the base rate has been increased since August 2018 when it rose from 0.5 per cent to 0.75 per cent.

Andrew Montlake, managing director of Coreco, said: “Given the radical uncertainty created by the Omicron variant, this decision has caught many off guard. Most thought the Bank would hold off until the New Year given the speed with which things are escalating.”

Montlake said the decision showed the Bank of England was “prepared to get tough” to rein in inflation which rose again this week to 5.1 per cent – the highest in a decade. The Bank’s inflation target is two per cent.

Laura Suter, head of personal finance at investment platform AJ Bell, said: “Last month we were all geared up for a rate rise party, only for the punchbowl to be whisked away at the last moment. Fast forward a month and there was minimal expectation of an increase, only for the Bank of England to whip out a Christmas surprise for everyone with a hike.”


Necessary measure

Trade bodies the Intermediary Mortgage Lenders Association (IMLA) and Propertymark felt the rate increase had come at the correct time.

IMLA’s executive director Kate Davies said: “Today’s decision by the Bank of England will have come as a surprise to many, with popular opinion expecting the Bank to put off the increase until after the festive period. However, the decision feels like a proportionate and appropriate response to recent rises in inflation and in truth the effect on the mortgage market may remain minor in the short term.”

She added: “A key concern will be the effect of this decision on vulnerable borrowers, who are more exposed to the consequences of rising rates.”

Propertymark described the rise as a “small and necessary step” and not one that was expected to have a significantly negative effect on the housing market.


Modest mortgage impact

Around three quarters of mortgage borrowers are on a fixed rate deal and will see no change to their mortgage payment.

That leaves approximately 850,000 mortgage borrowers on a tracker rate mortgage and 1.1 million homeowners on a standard variable rate who will feel the effects of the rate increase, according to UK Finance.

UK Finance estimates that the 0.15 percentage point rise will lead to an average increase in repayments by £15.45 per month for tracker customers. For those on a standard variable rate this rise translates to an estimated increase of £9.58 per month on average.

Paul Broadhead, head of mortgage and housing Policy at the Building Societies Association said: “A rate increase is an important psychological moment as it is the first time that the Bank Rate has risen since August 2018. But right now we have just moved from the lowest bank rate ever, to the second lowest ever.”

Although mortgage rates are expected to remain low, within an hour of the news that the base rate had risen, banks and building societies moved swiftly to re-price deals for new borrowers.

“Given the rising costs of energy and food and the tax hikes coming next year, it is helpful that eight in ten mortgage borrowers are on a fixed rate,” Broadhead added.

“These people will continue to pay the same each month until their fixed rate period ends. The 20 per cent on variable rate mortgages are likely to see their payments rise, but I expect the increase to be modest, tempered by the highly competitive mortgage market which is still being driven by relatively high demand and a sparse supply of homes.”


Ripple of concern

The Bank’s decision to put the base rate up before the New Year, however, sent a ripple of concern through the market.

Andrew Wishart, property economist for Capital Economics, said the persistent strength of both the labour market and inflation suggested there was a risk that the bank rate would increase by more than currently anticipated, which would be more harmful to the housing market.

“The seamless end of the furlough scheme means that the Bank now expects the unemployment rate to continue to fall rather than tick up,” he said. “Job vacancies remain at record highs, and underlying pay growth was judged to be running at 4.5 per cent year-on-year in October compared to three per cent year-on-year prior to the pandemic. Meanwhile, the rise in CPI inflation to 5.1 per cent in November was well above the 4.5 per cent the Bank predicted six weeks ago.”

Montlake said that the big question was whether this was the start of a trend we could expect to see over the next 12 months. He added that it remained to be seen just how tough the Bank was prepared to get to curb inflation.

Amigo proposes two options for borrowers mis-sold loans

Amigo proposes two options for borrowers mis-sold loans


One scheme would see affected borrowers get back just 29p per £1 owed, and the other 42p per £1 owed. Both pay outs are only predictions at this stage based on the number of claimants owed money and the average amount owed.

The proposals come as Amigo faces collapse as a result of a massive multi-million pound compensation bill for wrongly sold loans.

Amigo started to receive increasing numbers of complaints in 2018. Many of the complaints centred around affordability and mis-selling concerns. Where a customer’s complaint is upheld, Amigo must refund the interest paid or update the outstanding balance. However, it cannot afford to pay all the compensation claims in full. The sub-prime lender is not offering loans at the moment.

The High Court rejected a rescue plan put forward by Amigo in May. Before that the Financial Conduct Authority (FCA) had already opposed Amigo’s ‘scheme of arrangement’ which the company proposed under part 26 of the Companies Act 2006.

Before either of the two new proposed schemes get the go-ahead, they will need to be approved by the High Court, which is expected to take place in February 2022. Borrowers are then expected to need to vote on their preferred scheme in April 2022.

Amigo’s first option is a ‘new business’ scheme where claimants are predicted to get back 42p of every £1 they’re owed. This is Amigo’s preferred scheme, because it will stay in business. However, to do so it will need to be able to re-start lending within nine months of scheme approval. It will also need to raise £70m in the first 12 months of operating.

