Nationwide and Accord clarify valuation processes
Nationwide will increase its use of automated valuation model (AVMs) and remote desktop valuations in an attempt to complete as many as possible.
It will continue to accept applications as normal.
Accord will continue to accept applications for all properties, loan to values, values and mortgage purposes. The lender will review its position on standard valuations on 30 March.
As for existing requests for homebuyers reports and full building surveys, Accord is unable to carry these out and will contact applicants to discuss options on properties where surveys have been instructed but surveys have not been carried out.
New survey requests will be given the option of proceeding with a standard valuation, cancelling the request, or proceeding with the survey and waiting for government advice to change.
The lenders join NatWest, Halifax, Pepper Money and Santander in halting physical valuations in response to government guidelines.
Ongoing possessions and eviction orders put on three-month hold
From 27 March, all housing possessions which are underway will not progress through to eviction for 90 days. This three-month suspension period can be extended if needed.
As of 26 March, landlords are to give renters three months’ notice if they want to end a tenancy, but they are not allowed to apply to start the court process until after this period.
This extended grace period will apply in law until 30 September 2020 and the three-month notice can be increased if needed.
If a tenant has not moved out of the premises after the notice period, the landlord can apply for a court order.
All of these measures apply to private and social renters, as well as those with mortgages and those with licenses covered by the Protection from Eviction Act 1977.
The Ministry of Housing, Communities & Local Government (MHCLG) said tenants were still obligated to pay rent and should seek support if necessary. It encouraged landlords and tenants to work together to set up a rent payment scheme.
Since the coronavirus pandemic took hold, the government has announced it will pay up to 80 per cent of an employee’s wages to ensure they are still able to pay for rent and other expenses.
For those with tenants on benefits, Universal Credit and Housing Benefit will increase and from April, Local Housing Allowance rates will pay for at least 30 per cent of market rents in each area.
Buy to let landlords are also eligible for three-month mortgage payment holidays and the self-employed can claim up to 80 per cent of their profits if they face financial difficulties due to the pandemic.
Landlords are still legally obligated to ensure properties meet the required standard and urgent, essential health and safety repairs should be made.
Any non-urgent repairs can be postponed following an agreement between tenants and landlords.
The right decision
David Cox, chief executive of ARLA Propertymark said: “However difficult it may be, this is the right decision in light of the current circumstances. Yet evictions will not be required if we can keep the rent flowing.
“The latest advice is that people stay put, and as long as the government helps tenants pay their rent, there will not be a large build-up of debt from rent arrears, meaning there will be no logical reason why a landlord would start eviction proceedings.”
Major lenders pledge to continue high LTV mortgages
Update: Since publishing this article today, Santander has had to restrict new mortgage applications to only residential purchase and remortgages of up to 75 per cent loan to value (LTV) and up to a maximum of £350,000.
The lender is no longer accepting applications for buy-to-let, new build or government schemes including Help to Buy, Shared Ownership and Right to Buy.
Barclays announced it would only accept applications on products of up to 60 per cent LTV and a day later, Halifax removed all mortgages higher than 60 per cent LTV, except for product transfers and advances.
Nationwide, HSBC and Santander all confirmed to Mortgage Solutions there were no plans to withdraw higher LTV products but said they would keep reviewing market conditions.
According to their intermediary websites, all three are still offering mortgages up to 95 per cent LTV.
Although NatWest did not respond to Mortgage Solutions, its latest product update on 26 March includes deals up to 95 per cent LTV.
Nationwide Building Society said it would continue to support the market within the constraints of the current environment.
The society does not plan to pull any mortgage products at this time, but admitted that some applications would take longer to progress.
HSBC said it would not change its approach to lending and was monitoring service levels.
Santander is monitoring the situation and its impact on the mortgage market.
The bank said it would continue to review products and ways to support mortgage customers, including the processing of mortgage payment holidays.
A spokesperson for Santander said: “Any changes we make to our product offering will always be communicated clearly to our customers and the brokers who we work so closely with.”
Since this response the government has published its guidance on home moves and a note on the Santander website said it is reviewing its product range.
“We ask that you contact your dedicated Santander for Intermediaries (SFI) contact to discuss any new cases before you submit them,” it said.
