Slum landlord ordered to repay £739,000 in illegal rent
The confiscation order for £739,263.58 was handed to Mohammed Mehdi Ali of High Road, Willesden, following an investigation by Brent Council that revealed he had illegally converted properties he and his father owned into Houses in Multiple Occupation (HMO).
A councillor leading the Brent planning team described the conditions in the properties as “horrible” and said it was some of “worst residential accommodation” planning officers had ever seen.
According to the Guardian, up to 15 people were living in some of the homes. In one property a family of four were living in one room, a family of three in another room and three single men shared another. Many of the tenants had come from eastern Europe and Brazil.
Ali’s father had been served an earlier confiscation order for £544,000 when in 2014 he was found to have earned money from illegal rental homes, two of which were the same properties included in this investigation. Salah Mahdi Ali was found to have converted four homes into 38 flats without consent.
The order was made under the Proceeds of Crime Act 2002 in Harrow Crown Court in February and sentencing was scheduled to take place this week. He was found guilty of failing to comply with planning enforcement notices in April 2018.
Ali was told by the court that he would face a prison term of five years and nine months if he did not pay the order in full within three months.
He was also ordered to pay Brent council £30,000.00 to cover legal costs.
Cllr Shama Tatler, lead member for regeneration, property and planning, said: “This is another huge win for Brent. The council will take robust action to prevent the creation of poor quality housing.
“This penalty sends a clear message that rogue landlords will not be allowed to get away with ignoring planning laws. The accommodation provided was some of the worst residential accommodation that officers have ever come across.
“Brent will not tolerate this type of behaviour, landlords providing such horrible conditions. Brent residents deserve better.”
West One and Castle Trust expand distribution, Roma added to sourcing – round-up
Users of the sourcing system will now gain access to Roma’s bridging, standard residential and commercial products.
Nick Jones, commercial director at Roma, said: “Partnering with innovative sourcers like Twenty7Tec is a natural progression for us.
“Using technology to enhance the initial decision making process around product selection allows the Roma team to concentrate on the more subjective decisions as the case progresses, acting with flexibility and customer centricity.”
Nathan Reilly (pictured), head of lender relationships at Twenty7Tec added the firm was delighted its users would be able to source Roma Finance products.
West One and Castle Trust added to club panels
TMA Club has added West One Loans to its panel, giving its members access to the lender’s buy to let products.
Lisa Martin, development director at TMA, said: “Welcoming West One to TMA’s expanding buy-to-let panel reiterates our ongoing commitment to providing landlords with the best proposition and highest level of support.”
Meanwhile, Castle Trust Bank has joined Legal and General Mortgage Club’s panel, opening up its specialist range to the club’s members.
This includes Castle Trust Bank’s holiday let, portfolio, homes in multiple occupancy and ex-pat offerings.
Danny Belton, head of lender relationships at Legal and General Mortgage Club, said: “Castle Trust Bank is another great addition to the Legal and General Mortgage Club lender panel.
“I am looking forward to working in partnership with the Castle Trust Bank team to provide our members with access to its specialist lending proposition.”
BTL lending falls to £37bn but shows welcome recovery in high value areas – Rowntree
That was, of course, the date Boris Johnson announced the first national lockdown on a cold Monday evening, essentially closing down everyday life, including the housing market.
The figures from UK Finance today show buy-to-let lending fell to £37bn last year from £42.5bn in 2019, a remarkable figure considering the sector was shut for over two months and the length of time it took to get the wheels turning again.
The market was buoyed by two factors post-lockdown – record levels of tenant demand giving landlords confidence to invest and, of course, Rishi Sunak’s stamp duty holiday, shaving the buying costs for landlords.
We all know the brake this put on the market after March 2016, when the three per cent surcharge was introduced, and its release highlights the latent demand from landlords to add to their portfolios.
UK Finance’s figures show buy-to-let house purchases became fashionable again in the second half of 2020. The number and value of loans written for house purchase in the final quarter of last year was the strongest since the first quarter of 2016, while December was the busiest month since March of that year.
