Affordable regions have potential for further rental growth – Zoopla
The report found that on average 30% of net earnings is spent on rent, roughly in line with the average over the last decade.
Stretched affordability and slower employment growth have kept London rental prices close to 2014 levels, demonstrating that earnings have an important part to play in rent control.
Despite affordability being stretched, it has improved over the last three years.
Meanwhile, rental growth in the southern regions, the Midlands and Wales has outpaced most of the rest of the UK — with growth between 17% and 20%.
Conversely, growth in the northern regions averaged just 3% between Q4 2007 and Q4 2018.
The north of England has the best affordability, with the North East, Yorkshire and Humberside regions more affordable than long term average levels.
The North West is currently more affordable than it has been for a decade.
Renters in the North East were in the most affordable location, paying around 24 per cent of their earnings for accommodation.
Potential for further rent growth
The report noted that occupancy level of rental housing was an important factor to consider when assessing the true affordability of renting, and subsequently the outlook for rental growth.
And it added that there remained potential for further rental growth in regional markets where affordability remains attractive and levels of employment are rising.
However it found that 80% of first-time buyers move from renting, and lower costs of accessing home ownership are likely to limit the pace of rental growth in regional markets.
Understanding deposits can save limited company mortgage completions – Syms
The changes to the mortgage interest tax relief in particular, has meant many investors are now considering limited companies for their buy-to-lets.
Indeed, many investors are still unaware of this particular change and its impact.
We are now seeing some receive their first increased tax bills as the phasing starts and these investors are turning to mortgage advisers for guidance on options.
There is a common understanding in the market that advisers should not get involved in tax advice, but recommend the client speaks with a specialist tax adviser.
If, after receiving the appropriate advice, the client decides to move their portfolio from individual names into a limited company, this is where the adviser needs to ensure they have sufficient knowledge of this particular area specifically.
For example, does the client want to use an existing trading business or set up a new special purpose vehicle (SPV) and what is the difference?
Which lenders will accept a trading business and what Standard Industrial Classification (SIC) codes are acceptable to a lender for an SPV?
Will the lender you wish to recommend require a personal guarantee, a debenture or a floating charge?
What do these mean, what are the implications and how will you explain these to the client?
Who will be underwritten? Is it just the directors and majority shareholders or all shareholders?
Another important consideration is how will the deposit be funded.
Moving a property from individual names to a limited company is not a refinance, it is a sale and purchase and therefore the limited company will need to have funds to cover a deposit.
This may be do-able for one property, but what about if ten properties are being transferred at the same time?
Will the lender you are considering accept a concessionary purchase or a director’s loan to the company.
If they accept a director’s loan, will they allow this to be a paper transaction rather than a physical transfer of the cash?
Majority declined by deposits
Being able to present to the lender’s underwriter exactly how the deposit will be managed is key for the underwriter to understand and approve the application.
One lender recently advised me that they reviewed all their declines for these types of applications; 60% had been declined due to a misunderstanding around the deposit but it could have proceeded if both the adviser and the underwriter had had the correct understanding.
By spending some time to fully understand these areas, advisers can ensure they are in the best position to give the right lender recommendation that won’t lead to future complaints, while taking advantage of this big opportunity.
UTB appoints BDM for mortgages and bridging
Bentley (pictured) has worked in the mortgage industry for more than 12 years with most of his career spent in broking, joining from Precise Mortgages.
He has a wide range of experience dealing with residential, buy to let, commercial, international and bridging finance, having switched to lending two years ago.
UTB said the appointment continued the growth of the sales team and developed the bank’s presence in the M4 corridor, South West England and South Wales.
United Trust Bank head of sales – mortgages and bridging Mike Walters said: “Owen has a wealth of industry knowledge and this coupled with his broking background makes him a valuable addition to the Sales team.
“This is a very exciting time for mortgages and bridging at United Trust Bank with several new products and service enhancements on the cards for this year.
“We are continuing to attract and invest in great people who will play a vital role in UTB’s future success,” he added.
Pepper rejigs range with rate and valuation fee cuts
Borrowers have the alternative of a flat fee of £995 or £1,295 for debt management plan products.
The lender has repriced rates across both its residential and buy-to-let deals by up to 0.2 per cent.
Alongside the rate cuts Pepper has cut the cost of valuation fees, in some cases by as much as £200.