If these two conditions aren’t met, Amigo will automatically revert to option two which is a ‘wind-down’ scheme where claimants are predicted to get 29p of every £1 they’re owed. This scheme will eventually result in Amigo shutting down.

Full details of both schemes can be found on Amigo’s website. Complaints with Amigo are on hold until a redress scheme is approved.

Confident landlords eye portfolio expansion

Confident landlords eye portfolio expansion

A survey carried out by Shawbrook Bank found that confidence in the market was high, prompting landlords to plan for further investments.

Of the 34 per cent of landlords who said they planned to buy at least one property in the next 12 months, 14 per cent said they were aiming to purchase more properties than they had first planned.

The results follow a recent survey published by research firm BVA BDRC which found that landlord confidence levels were at their highest point in the last five years and tenant demand was soaring. Meanwhile, confidence in rental yields was at its strongest since 2016.

Some 13 per cent of landlords responding to Shawbrook’s survey said they planned to buy properties in a new location while 12 per cent said they were interested in buying a different type of property. Of those looking at new locations, 36 per cent said urban areas were of interest while 30 per cent are looking at rural locations.

The north of England is drawing attention, with almost a quarter of landlords who plan to expand looking to buy in northern regions.

Emma Cox, sales director at Shawbrook Bank, said: “The resilience of the UK property market is clear from our research. Despite the hurdles caused by the pandemic, the market has stood firm and house prices have continued to soar in price. This has created attractive opportunities for investors and property developers, whose confidence in the market has grown over the last 12 months. Their buying activity and trends show that the market is likely to remain strong over the short term.

“Indeed, with 2021 announced as the busiest year for the housing market according to Zoopla, despite recent falls in transactions, it’s clear that the market has fully rebounded from the lows of the pandemic. As supply continues to be low, it’s unlikely that we’ll see house price growth slow significantly and as we move into January next year following the seasonal slowdown over Christmas, property investors will be seeking further opportunities to expand their portfolios.”

Richard Fearon appointed as chair of UK Finance mortgage board

Richard Fearon appointed as chair of UK Finance mortgage board

Fearon (pictured) will replace Lloyd Cochrane, head of mortgages at Royal Bank of Scotland, who is stepping down after completing his two-year term.

Deputy chair positions have been awarded to Michelle Andrews, head of buying a home at HSBC, and Damian Thompson, managing director of Aldermore Bank.

Fearon spent ten years at Lloyds Banking Group in senior mortgage and savings roles. He became chief executive of Leeds Building Society in February 2019.

The UK Finance Mortgages Product and Service Board is one of the trade body’s specialist forums which brings together senior industry figures to discuss key issues facing the mortgage sector.

Charles Roe, director of mortgages at UK Finance, said: “Next year will be a busy time for the mortgage market as we deal with the continuing effects of the pandemic and new requirements to green Britain’s housing stock. Richard’s extensive mortgage experience will be key to our work to support members and their customers in 2022.

“I would like to thank Lloyd for his contribution over the last two years and welcome our new deputy chairs Michelle Andrews and Damian Thompson to the board.”

Fearon added: “As a group of lenders we can show leadership in our work with the government and regulators on industry priorities, including decarbonising the UK’s housing stock and encouraging innovation to bring home ownership within reach of more people.”

Offers accepted on homes in London reaches 10-year high – Knight Frank

Offers accepted on homes in London reaches 10-year high – Knight Frank


Knight Frank’s prime London market report revealed offers accepted in prime central London were 116 per cent higher than November 2020. In Prime outer London that increase was 25 per cent.

According to the national estate agent, the biggest increases in the number of prospective buyers in the three months to November compared to 2020 were all in London.

Meanwhile the ratio of prospective buyers to sales instructions reached its highest level since the start of the pandemic. In prime central London the ratio climbed from 3.9 buyers for every new instruction to 7.8 year on year. In prime outer London the ratio increased from 6.1 buyers for every new instruction to 10.9.

Prime central London prices increased by an average of 1.2 per cent annually, for the second consecutive month. In prime outer London, average prices rose by 3.1 per cent marking the sixth time the figure has been recorded over the last seven months.

The UK average annual house price increase recorded by Halifax for November was 8.2 per cent.

According to Knight Frank’s report, the biggest rises were still seen in outer London where buyers benefit from more space and green areas. The largest annual increases included Wimbledon, 11.4 per cent, Dulwich, 6.1 per cent, Queen’s Park, 6.6 per cent and Richmond per cent 7.3 per cent.

In central areas, the biggest rises were recorded in Islington, 6 per cent, South Kensington, 3.6 per cent and Notting Hill, 2.4 per cent.

Borrowers keep equity release from families to spare them worry and hide financial hardship

Borrowers keep equity release from families to spare them worry and hide financial hardship


When asked why some borrowers chose not to include their families in their decision to take equity release, 29 per cent of advisers reported that not worrying their families was a key borrower consideration, down from 34 per cent in 2020, a survey from More2life found. Less than 10 per cent of advisers reported this was the case when dealing with vulnerable borrowers.

