Preparing landlords for EPC changes will be key to advice process – Cox

Preparing landlords for EPC changes will be key to advice process – Cox

The latest Nationwide index for April shows annual growth rose by 12.1 per cent; the ninth consecutive month for price growth. 

For existing landlords, who are acquisitive and understand the methods by which they can use equity growth to develop their portfolios, this would normally represent an opportunity not to be missed.  

Releasing that equity via a remortgage or further advance allows them to potentially secure their next deposit for their next property. And, of course, there will be a significant number of landlords who do this, who want and need advice, and will be looking to advisers in order to support this activity.  


Reassigning funds 

However, it may not simply be a matter of gearing up to fund further purchases right now, because as we know there are other matters at play which may determine what they do with that capital growth.  

As was mentioned extensively at the recent Buy-to-Let Forums, the need to ensure properties are going to meet the EPC standards of the future may be preying heavily on the minds of many landlords at present.  

Unfortunately, the chance of securing grants to allow them to upgrade their properties’ energy efficiency is zero, and yet should the consultation come into effect – as we all anticipate – then from the end of 2025 they will need to ensure every new tenancy is within a property at EPC level C and above, while this requirement will be a few years later for existing tenancies

If a landlord has properties which don’t currently meet these requirements and their intent is on being active in the private rental sector (PRS) for many years to come, then they will literally have to get their house(s) in order to do so. 


How advisers can help 

In that sense, advisers may well need to have these conversations with landlord clients sooner rather than later. Of course, the last thing you’re going to want to do is throw a potential spanner in the works for a client who has come to you in order to access their equity in order to further their purchasing agenda. 

But, at this very point it’s likely you’ll be talking about EPC levels for any new properties anyway, so why wouldn’t you also be raising the issue in terms of what will be required for the rest of the portfolio. 

As an industry, we don’t always have the best record in terms of planning and preparing for market-shifting changes; we can tend to leave it to the last minute. But, when it comes to energy-efficiency now is definitely as good a time as any, especially given the house price growth, and what is also befalling many people in terms of household costs, specifically those for utilities. 

It’s unlikely to mean you lose out on any potential remortgage or product transfer business, but it just might mean that the landlord uses some (or all) of those funds released for a different purpose than they anticipated.  


Using available tools 

Look at the government’s EPC checker and it gives ideas about what might be required for the property to move up a level or two to secure a higher EPC ‘grade’. For many properties, it might not be much at all, and therefore the ambition to access equity for further purchasing won’t be impinged upon. 

However, for others, it may well need some significant investment and therefore now might well be the right time to work out what is required and how it’s going to be paid for.  

This is a key part of the service you are going to need to offer to landlords – existing or new – and the sooner you have that conversation, the sooner they can prepare for the future, and you can help them secure the funds they need. 

It’s time to help your clients cope with the rising cost of living – Adams

It’s time to help your clients cope with the rising cost of living – Adams


According to Ofgem, the increase in the energy price cap, which was introduced on 1 April, will impact approximately 22 million customers.  

Ofgem says that those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding), while prepayment customers will see an increase of £708 from £1,309 to £2,017.  

The increase is driven by a record rise in global gas prices over the last six months, with wholesale prices quadrupling in the last year. This is before you consider the impact that the serious situation in Ukraine is likely to have on the energy supply. Add to this the rising cost of fuel at the pumps, food in the supermarket and, of course, the cost of borrowing as interest rates rise, and 2022 looks set to be a very difficult year financially for many people. 

Many customers will be unprepared to face this financial difficulty. The most recent Pepper Money Adverse Credit Study found that 81 per cent of people with adverse credit said a £100 increase in their bills would significantly impact their finances.  

At the same time, nearly a third (32 per cent) of people with adverse credit said they had increased their level of debt in the last 12 months, representing a significant increase compared to the previous wave of the research in Spring 2021. And, with interest rates rising, the cost of servicing this borrowing is only going to increase. 


The role of an adviser 

So, as a mortgage adviser, what can you do to help?  

Taking out a new mortgage may only happen every few years for most customers, but a mortgage is also the single biggest debt that they are likely to have, accounting for a significant chunk of their monthly expenditure.  

