Tag Archives: cookies
Trend of letting to rent becoming more popular in UK
There is growing evidence that the concept of let to rent is becoming more popular in the UK where a home owner rents their property out and then rents a place in another location. While let to rent isn't a new concept, it's becoming a great deal less niche as an alternative owning and living option. ‘One of the biggest factors in this trend is the massive and rising cost of moving, and the difficulties that many owners are encountering in replacing their existing mortgage with a similar deal,’ said David Brooke Smith of Stacks Property Search. He explained that there are lots of reasons and schools are one of the main drivers. ‘Families who want to live in a specific catchment area, or who want to be close by for a child's limited time at a particular school, are letting out their home and renting close to the school,’ he pointed out. ‘It's also a great way of trying out a new area without committing to it fully. So for those who are contemplating a move from town to country, vice versa, or from one part of the country to another, or wanting to try out a specific village that has caught their eye but about which they know nothing, it reduces the risk of buying in haste and repenting at leisure,’ he added. Other scenarios include short term work contracts, taking time out, such as on a sabbatical and some even want to move, but can't bear the idea of selling their much loved property. ‘There are huge benefits to let to rent. Selling and buying is a big step both emotionally and financially so if there's ever any doubt that it's the correct long term decision, letting to rent makes a lot of sense,’ said Brooke Smith. But he warned that while let to rent is often a win-win scenario, there are several issues that need careful consideration before making a decision, most importantly the figures. He pointed out that that big disadvantage is that the rental income will be taxable income. ‘You can offset costs related to the property you're letting, but you can't offset the actual cost of renting. So if you want an even playing field, the figure you have available for your rental may need to be less than the figure you can achieve for letting your property out,’ he explained. ‘Depending on where you're moving from and to, the figures could stack up very nicely. Letting in London, and renting in the country, should mean you're well placed financially. But going in the opposite direction will mean you have to be pragmatic about what you can afford,’ he added. He also explained that availability can be a challenge in rural areas as rental homes are often in short supply and the choice can be further limited if landlords choose not to welcome children and or dogs. Home owners will also need to get consent to let their… Continue reading
Mortgage payments for UK first time buyers have fallen sharply
First time buyers in the UK with small deposits are making savings of more than £790 a year, when comparing monthly mortgage payments to the same time last year, new research suggests. This is in part due to competitive interest rates now available as monthly mortgage costs for first time buyers have fallen sharply, according to the latest Genworth Moneyfacts LTV tracker report. The average house price for a first time buyer is £154,559 and for those with a 10% deposit, lower mortgage interest rates mean they can save £67 a month compared to what they would have paid if they’d taken out the same loan a year ago. This adds up to savings of £800 over the course of a year. For those with 5% deposits, the monthly payment on a 95% LTV mortgage for an average first time buyer home was £66 per month lower in March 2016 compared to 2015, equating to annual savings of £792. The report explains that part of the reason for the attractive rates is increased competition as the number of mortgage products at high LTVs has risen in recent months. The number of mortgages available for those with a 5% deposit jumped sharply from 195 in March 2015 to 267 in March 2016. As a result, rates for 95% LTV mortgages reached a record low of 3.92% in March 2016, 0.80 bps lower than a year before. Rates for 90% LTV loans are also much cheaper, having fallen 0.92 bps to 2.82%. However, the total amount of high LTV lending has stagnated even while overall lending has increased revealing that while lenders may be competing for the best customers in the high LTV bracket, they are more focused on increasing lending to customers with larger deposits. Despite a climate which is ripe for high LTV lending and a rising numbers of available mortgages, lending to those with a 5% deposit, which saw a notable boost following the introduction of the Help to Buy Mortgage Guarantee (HTB2) Scheme, has subsequently flat lined. Lending to those with 5% deposits received a much needed boost following the introduction of HTB2, with the proportion of lending at this level climbing from 1.7% in the fourth quarter of 2013 to 3.1% in the first quarter of 2014. It reached a high of 4.2% of total mortgage lending in the second quarter of 2014 but stagnated at around 3% in 2015. The stagnation in lending to those with small deposits is particularly concerning given that the Help to Buy Mortgage Guarantee scheme is due to end after this year. With nothing scheduled to replace the scheme, the fear is that lending to this part of the market could continue to fall. ‘Competitive rates available for those with just 5% or 10% deposits mean they are able… Continue reading
Chancellor warns property prices will take a big hit if UK leaves EU
Leaving the European Union would hit the UK residential property market with prices likely to be hit significantly and make mortgages more expensive, according to the Chancellor of the Exchequer George Osborne. Speaking on national television, he warned that if there is a Brexit, the term used to describe the country leaving the EU, then the values of homes will fall. He also revealed that the Treasury is about to publish a major piece of research on how Brexit would affect that UK economy and that one major issue that emerges is the effect on real estate, ‘You will see the analysis we will do, but I’m pretty clear that there will be a significant hit to the value of people’s homes and to the costs of mortgages. That is one example of the kind of impact, economic impact, that we get from leaving the EU,’ he said on of ITV’s Peston on Sunday politics programme. He has spoken out as the campaigning ahead of the EU referendum on 23 June hots up. The polls have been neck and neck but at the beginning of May an ICM poll put the leave camp slightly ahead at 45% compared to 44% for remain. The warning from Osborne comes as prices have started to ease slightly. The latest Halifax index, just published, shows prices fell by 0.8% in April. The market has been looking healthy recently with data from HMRC showing that sales have risen dramatically from 116,930 in February to 165,480 in March, the highest monthly total since records began in April 2005. While sales in the first three months of 2016 were 32% higher than in the same period last year, much of both the monthly and annual increases is likely to be attributable to a rush to beat the new stamp duty tax rates for buy to let and second homes in April. On top of this the volume of mortgage approvals for house purchases, a leading indicator of completed house sales fell by 2.5% between February and March. This suggests that the number of new buyers seeking to complete ahead of the stamp-duty surcharge had already begun to ease. Approvals, however, were still 15% higher than in March 2015, according to Bank of England, seasonally adjusted figures. Meanwhile, supply remains historically low. New instructions by home sellers fell marginally in March following three consecutive monthly increases. Market conditions remain very tight with stock levels nearly 20% lower than a year ago, at a near historical low, the most up to date monthly report from the Royal Institution of Chartered Surveyors (RICS) shows. Continue reading