Paragon certainly experienced this surge in business, with our pipeline hitting a record high during the first quarter of 2021.
The good news is the stamp duty holiday extension means more pipeline applications will complete ahead of the deadline, so I’m expecting strong industry Q1 numbers when they are eventually published.
Expensive regions most popular
What is interesting is the impact of the stamp duty holiday on where landlords purchased property, with a resurgence in those more expensive regions where investors would achieve the greatest tax savings.
Industry stats show that the number of buy-to-let loans for purchase in London, for example, was 25 per cent higher in the final quarter of last year than the same period in 2019, while the South East recorded an 18 per cent increase.
The South West – another area with above average house prices – was 21 per cent higher, although this could have also been boosted by landlords buying holiday lets for the expected surge in domestic holidays.
Conversely, the North West, which has been the buy-to-let hotspot in recent years, was just 1.5 per cent higher and other northern regions with below average house prices did not experience the same Rishi bounce.
However, the overall strength of the final quarter of last year helped claw back those lost few months and we sit here, nearly a year to the day of that first lockdown, looking ahead with confidence.
We know we may not have yet felt the full economic pain of coronavirus, but the sector is in a much stronger shape than many would have predicted a year ago.
Home Survey Standard provides greater clarity and detail for borrowers – Arnold
The standard launched by the Royal Institution of Chartered Surveyors (RICS) marks a turning point in terms of engagement and accountability and should encourage more buyers to have more confidence in the value of the survey.
It puts more responsibility on a surveyor to be clearer about their observations and recommendations, and it puts greater emphasis on a homebuyer taking the most appropriate survey for their property.
Where the instructions to carry out a survey have been received from a third party, such as a lender or a panel manager, for example, it is stated that a RICS member or regulated firm should satisfy themselves that the instruction is best suited to the property and the needs of the client.
Where the RICS member finds the instruction is not suitable, the client should be given the reasons why and advised on the appropriate level of service.
Increasingly lenders are turning to automated valuations based on statistical trends as a way of cutting costs and so often in these transactions no surveyor enters the building to inspect the actual condition of the property.
In this situation, whose responsibility is it to ensure that the buyer has fully considered the undertaking that they are entering?
Anecdotally, we have already heard of mortgage lenders contacting applicants directly to check whether they are comfortable to proceed without a professional inspection of the property, which would indicate they already have some concerns about the potential for complaints in the future.
Where does this leave a mortgage adviser?
If a client engages you to give advice on how to finance a home purchase, will you also be accountable for other financial considerations, such as whether the property has potentially expensive defects?
At this stage we don’t know how the narrative will play out, but it would be sensible to adopt a cautious approach.
An easy way to do this is to partner with a surveyor who can have this conversation with a client on your behalf.
On a practical level, this will mean reviewing your terms of engagement to ensure your clients have provided consent to be contacted by third parties and putting the processes in place to facilitate those conversations.
A well-managed and well-communicated survey can help hold a deal together, showing there is nothing to hide when it comes to the condition of the property.
Brokers are in a good position to discuss this early in the process and if it’s not discussed early it can be picked up by conveyancers at the point of exchange, which can lead to delays of weeks at a crucial stage of a transaction.
So, with the arrival of the new Home Survey Standard think about what responsibilities you have to your clients, and what steps you can take to protect their financial wellbeing when they buy a home.
Zephyr trims BTL rates but ups fee
Rates on the products start at 3.19 per cent and have a two per cent arrangement fee with loans of up to £1.5m available for individual and limited companies.
Previously the reciprocal 60 per cent loan to value (LTV) deal was at 3.39 per cent with a 1.5 per cent product fee.
Zephyr will lend up to £1.5m on its standard range at up to 70 per cent LTV and up to £1m with a 75 per cent LTV.
Managing director Paul Fryers said: “We are delighted to offer a reduced and highly competitive Spring Special on our five-year fixed rate product which coincides with the peak property buying season.