Opting for the wrong deal, or languishing on an existing lender’s variable rate, could be a costly mistake. Making sure your customers are provided with the right advice for their circumstances is an integral part of their financial planning.  

It could prove the difference between them being able to meet the rising cost of living and falling short. 

Unfortunately, not all customers are aware of their options, particularly those who have a record of adverse credit. According to the latest Pepper Money Adverse Credit Study, 12 per cent of all adults in this country have experienced some form of blip on their credit record in the last three years.  

Many of those believe that this will write off their chances of securing a new mortgage. This lack of confidence could leave them stuck on their lender’s variable rate long after their deal has expired, potentially crippling their finances through unnecessary additional monthly costs. 


Keeping in touch 

At a time like this, brokers have a duty to all their customers to be proactive in communicating their services, the available options, and the value of professional advice.  

A simple nudge could be all that’s needed for concerned customers with adverse credit to overcome those worries and seek out a better deal for their circumstances. 

Similarly, a remortgage can also prove an excellent time to restructure finances and debt consolidation can prove a useful tool for some customers to reduce their monthly outgoings and improve their monthly cashflow.  

Adverse credit doesn’t have to stand in the way of a debt consolidation remortgage. 

So, don’t let your customers get beaten by the rising cost of living. Even if they have adverse credit, you could help them to remortgage and improve their financial position. 

Consultations and cost of living; the opposing forces on affordability – Toumadj

Consultations and cost of living; the opposing forces on affordability – Toumadj


Across the mortgage community, the ruling is expected to pass, after which lenders will have the freedom to set their own reasonable rate. 

BoE estimates that this change will allow six per cent of borrowers to get the loan they wanted. This could also open the door for a more bespoke data-driven approach to affordability that takes into account the fact that buyers are unique. 

However, there remains a question about whether the regulator should review its loan-to-income (LTI) flow cap, which currently stands at 15 per cent at or above 4.5 times LTI.  

Habito and Perenna have already made a statement to say the current limit is not ‘fit for purpose’ and it’s likely that other organisations will also call for more action.  

There is definitely borrower-led demand as 40 per cent of Mortgage Broker Tools (MBT) searches are for an LTI of 4.5 or greater. At the moment, a borrower looking to buy a £250,000 home, with a 15 per cent deposit and a salary of £35,000, needs an LTI of 6.1.  


Cost of living risk 

These may be positive signs, but they are being offset by the increased cost of living, which will lower borrower’s affordability and will have a disproportionate impact on lower earners, who will struggle the most to buy their own home. We will see this impact feed into lender’s affordability calculations over the next few months as Office for National Statistics (ONS) expenditure figures are updated. 

Whatever the income bracket, everyone is facing skyrocketing bills and the complications that come along with an inflation rate of seven per cent year-on-year as of March 2022, which the BoE has described this as “uncomfortably high”. 

ONS data from March reveals 23 per cent of UK adults found it difficult to pay household bills. For renters, who skew largely towards lower income brackets, this figure increased to 37 per cent. 

The treatment of rent payments is actually one way that could be used to ease the mortgage affordability squeeze. At the moment, there are millions of potential first-time buyers who clearly demonstrate that they can afford to pay rent every month, often at a higher price point than a mortgage would be, but who are excluded by current affordability calculations.  

We need more data and analysis in order to fully understand the issue and ensure affordability works for renters – something which MBT is actively working on as we speak. 


Finding balance 

Affordability is all a matter of balance.  

For example, we need to make the most of modern technology, and the incredible granular data analysis it is able to provide. But we also need to remember that these algorithms can only be as good as the data that is included, and so the addition of something like rental payments can only help to improve the outcomes. 

In general, the market as a whole must strike a delicate balance between making affordability rules more flexible, while also protecting borrowers and the wider UK economy by making sure to lend responsibly. 

Deter clients from cancelling protection policies to make savings – Hunt

Deter clients from cancelling protection policies to make savings – Hunt


At such a time, it is absolutely understandable that individuals are looking at what leaves their bank account each and every month, and working out whether some of these costs for products and services are absolutely essential, or if they can be cut in order to fund, for example, rising energy, food and clothing costs. 

We could see a ‘bonfire of direct debits’ and given the recent profit forecast from Netflix this appears to be already happening. 