Paul Adams, sales director at Pepper Money (pictured), said that the latest changes delivered greater choice and more simplicity.
He suggested the zero completion fee option would be “ideal for clients who want to borrow up to the maximum loan to value and would have otherwise had to add the fee to the loan”.
The Mortgage Lender enters BTL remortgage market
The product range is available up to 80% loan to value (LTV) and facilitates the addition of the completion fee, which ranges from 1.5% to 2%, to the loan.
Initial rates start at 3.44% and 3.70% for a two-year and five-year fix respectively, at 70% LTV.
The products cater for individual, Houses of Multiple Occupation (HMO) and Multi Unit Block (MUB) applicants and are available to the whole of market.
A no fee £500 cashback remortgage product is available for limited company applicants with rates starting at 4.02% for a five-year fix with no fees.
Keith Street, chief commercial officer at TML (pictured), said that the BTL mortgage market is changing, purchases are down and remortgages are up, by 12.5 per cent last year.
He added: “We expect that trend to continue and for remortgages to make up as much as two thirds of activity in the market over the next few years.
“Our new product is our response to that change in the market. It addresses the borrower and intermediary need for a simple, easy to execute, real life lending choice for those looking to refinance their BTL properties.”
FCA investigates second charge and subprime lenders for targeting unaffordable borrowers
It raised concerns that the business models of some retail lending products, including some subprime credit and second charge mortgage products, “are designed to benefit from consumers not repaying their debts”.
“For example, firms may make profits from consumers who do not or cannot repay in full and on time,” the regulator continued.
“We will carry out work to identify these business models and the consequences for consumers and use our findings to identify what action we may need to take.”
Business models rely on arrears
The regulator announced its concerns about the sector in its business plan published today, and the action will continue an intervention in the second charge sector over the last two years.
Early last year the FCA sent a Dear CEO letter to all second charge providers calling on them to address poor lending practices.
This followed a meeting in which it summoned lenders to its office for a workshop on lending practices.
As part of the review process, Shawbrook pulled products and admitted it was overhauling its lending approach.
The FCA will carry out diagnostic work to understand whether there are business models in the retail lending sectors that rely on consumers who cannot afford to repay.
“We want to understand whether the causes and consequences of these business models exploit consumer biases and cause harm,” it said.
“This work will include consumer research to understand the consumer behaviours that drive demand-side pressures,” it added.
It expects to complete this work in 2020/21.
Review second charge complaints
In a section outlining the outcome indicators it uses to assess potential consumer harm, the FCA highlighted its Mortgage Lending and Administration Report monitoring consumers in arrears.
Product sales data also shows how many consumers are on the lenders’ Standard Variable Rate, indicating they could potentially choose a different product and pay less.
“We will also review the number of complaints to firms and notifications from firms about second charge lenders to monitor how they are treating these consumers,” the FCA continued.
“Firms’ poor lending decisions and consumers’ poor borrowing decisions can lead to consumers suffering financial distress and affecting other parts of their lives.”
The regulator added that it requires firms to undertake robust affordability assessments before they make a lending decision, but it acknowledged that consumers can get into financial difficulty because of factors neither they nor the firms could have reasonably foreseen.
“This makes it difficult to rely on arrears data to show whether a product was unaffordable from the outset,” it said.
“Such data can, however, provide an initial indication that we can then test by assessing a firm’s policies and procedures and lending decisions.
“Through our Financial Lives Survey, we will continue to measure levels of over-indebtedness,” it added.
Exclusive: Tipton to launch BTL for limited companies
Amaira (pictured) said that the range will include only discounted rate deals, available up to 70 per cent loan to value (LTV). The maximum loan will stand at £500,000.
This follows the launch of a range of BTL products for expat borrowers in February.
Cammy Amaira said: “Our offering is designed to try and support brokers help customers in the BTL space, especially at a time when BTL investing is even more challenging for both new and experienced landlords”.
He also revealed that as part of its plans aimed at implementing the later life arena, Tipton is currently talking to Age Partnership and Key Retirement, with a view to referring customers who the society were unable to assist.
However, he pointed out that at this stage no further information can be disclosed.
Amaira said that this launch is part of the lender’s growth plans for this year.
He added: “Our lending target for 2019 is £100m. Last year we overcame our target of £80m, achieving £84.5m in total.