“The new rates are one of the lowest in the specialist buy-to-let market today, offering landlords and property investors further product options when considering either plans to purchase a new property or re-finance existing mortgages.”
Paragon adds five-year BTL fixes and West One cuts holiday let and expat rates
The first deal has an initial rate of 3.44 per cent and a product fee of two per cent while the second has an initial rate of 3.50 per cent and a one per cent product fee.
The maximum loan size for both products is £750,000 at up to 75 per cent loan to value (LTV), £1m up to 70 per cent LTV and £2m up to 65 per cent LTV.
Both products come with a free valuation and are available for purchase or remortgage through single self-contained properties in their personal names or through their limited company.
Moray Hulme, director for mortgage sales at Paragon said: “In response to the current strong demand and ahead of the imminent budget announcement, we have reviewed our product range.
“We have decided to offer two products that give landlords who are interested in either purchasing or remortgaging on single self-contained properties a couple of well suited options.
“This comes ahead of a significant re-structuring of our product range and we look forward to sharing more information once it is available.”
Meanwhile, West One Loans has cut rates on its short-term let and expat semi-exclusive buy-to-let mortgages.
The lender has taken 15 basis points off both deals.
Its holiday let product on the W1 range is a five-year fix at 4.19 per cent up to 70 per cent loan to value (LTV) with a maximum loan size up to £500,000.
And the expat W1 product is also a five-year fix up to 70 per cent LTV at 4.09 per cent and maximum loan of £500,000.
Both deals have an application fee of £150 and a lender fee of two per cent.
West One Loan managing director of buy-to-let Andrew Ferguson said: “We re-entered these markets back in January and have been pleased with the response we’ve seen.
“These price changes reflect our ongoing support for the products in a market where we see great potential.
“It follows on from a very busy start to the year for West One’s buy-to-let team, which has included the launch of new products and a new funding agreement which means we’re able to offer more choice to brokers and their clients, broadening our proposition still further.”
Octane Capital funds mixed-use ownership transfer; Castle Trust Bank delivers hybrid loan
Shares in the site were transferred to two limited companies comprising of 60 tenancies and 40 titles that had been held by the same managers for 25 years.
Nick Harrison, founder of commercial broker Bespoke Business Finance, said: “This ended up far more complicated than originally anticipated with a share purchase agreement involving numerous shareholders, a highly complex security structure and three sets of lawyers.
“In my eyes, the transaction would never have got over the line without Octane’s expertise.
Alex Tyrwhitt (pictured), head of structured finance, Octane Capital, added: “Nick Harrison and Martin Lee of Bespoke showed their quality and experience as ever by working day and night to ensure all parties and professionals were on track, informed and motivated to see the deal through to a successful completion.
“In addition, Simon Noonoo and the rest of the team at Seddons were absolutely crucial in getting this labyrinthine deal over the line.”
Castle Trust Bank completes £9.6m hybrid loan
Castle Trust Bank has completed a £9.6m development exit loan with a combined serviced loan and bridge.
The lender worked with brokerage Sirius Property Finance to enable the client to secure the loan on a block of 69 one and two-bedroom apartments in a five-storey commercial to residential conversion.
The project was constructed under permitted development and the owner plans to sell some of the residences and let the remainder.
The loan has been split between a bridging loan on the properties which will be sold alongside a five-year fixed rate loan with serviced interest on the properties which will be let.
The bridge will convert to a serviced loan after nine months to allow the client to de-leverage the loan or service the debt.
The development has been valued at £13.2m and the loan to value (LTV) was 73 per cent.
Rob Oliver, sales director at Castle Trust Bank, said: “This case is an excellent example of the type of bespoke deal we are able to structure at Castle Trust Bank.
“The client wanted the flexibility to sell some of the units but also a sustainable solution that would allow them to retain the majority of the units for ongoing income.”
Nicholas Christofi, managing director at Sirius Property Finance, said: “It’s always a pleasure to work together with a lender on a deal like this, which is structured to give a client exactly what they need.”