What is however extremely important for both advisers and their clients is that the latter do not conflate their monthly subscriptions to streaming platforms or regular beer deliveries, with those they are making to financial providers for much-needed protection and insurance cover. 

We might all understand why a run-through of monthly direct debits might illicit a reaction of ‘what am I getting for this money?’ when viewing monthly premiums for income protection or life insurance or critical illness.  

So, it is going to be important for the advisory community that we re-engage with clients and highlight exactly what this money affords them, and what the consequences might be if they decide to cancel premiums and policies. 


Engaging with clients 

This is why I was very pleased to see Association of Mortgage Intermediaries (AMI) tackling this head on with its recent guide for advisers on selling protection, which also included a consumer-focused document that could essentially be used to highlight what cancelling a policy means, but perhaps more importantly provides advisers with an opportunity for client contact.  

This may begin as a conversation about protection and what it might deliver if a job is lost or ill health stops clients from working, however it could also help open the door to further monthly cost savings for a client.  

It may well be, for example, that a client is coming to the end of their mortgage deal, and the adviser can provide an outline of the products available, their cost and how a potential monthly saving here might mean they can hold onto policies or indeed other subscriptions that they otherwise might feel they have to cancel.  

There may well be a temptation – particularly as the first new energy bills of this new increased tariff era begin popping through front doors and into inboxes – to run a metaphorical scythe through any outgoing that looks unnecessary, but the argument from advisers should actually be the opposite. 


Explain the benefits 

Again, we want to highlight the position they may be in should the worst happen. Should the main bread winner lose their job or lose their ability to work, should a family member require a lengthy stay in hospital, etc.  

If you intend to rely on savings in order to get you through such a period, then how long will this last you? A third of UK people have less than £600 in savings put away – how many mortgage payments will this cover, let alone the other household bills? 

Of course, this is not about frightening people into holding onto protection policies, but it is about helping them weigh up how they would cover themselves in the circumstances outlined above.  

And, as you will know from countless client interactions, it’s often the case that you’ll be able to help in a variety of ways following that initial communication, and you can provide solutions to problems that the client may not have even thought about or knew existed. 

Now is therefore definitely the time to make that client contact, to prevent any rash decisions being made, and to highlight once again the ways in which you can help.  

Homes for Ukraine pitfalls worth an intermediary double-check – Wilson

Homes for Ukraine pitfalls worth an intermediary double-check – Wilson


We would perhaps have suspected nothing less and I hope that the administrative problems and issues which appear to have blighted the scheme are starting to be sorted out, and that refugees are beginning to be housed here in order to give them the stability and safety they need and deserve.

I’m led to believe that the numbers are rising – although probably still not fast enough – and that progress is being made.


Implications for equity release and later life clients

You might wonder why I’m raising this in an article which is normally about the equity release and later life market, and for an adviser audience, and the reason is that the Homes for Ukraine scheme does have implications for equity release and later life customers who are opening up their homes to refugees.

It’s something that advisers, and clients, need to be aware of because just as lenders and providers would want to know if a customer of theirs had new adult residents in their property, this might also be the case with the Ukraine scheme.

Of course, lenders and providers are obviously sympathetic to what is happening in this situation and the decision the homeowner is making, so there may not be a major concern here, however advisers should still make their existing and new clients aware of this.

For members of the Equity Release Council, there is already a document available – helpfully put together by the council – which covers how all equity release and later life lenders and providers are approaching this issue. It can be accessed via the members section of the council website.


It could affect clients’ insurance

However, one further aspect which I’m not sure has been covered and may be as relevant in the residential borrower space as the later life one, is how insurers might approach new people being resident in the home?

I’m not fear-mongering here, but as a worst-case scenario, accepting refugees into a residential home might invalidate some insurance policies, although again I’m sure there will be sufficient flexibility provided by the insurer.

Clearly, we don’t want to put off any family or organisation that wants to shelter refugees. But we might suggest they double-check just to understand how they might view this, and whether there are any potential ramifications for such a decision on existing policies, particularly in terms of contents insurance and the like.

Opening one’s home to those fleeing such a terrible situation is a wonderful thing to do, and it’s my sincere hope that more people will continue to do this, and our government goes the extra mile to make the most of this generosity.