“We are looking at niche areas and we will be reviewing our criteria on an ongoing basis to continue to be competitive.
“Part of our plans also include the recruitment of another business development manager by the end of the year.”
Looking at the future, Amaira said that the lender will be investing further in technology.
“The front office broker portal will be implemented during 2019, in response to the brokers’ feedback revealing their preference for online applications.
“This will help them upload documents quicker,” he concluded.
Avamore completes £1.8m finish and exit deal in Birmingham
The lender said the deal reflected existing market dynamics with the regions showing strong signs of growth and developers needing to finish final works and further time to complete a suitable exit.
The Birmingham development includes seven town houses, three individual apartments and one office located in the city’s Jewellery Quarter.
It was introduced by Nicholas Christofi, co-founder of Sirius Property Finance and is the first transaction which Avamore and Sirius have worked on together.
Northwood Street Developments is building the project and has a portfolio of around 1,200 units completed outside of London.
Business moves and Brexit
Avamore said one reason for greater buyer demand was businesses increasingly opening offices in regional cities that offer more attractive and affordable living prospects.
“Furthermore, on the developer side, Brexit uncertainty is driving labour shortages, cost over-runs and unexpected delays,” it said.
Senior underwriter Philip Gould said it was the first deal he had closed since joining Avamore.
“With any finish and exit, there were a number of factors to consider however, the team took a collaborative and dynamic approach to get the deal over the line,” he said.
“We are probably the most experienced lending team in the market when it comes to finish and exit schemes and in addition to that we offered competitive leverage on the deal at a very attractive rate.”
Fleet Mortgages promotes pair of BDMs
Josh Parker joined Fleet Mortgages at the end of December 2018 to support the business development team, after six years with a specialist lender in the later life lending market.
In his new business development manager (BDM) role, he will be responsible for developing new and existing relationships in the South West and South Wales.
Anna Gibbons (pictured) joined Fleet Mortgages working in sales support and she will work closely with Josh Parker as telephone BDM to support advisory firms in the region.
Steve Cox, distribution director of Fleet Mortgages, said: “It is highly important that we have an experienced business development team both out in the field and within head office, easily accessible to our advisers.
“With Josh and Anna now working in tandem, firms in the South West and South Wales can draw upon their expertise, plus the resource and support they will offer.
He added: “This is an incredibly exciting time for the business and having quality people like Josh and Anna in situ means we can deliver everything advisers need in order to support their buy-to-let activity.”
The establishment of the new South West team follows last week’s launch of Fleet Mortgages’ new product range which includes a ‘limited edition’ product offering and a number of criteria enhancements.
It comes following the completion of a new long-term funding deal which will see the lender have access to £1bn in new lending.
Landbay ups maximum loan term and Paragon overhauls BTL range
Landbay is increasing its maximum loan term from 25 to 30 years, effective on 1 May with all products available through the lender’s distributor partners.
Managing director of intermediaries Paul Brett said: “We are constantly listening to our intermediary partners to understand the needs of the clients.
“This product enhancement is a direct response to those needs, and we are pleased to be able to offer even more flexibility to brokers and their landlord clients.”
Paragon has updated its buy-to-let mortgage products for portfolio and smaller-scale landlords.
The portfolio range is designed for landlords with four or more mortgaged properties, and those operating in limited companies or limited liability partnerships.
They can be used to finance single self-contained units (SSCs), multi-unit blocks (MUBs) or houses in multiple occupation (HMOs).
For SSC units at 75% loan to value (LTV), a two-year fixed rate mortgage at 3.35 per cent with no product fee, free mortgage valuation and £400 cashback is available.
For MUBs and HMOs at 75% LTV, a two-year fixed rate deal at 2.95 per cent with a 1.00 per cent product fee, free mortgage valuation and £400 cashback is available.
In the non-portfolio range, new options include five-year fixed rate mortgages with no product fee, no application fee, a free mortgage valuation and £250 cashback at 3.75 per cent on loans up to 75 per cent LTV and at 3.95 per cent on loans up to 80 per cent LTV.
Paragon director of mortgages John Heron said: “The refreshed range gives landlords a wide choice of options to suit their needs depending on the size and complexity of their property portfolio, as well as an opportunity to reduce their up-front costs with a range of cashback and limited up-front fees.”