Coventry BS overhauls LTV limits but progresses pipeline
However it has committed to proceeding with all pipeline cases by using a non-physical valuation on all residential and buy to let cases regardless of LTV.
This applies to all pipeline business submitted up to and including 26 March, where a valuation has not already taken place.
For residential flats it will no longer be accepting mortgage applications above 50 per cent LTV, while for houses, the society has increased the maximum allowable LTV for non-physical valuations to 85 per cent.
Applications with an LTV over 85 per cent will be accepted and processed to the point of valuation, when they will be put on hold until a physical valuation can happen.
Coventry will still accept applications for buy to let purchases and these will be processed to the point of valuation then put on hold.
The society will allow non-physical valuations for buy to let remortgage applications up to a maximum LTV of 75 per cent for houses and 50 per cent for flats.
These changes are effective from 27 March.
TML pauses residential applications amid capital markets uncertainty
It is the latest in a line of non-bank lenders to scale back mortgage offerings as a direct result of the coronavirus impact on financial markets.
The lender will continue to accept buy- to- let applications however, as the funding for these mortgages are not dependent on capital markets.
TLM is also exploring further use of desktop valuations (AVMs) in view of the government’s social distancing instructions.
Peter Beaumont (pictured), deputy chief executive of TML, said: “It is right for us to pause residential applications at this time. Our staff are focused on supporting our customers and business partners in the coming weeks.
“All staff are now working remotely and we are collaborating to maintain health and wellbeing as we get used to new ways of working. Our teams are also actively supporting customers who are impacted by Covid-19 at this challenging time.”
He added: We are continuously reviewing our forbearance policies to make sure we are doing everything we can, this includes the option of payment holidays for up to three months, in line with the recent government announcement.
“We will provide regular updates for our customers and partners over the coming weeks.”
Vector Capital provides £3.3m for four housing developments
The developments are located in Woburn Sands and Aspley Heath, Bedfordshire.
With a combined value of £10.7m, the properties across four sites feature 13 apartments at Woburn with a gross development value of £6.5m; two semi-detached homes in Aspley Heath with a value of £1.4m; and the barn-style house at Aspley Heath, with a value of £1.3m.
A further detached property site remains land banked, subject to an appeal for apartments, with a current value £1.5m.
The barn-style house at Aspley Heath has just been completed and features four double bedrooms, a detached double garage, gated parking and a rear garden on a 0.3 acre plot. The site was formerly a scout hut.
The development loans were used to finance the four sites and will provide ongoing funding for the construction of the properties.
The loan has been secured against first charges with a 68 per cent loan to value (LTV) over four years.
Agam Jain, managing director of Vector Capital, said: “The development loans were processed in under 21 days from the initial application to the drawdown of funds.
“We are looking forward to working with the group on their future developments.”
Matt Evans, director of Goldcrest Group, said: “We continue to grow in strength due to the flexible funding provided by Vector Capital. We have found them extremely efficient and responsive as our financial requirements arise.”
Castle Trust recruits director of property credit risk
Dabbs has more than 15 years’ experience with SME and property portfolios.
He has held roles at Merril Lynch, Global Home Loans and Amicus Finance, where he was a member of the enterprise management risk committee and group credit committee. Most recently, he worked as the head of credit at Fiducium.
Barry Searle (pictured), managing director of mortgages at Castle Trust, said: “Phil’s appointment as our new director of property risk will give us exactly what we need to continue to deliver our ambitious plans.”
Dabbs added: “I’m really pleased to be joining Castle Trust. Property credit risk is a key element to the continued growth of this business and I have a wealth of experience and expertise that I look forward to bringing to the role.”
Networks and clubs should push FCA to pause or reduce fees, brokers say
Rachel Dixon, founder of RH Dixon, said her network already approached her saying it made contact with the FCA to see if this was a possibility for its members.
“I’m surprised they’ve mentioned this so soon, it must mean they have had a few queries come through from broker firms,” she said.
However, she noted it was understandable as some brokers may be concerned about having to still pay indemnity and membership fees even during a slowdown in business or contracts not completing.