If you, or an organisation you represent, want to record your interest to take part in the Homes for Ukraine scheme, you can do so here.

Let’s not underestimate the power of the backbench MP – Rudolf

Let’s not underestimate the power of the backbench MP – Rudolf


We often hear about certain individuals being ‘good constituency MPs’ which to some, who dream of higher office, might not be a perceived compliment, but I suspect to the vast majority will be everything they wished to be when they entered politics.

Let’s not underestimate the power of the backbench MP – particularly at the moment – and the influence they have in changing constituents’ lives for the better.


Housing and your MP

I’m not sure how many MPs receive regular communication with members of public about the housing market in their constituency, but I can guess it is considerable. Whether it’s the supply of affordable homes, or locals being priced out of their regions, or it’s about the private rental sector (PRS) or supply and state of social housing, I’m guessing that housing is a topic constantly on the local agenda.

It may not be drilled down to an individual problem, but we currently have an opportunity to improve the lot of everyone in England and Wales who engages with the housing market, to save them time and money, to improve the productivity and economies of local areas, and it more than likely begins with the local MP.


Client stress has a knock-on effect

Buying a home is deemed to be one of the three most stressful life events you can go through behind death and divorce. That should tell us everything about the process we have in England and Wales, and what it can do to people who go through this.

At the moment, the average time to complete a property transaction is 22 weeks, and almost one in four transactions which start never actually get to completion. How much money, time, resource and investment is being lost as a consequence of those fall-through numbers? How much money are you losing every year progressing those transactions only for them to fall through, with all the emotional impact that brings to you and your staff, having to deal with upset customers.

Fall-throughs costs the industry and borrowers hundreds of millions of pounds every year, hitting individual and business stakeholders each and every time.

The knock-on effect is also considerable because people know there is a 24 per cent chance the property they think they are going to buy simply won’t happen. That they’ll begin the process but will never complete it, and psychologically that – logically – puts people off.

It particularly puts off people on lower incomes because who wants to waste money, especially during a cost-of-living crisis? But it also dampens supply because it stops people putting their houses on the market – particularly older owners – which means that, for example, they don’t downsize and the larger homes they tend to live in never come to the market for the families that need them.


Three ways MPs could help solve the problem

This is all interconnected and therefore needs an interconnected solution. It’s why the CA – as part of the Home Buying and Selling Group (HBSG) – is urging all property stakeholders to write to their local MP, asking them to support legislation which mandates, in the first instance, three key things which will help.

Firstly, we want sellers to appoint a conveyancer on day one of the instruction to their estate agent. This will do a number of things, mostly clearing potential obstacles far earlier in the process and ensuring the conveyancing work begins as early as possible. We all know that the longer a transaction lasts, the greater the chance of failure.

Secondly, we want the government to mandate property packs with upfront information accessible to all stakeholders in the transaction. Again, this will provide all those involved with far earlier and clearer sight, particularly in terms of what they are buying, rather than finding out after they are emotionally involved and they have already mentally committed to buying.

Finally, we want the government to facilitate the use of a single digital identity to be available to all who need to access it throughout the process. Again, this cuts out the huge amount of duplication we have around checking individual’s ID, the cost and time this incurs, to say nothing of the positive impact it will have on targeting fraudulent activity.


There’s more to be done

The HBSG is producing a summary to send to all MPs, but clearly numbers matter in this regard. Market professionals will know exactly what can happen, how it can go wrong, and what that means to you and your client’s mental health, stress levels and pocket.

With enough support we can move the industry in the right direction. We are providing the solutions required but the government has to write them into the legislation that will make it happen.

We need your help asking your local MP to deliver the common sense, positive home moving experience through upfront material information, early instruction of conveyancers and digitally identifying home movers.

New-build advisers need to know about latent defects insurance – J3 Advisory

New-build advisers need to know about latent defects insurance – J3 Advisory


Latent defect insurance provides cover for damage as a result of defective design, workmanship or materials, not discovered before the cover commences and after practical completion.

A 10-year warranty on new-build homes protects homeowners of newly built, converted or refurbished properties from structural defects. If there is first party insurance in place it can rectify any issues and cover the cost for complete or partial rebuilding in the event of structural failure, including professional fees and demolition.