Some 83 per cent of advisers said that a barrier to borrowers involving family was not wishing to include them in day-to-day financial decisions.

Meanwhile, 38 per cent noted that clients were too proud to tell their families that they were struggling financially.

Almost one in five advisers (18 per cent) reported clients who do not wish to involve their families are concerned that their loved ones might try to talk them out of their decision.

The survey which was carried out to investigate adviser sentiment on client vulnerability found that three quarters of advisers thought it was important for family members to be involved in the equity release process. However, one in five thought family involvement was dependant on the complexity of the case.

Just four per cent of advisers surveyed thought it was not important for family members to be involved at all.

More2life says its findings revealed that advisers were becoming increasing aware of the support family can offer vulnerable clients. However, advisers also recognise the influence family can have over vulnerable members.

When ascertaining if a client is vulnerable, 66 per cent of advisers made sure the borrower was answering questions themselves, without coaching from family or friends.

Just over 41 per cent observed how any family or friends present at the meeting reacted or took part in the meeting when assessing the borrower’s vulnerability.

Dave Harris (pictured), chief executive at More2life, said: “Where possible, families can play a huge role in supporting people as they make choices around housing equity and the role it can play in funding later life. However for some, being open about their finances is more challenging as it would break a habit of a lifetime or they are concerned that their families will worry that they are struggling financially.

“Advisers and companies within this arena need to continue to advocate for family involvement and ensure that clients give sufficient consideration to talking to their loved ones about important financial decisions. Collaboration to enable the best practices for identifying and managing vulnerability to become commonplace is vital and is something that as an industry we must all get behind.”


NAO slams govt’s ‘piecemeal approach’ to PRS regulation

NAO slams govt’s ‘piecemeal approach’ to PRS regulation

Over the past decade, the Department for Levelling Up, Housing and Communities (DLUHC) has introduced policies such as mandatory redress schemes for letting agency work, a ban on charging letting fees to tenants and temporary restrictions on evictions during the Covid-19 pandemic.

However, the damning report from the public spending watchdog, told DLUHC that it had taken a piecemeal approach to its intervention and lacked a strategy for the regulation of the sector as whole.

Tenants and industry representatives interviewed for the report described the current system of regulation as “fragmented and over complex”. With no evaluation of recent interventions, the department was unaware of how its actions had affected the operation of the market.


589,000 properties fail standards

The NAO undertook the report to investigate whether the regulation of private renting in England, which spans 36 pieces of legislation, is meeting the department’s objective to ensure the sector is fair to renters.

An estimated 13 per cent of privately rented homes equating to 589,000 properties fail to meet legal standards because they have at least one category one hazard. Category one hazards pose a serious threat to health and safety and carry estimated associated costs to the NHS of £340m a year.

This compares with 10 per cent of owner-occupied homes and 5 per cent of social housing.

Furthermore, an estimated 23 per cent of privately rented homes are classified as non-decent, rising to 29 per cent for those receiving housing support. This compares with 12 per cent of social housing and 16 per cent of owner-occupied homes.


Local authority lottery

The report acknowledged that many local authorities face funding pressures which could hinder their ability to check properties proactively for non-compliance which placed greater reliance on tenants to know their rights and report problems.

Gareth Davies, head of the NAO, said: “The proportion of private renters living in properties that are unsafe or fail the standards for a decent home is concerning.

“The government relies on these tenants being able to enforce their own rights, but they face significant barriers to doing so.”

“The Department for Levelling Up, Housing and Communities should improve the quality of its data and insight into the private rented sector, so that it can oversee the regulation of the sector more effectively. It should develop a clear strategy to meet its aim of providing a better deal for renters.”

The government also came under fire for its inconsistent enforcement of regulation by local authorities and for not helping them to regulate effectively.

The report found that some authorities inspected almost no properties while others inspected a large proportion of their market.

“We were only able to identify 65 out of 308 [local authorities] that have chosen to license more properties than the minimum requirement since 2010, due to data limitations,” the NAO wrote in its report. “We also found low use of some regulatory tools such as banning orders and penalty notices – only 10 landlords and letting agents have been banned by local authorities since new powers were introduced in 2016.”


Government needs clear vision

Further conclusions from the report include:

• A lack of robust data on key issues where regulatory action may be required such as harassment, evictions and disrepair that is not being addressed.

• DLUHC does not know the full costs to landlords of complying with its obligations leading it to struggle to measure the impact of its interventions or establish whether further action is needed.

• While the department works with other parts of government to understand the impact of any related policies on private renting it could do so more consistently. Regular discussions are held but there are no formal arrangements with other departments such as HM Treasury and HM Revenue & Customs, covering issues on tax policy and compliance affecting landlords.

DLUHC recognises that challenges within the sector affect how it should be regulated, and it is planning large-scale reforms to help address these issues. It has committed to publishing a white paper in 2022 which will provide further details on the proposed reforms.

The NAO said for reforms to be effective the government needs a clear vision for what it is trying to achieve and an overarching strategy for how to address the challenges raised by the report. It must work across central and local government where necessary if it is to meet its overall aim to provide a better deal for renters