She added: “I’m good for a while and I have quite a big pipeline but if they don’t complete then I won’t get paid. I’ve already had a £450,000 transaction fall through, so I can see how something like that might be a problem if it happens to other brokers.”
Jo Jingree, mortgage adviser at Mortgage Confidence also said it would be good if fees could be suspended but said it was unlikely to happen.
Additionally, Dixon referenced how an industry-wide change in working patterns could still end up having a knock-on effect for brokers who were in a comfortable position like herself.
“A slowdown could be caused if surveyors and valuers aren’t able to go out and do their job. If construction workers aren’t working on sites then properties won’t be ready in time and mortgages on new builds will fall through if the mortgage application deadline runs out,” Dixon said.
A number of lenders have already made the call to suspend physical valuations in compliance with the current lockdown.
To further assist brokers financially, Andy Wilson, director of Andy Wilson FS, said networks and clubs needed to keep on top of payment services so member firms get paid at the earliest opportunity.
Updates on industry changes was also suggested as a way brokers could be supported by networks and clubs.
Mike Owen, mortgage adviser at Diverse Advisers, said this would be particularly helpful in giving brokers one place to see relevant information instead of looking up each lender site.
He also said updates on the insurance industry were important as the sector was a “movable feast”, with terms changing on a regular basis.
“People are assessing their own mortality now so it will be nice to get a clear view of the various insurances,” Owen said.
Jingree added that her network was already doing this and said it was helpful during this busy time when advisers were trying to keep a clear head.
Many brokers are already accustomed to working remotely but greater technological support was suggested as a way to assist particular functions such as meetings and identification checks.
Andy Wilson, director of Andy Wilson FS, said guidance on the best video calling platforms would be welcomed so advisers could still provide a “friendly face” to clients.
“I have always shied away from dealing with clients in any way other than face to face, but with the prospect of a lengthy lockdown period, this has to change if we are to survive,” he added.
Owen went further and said if advisers were going to have face-to-face meetings with clients through video calling platforms, there needed to be guidance on how they could continue to verify the identity of clients.
He said: “It’s one thing being able to speak to clients on platforms like Skype but it’s not always that easy to verify that they are who they say they are compared to when it’s done in person. Maybe the government can relax some of the money laundering laws to allow for this.”
Although social distancing has meant many industry events have had to be cancelled, Wilson suggested how technology could be used to continue these events which can be instrumental in an adviser’s business development.
“With network organised seminars and meetings being cancelled, it would also be useful to see networks organising more webinars, where they bring in outside speakers, again in a virtual sense,” Wilson said.
Jingree suggested networks and clubs provide marketing support to help firms deal generate leads ahead of a possible industry slowdown.
She added: “It would be good to learn new ways to bring in business for those who may be worried about their streams of income.”
BoE monitoring lender reductions as base rate held
The Financial Policy Committee (FPC) and the Prudential Regulation Committee will also keep an eye on the response of banks to recent measures.
In its meeting held on 25 March, the Monetary Policy Committee (MPC) said it expected the spread of Covid-19 to result in a “very sharp reduction” in activity and predicted consumers would hold off on major purchases including property.
It also said it was probable that GDP would fall sharply in the first half of the year.
Inflation reached 1.7 per cent in February and the MPC said it would probably fall below one per cent in the spring, reflecting the pass-through to fuel prices of the recent and sharp decline in the oil price.
The bank said: “The nature of the economic shock from Covid-19 is very different from those to which the MPC has previously had to respond.
“The scale and duration of the shock to economic activity, while highly uncertain, will be large and sharp but should ultimately prove temporary, particularly if job losses and business failures can be minimised.”
Roma Finance stops new business due to Covid-19 restrictions
However, the lender said it would be prioritising its pipeline cases through to completion.
Roma said movement restrictions had impacted how valuers can inspect properties and that solicitors working from home were unable to witness and advise on legal charges.
Scott Marshall (pictured), managing director at Roma Finance, said: “The decision is a prudent one at this time but rest assured Roma Finance remains committed to the bridging, development finance and buy-to-let lending sectors.
“We’ll be launching new products to help kickstart the market as soon as the government’s restrictions are lifted.”
These restrictions have seen many lenders suspend in-person valuations until further notice, while Vida has also been forced to stop accepting new applications.