Govt mulling holiday let tax changes as Leeds BS adds pair of mortgages
The statement came following a written question about whether it would be applying HMRC guidance on furnished holiday lets to the business rates criteria for self-catering accommodation.
This follows a consultation published by the Ministry of Housing Communities and Local Government (MHCLG) considering the issue in November 2018.
Minister for regional growth and local government Luke Hall said: “The government has consulted on possible changes to the rules under which holiday lets are assessed for business rates, including the possible addition of a letting criterion.
“We have been considering responses to that consultation, taking into account factors such as the impact of the pandemic on the tourism industry and consideration of owners of holiday properties in less frequently visited parts of the country.
“The government intends to provide an update on the consultation shortly.”
The consultation proposed strengthening the criteria under which furnished holiday lets could claim business rates classification instead of council tax, which tends to be more expensive.
The holiday let market has generated great interest since the pandemic hit restricting holidays abroad, with brokers calling for lenders to launch new products.
Leeds Building Society said it experienced its biggest-ever month for holiday let purchase applications last September in a busy second half of 2020.
It is adding two five-year fixed deals at 60 per cent and 70 per cent loan to value (LTV) into its holiday let offering at 3.69 per cent and 4.29 per cent respectively.
Each comes with a free standard valuation, no product fees with fees assisted legal services available for remortgages.
“Holiday lets are a popular choice for our buy-to-let borrowers with the potential for higher yield returns,” said Matt Bartle, director of products at Leeds Building Society.
“Ongoing pandemic-related uncertainty around international travel adds to the likelihood that more Britons will holiday in the UK this year.
“Therefore, a suitable property in a prime tourist area may offer an opportunity for buy-to-let landlords to diversify their portfolio with a short let holiday property.
“We’ve expanded our holiday let range to offer more choice to borrowers, who may wish to take advantage of this under-served part of the mortgage market,” he added.
Eastgate: Shawbrook and TML strategy looks to distribution, product design and two core markets
The most significant change advisers are likely to see from the Shawbrook and TML merger is a wider representation of both brands, but it also brings stability of funding and cross-pollination.
“For both of us there was opportunity to grow – for obvious reasons there were challenging forces last year and that uncertainty created opportunity,” explains Eastgate.
“But the merger had been on our agenda for some time and the pandemic probably accelerated that thinking. We looked at what TML would get and what we would get, and both believed the whole would be greater than the sum of the parts.
“This will extend the Shawbrook name into distribution we have not had much exposure to before and for TML there’s the benefit of having a savings association behind them.”
The distribution changes will not come in overnight and the lenders will take time during this year to assess how to do it exactly, but there will be extra visibility and support from both sales teams.
“The TML salesforce will be representing us, they will be an introductory gateway and that makes us more resilient,” Eastgate continues.
“A mainstream broker is probably not going to come across a Shawbrook-type deal that often, this will just open up the opportunity for someone who wasn’t aware of Shawbrook before.”
The dual branding is already visible with Shawbrook being a prominent part of TML’s latest mortgage ranges.
“The aim is to reinforce the message that TML is backed by a retail bank and to show that we are permanently in the market,” Eastgate says.
“TML competes with a lot of non-bank lenders they have just created for themselves a point of competitive advantage.”
But is there a risk of the brands overlapping and confusing brokers and borrowers, or potentially even taking each other’s business? Eastgate believes that is unlikely.
“Distribution will play a large part and then it comes down to product design,” he says.
“Shawbrook has a long history of complex transactions in the buy-to-let (BTL) and commercial markets – these are not done by the more mainstream lenders like TML and its peer group.
“We’re very clear of the markets each business will point at and rather than cannibalise each other it gives us market options where TML has an avenue to route cases if they do not fit for it.”
Core lending markets
So with a deal intended on growing two businesses, where does Eastgate believe that growth will come from?
BTL is the prime opportunity, but perhaps surprisingly he also sees potential for the commercial lending sector despite its many issues at present.