It is a requirement of UK Finance, formally the Council of Mortgage Lenders, for all new-build residential open market sales. You will also see it in place on mixed-use schemes and while there isn’t a lending requirement for it, we are seeing an increase in warranty requests from funders and investors on commercial developments.


Fluid market

The recent increase in the number of providers in the latent defects insurance market has resulted in property professionals being inundated with various proposals from providers offering their services.

In a similar fashion to the liquidity levels in the funding markets, this is a positive move for developers and property people. However, it does pose the problem of identifying who the right insurer is for each project and obtaining the most suitable terms for each development.

With that in mind, the need for unconflicted, truly independent advice has become essential. Brokers working with developers on finance are well placed to advise on finance options, but with the growth in new build warranty providers working with a specialist advisory firm, it is crucial for all intermediaries to bare it in mind.


Various solutions

As developers look for more creative solutions to help solve the housing crisis, insurers have adapted their policies to cater for varying scenarios. Brokers working with developers looking to build mixed-use and or larger schemes should always look for appropriate advice on what’s available and most suited to them. When it comes to larger builds, it’s even more important to obtain a full market overview.

The key features for a 10-year new-build warranty include 10 to 12-year building warranty cover from building regulation sign off, defect periods ranging from zero, one and two-years, £1,000 excess per claim per dwelling and assignable policy.

These should come from UK Finance approved companies that are recognised and accepted by mortgage lenders.


Expert advice

Organising new-build warranties can be a time-consuming and confusing exercise for brokers. A number of funding intermediaries are choosing to partner with firms who specialise in handling and placement of such policies.

These specialists can provide objective advice, finding them the most suitable cover for the developers’ project. Our firm, for example, also has access to all A-rated insurance providers across the market and delivers a market comparison enabling developers to make decisions confidently and swiftly.

Know Your BDM: Simon Parish, SortRefer

Know Your BDM: Simon Parish, SortRefer

What locations and how many advisers and broker firms do you cover in your role?  

I cover the South East region, looking after 800 brokers and counting. 


How have you changed the way you establish and maintain a good relationship with brokers in the pandemic?  

We have all been in the same position, not being able to go out as much, not being in an office mixing with colleagues, so as well as talking business when in a Zoom call it is also just good to talk, this I believe helped them and me.  


What personal talent/skill is most valuable in doing your job?   

Listening and empathy. I have been a broker before which helps me understand what the brokers are up against. 


What personal talent/skill would you most like to improve on?    

My patience. 


Where would you rather be stuck, in bumper-to-bumper traffic or back-to-back Zoom calls?  

Definitely not in traffic, at least on a Zoom call I can show the brokers the systems and all the amazing products and services we can offer them.   


What’s the best bit of career-related advice you’ve ever been given?  

Keep it simple. 


What is the most quirky/unique property deal you’ve been involved in?   

A few large self-builds and flying freeholds. 


What was your motivation for choosing business development as a career?  

I like meeting lots of people, being out of the office and experiencing different broker firm set ups. I have also enjoyed watching firms I have dealt with grow over the years I have been visiting them. I like to pass on my experience and knowledge onto new brokers coming into the industry too. 


If you could do any other job in the property sector, what would it be and why?  

I’d be a property developer. To see an old, dilapidated building take the form of a new home – and the money seems to be good. 


What did you want to be growing up?  

Formula one driver, footballer, and a random one, talk show host. 


If you could have one superpower, what would it be?  

Flying, so if I was in bumper-to-bumper traffic it wouldn’t matter. 


And finally, what’s the strangest question you’ve ever been asked?  

When I went on an American exchange at school I was asked if I lived near the Eiffel Tower and had met the queen. My replies were, ‘closer than you’ and ‘not yet’. 


The necessity of a customer experience platform in today’s marketplace – Uinsure

The necessity of a customer experience platform in today’s marketplace – Uinsure

Facebook recently learned this the hard way after it showed negative user growth for the first time ever and lost $250bn dollars of value in the process.

Customer experience (CX) is the most important thing any organisation needs to be obsessing about to compete, grow and even survive. Everything from systems and communications to processes and proposition needs to be created with CX technology at the very heart of the business.

For most of us, we can’t build an entire ecosystem ourselves so choosing the right partners who can integrate seamlessly enabling the CX you want to create for your business is mission critical.