“There’s going to be huge challenges across consumer landscape so if you want to get a mortgage its more difficult than it was a year ago,” he continues.
“So many people may have no option but to rent and that’s continuing a long-term trend, so I can’t see prices falling significantly and as a result BTL demand will be strong and very robust.
Eastgate notes the lender has been taking “very conservative views” on commercial properties with a focus on particular sectors away from those in challenging situations, and investors are returning.
“Commercial is very different, but there are parts that have been very resilient, for example, warehouse storage and semi-commercial have done very well,” he says.
“So these are the core markets for Shawbrook and TML but under slightly different situations, and that being the case, I believe for both firms growth will be underpinned by these two markets.”
Small and local businesses have done, perhaps counterintuitively, “really well” during the pandemic year as has warehouse and distribution space with the increased reliance on mail order.
“There are selective markets that we can rely on,” he adds.
‘Off the pace on bridging’
And then there is the bridging market which the lender notes is “very robust” at the moment, fuelled in large part by the stamp duty holiday, but also the need to renovate and convert properties.
Eastgate admits that after being in the market for 10 years the lender’s proposition in the area had “come off the pace”.
“So we have done a lot of with our bridging proposition after recognising that we needed to do some work on it – we’ve focused a lot of our investment in improving products and processes,” he says.
“It’s a big market for us and remains an attractive market. I think it will increasingly see people buying properties to add value.
“And it will be interesting to see how commercial spaces become residential spaces as planning regulation changes – we want to be well set to take advantage of that trend.”
Overall, Eastgate believes the housing market will remain resilient through the year and even if there is something of a dip, he argues the long term returns from property investment warrant confidence in a rapid recovery.
Foundation Home Loans cuts rates and Masthaven revises bridging range
Across its residential range, the two-year fix at 65 per cent loan to value (LTV) has been cut from 2.99 per cent to 2.89 per cent and the 75 per cent LTV offering has been reduced from 3.29 per cent to 3.19 per cent.
The five-year fix at 65 per cent LTV has reduced by 10 bps to 3.39 per cent while the 75 per cent LTV product has been cut to 3.54 per cent from 3.69 per cent. These products have a £995 fee.
Its fee-assisted remortgages have also seen reductions including the five-year fix at 65 per cent LTV which has gone down from 3.99 per cent to 3.59 per cent.
These products come with a reduced £595 fee, no application fee, a free standard valuation and £250 cashback.
For buy-to-let borrowers, the lowest two-year fixed rate is the deal at 65 per cent LTV which now has a rate of 2.89 per cent, down from 3.09 per cent.
George Gee, commercial director at Foundation Home Loans, said: “We have taken this opportunity to make our ranges even more competitive for both landlords and residential borrowers, by cutting a number of our two and five-year fixes by up to 50 basis points.”
Gee added: “In the residential range particularly, this is an opportunity for advisers who are seeing an increasing number of clients with complex income or multiple income sources, and the self-employed who may have only one-year accounts, to find competitively priced mortgages combined with flexible criteria.
“Landlord borrowers will also benefit from cuts to various products including our remortgage specials, our early remortgage offering, and those seeking large loans.”
Masthaven makes changes to bridging range
Masthaven Bank has revised its bridging range with the addition of refurbishment products and mini bridges.
The refurbishment range includes a heavy refurbishment option with tailored pricing for different projects.
There is also a mini bridge product for loans between £200,000 and £300,000, designed for smaller borrowing amounts which need to be deployed quickly.
Alan Margolis, director of bridging at Masthaven, said: “During the pandemic, bridging has been a vital tool for homebuyers looking to complete purchases quickly, but responsibly.
“As we navigate a third national lockdown and enduring economic uncertainty, adapting our product offering is vital.”
“At Masthaven, we want to respond positively to changes in the market and rising demand. These latest updates to our bridging range will allow us to be competitive in the market and offer great service as we work collaboratively during this challenging time,” he added.