When firms are choosing their business partners of the future it’s vital to assess who has built customer centricity and not just technology, and who is driven by a talented and trusted empowered team, as they will be the ones thinking outside the box to create progressive solutions that work for your customers.


Choosing the right partner

When assessing the market for partners you’ll find two kinds of businesses, on the one hand are those that are largely product siloed and use technology to automate traditional processes.

These firms will essentially take the same arduous paper processes customers used to fill and digitise them without any thought as to how they will intertwine into the CX you’re developing to accelerate your business. This is then often supported by sub-standard API integrations making your CX slow, fragmented and clunky – a recipe to send your clients elsewhere.

On the other hand are the true technology companies that have learned the above approach isn’t good enough, nor the way forward, because CX is not being seen as the most important single element of your development. It’s these firms that are focussed on coding new solutions and have been able to understand how to embed a culture of customer centricity using technology and data that are outperforming their peers.


Culture is key to customer experience

When you’re looking for potential partners, it’s vital to assess if organisations you could partner with for technology, culturally embrace customer centricity principles and place CX at the heart – or is it simply used as a tag line? Culture is the key.

Those that do embed CX culture are the businesses that are led by the engine room, not from the boardroom. It’s the individuals that are on the front line within an organisation that are experiencing the live customer feedback and are working daily to solve problems, who will not only know where to focus the business but will also often come up with the best solutions when they are empowered to make decisions.

The leadership team should be there to orchestrate the direction, reward bold thinking and be responsible for setting the boundaries – that is how true customer centricity is achieved.

BTL business is there for the taking so let’s support landlords – Duncombe

BTL business is there for the taking so let’s support landlords – Duncombe

Meanwhile others are predicting the tide’s about to turn and people will flow back, so it’s hard for anyone to be certain about what will happen in the rental sector.

It’s the property market after all, and we only need to look at the twists and turns of the past few years to know the only thing we can expect here is the unexpected.  

That said, there are some strong signs that landlords are on the march once again, so much so that recent analysis suggests investors are behind one in 10 UK property purchases this year, totalling more than £8bn worth of property in the first quarter alone.  

And with average monthly rents said to have increased by up to 15 per cent since before the pandemic, we’re seeing average rental growth at its highest levels in more than a decade.  

Further still, as the cost of living bites there’s a growing inability to save for a deposit, which combined with squeezed affordability, means there’s a realistic expectation that we’ll start to see more renters as the dream of homeownership may be pushed too far out of reach for many. All this points to ever-lucrative investment prospects for existing and potential landlords, and with that comes opportunity for brokers and lenders.  


Change on the horizon 

But with so much change afoot in the buy-to-let market in terms of regulation and policy, it’s important landlords feel supported by knowledgeable and expert advisers, such are the complexities of stamp duty surcharges and tax relief removal to name a couple. 

It might sound obvious, but landlords have different needs to residential buyers, and many have been in the business a long time.  

Brokers serious about attracting buy-to-let business can show their value by going beyond what landlords can do independently, demonstrating their detailed knowledge of the rental market and, crucially, their understanding of which lenders will be best placed to meet a landlord’s needs. 

Keeping abreast of ever-changing lender criteria can be difficult but utilising a business development manager (BDM) can help here. Lenders too are making strides to strengthen support for the buy-to-let market.  

I recently spoke at the Buy to Let Market Forum to explain how at Accord, we’re setting ourselves up to support the sector more than ever before.  

These improvements come from working together with brokers. BDMs are our direct link to advisers, and they regularly feedback ideas and propositions brokers feel are lacking in the market.  

Early repayment charge-free products for landlords is a great example of that this year; we heard brokers wanted them as part of a wider product choice. 

Being transparent with your business strategy helps people understand quickly what you’re about, where and when you can help and why you’re best placed to do so. In an increasingly buoyant property investment market, making it clear you’re a buy-to-let expert will attract the right sort of clients. 

Showing them how you can help maximise their profits and securing the finance they need by working with the right lenders could win you more buy-to-let business both now and in the future. 

Above all, lenders too want brokers to be an extension of their team. Working together is the only way we’ll all deliver the best products and service to landlords – who this year might need us as much as ever.