LANDLORD NEWS
CMA flags concerns over rental sector
The Competition and Markets Authority (CMA) is planning a crackdown for the private rental sector, having found a number of issues that it says may need addressing. Warning that a “significant minority of landlords and letting agents may not be following consumer protection rules,” the competition watchdog highlighted the “possible unlawful discrimination” against those receiving benefits as an “area of concern.” It also flagged concern over “sham licences”, which make evictions easier, and zero-deposit schemes. CMA chief executive Sarah Cardell said potential discrimination by landlords warranted “further investigation”, adding that the regulator was “ready to take enforcement action if needed.”
BBC News City AM The Daily Telegraph The Times
More rental homes flood the market as sellers shift to letting
More homes are being put up for rent as homeowners choose to let their properties instead of selling due to high demand and rising rental costs. The number of rental homes in the UK has increased by 8% since March, according to Connells. However, there are still 43% fewer rental homes on the market compared to 2019. Hamptons reports a 17% increase in rental homes compared to last year, but this masks a drop in supply during the pandemic. London has seen a 39% increase in rental properties, leading to more negotiation power for renters. Rent rises are expected to continue until mortgage rates decrease. David Fell, a senior housing market analyst at Hamptons believes that rent rises are unlikely to subside until mortgage rates begin to fall.
Daily Mail
Student landlords criticise law to ban fixed-term rent
Rental accommodation for students is at risk as the government plans to ban fixed-term tenancies, according to landlords. A bill currently going through Parliament will end the practice of students signing contracts that last for either 12 months or an academic year, potentially collapsing the student rental market. The National Residential Landlords Association (NRLA) has called on the Government to amend the bill to allow landlords to give students two months’ notice, applicable only at the end of the academic year. The trade body has warned Michael Gove, who introduced the Bill, that property owners will simply leave the student rental market because they will view it as too much of a risk.
The Sunday Telegraph
BUY TO LET
Terrington aims to dispel myths about buy-to-let industry
The Sunday Times interviews Nigel Terrington, CEO of Paragon Bank, who is challenging the misconceptions surrounding the buy-to-let mortgage industry. He said: “There is a myth that buy-to-let is higher risk. If I said that for the last 25 years, [debt] arrears in buy-to-let are lower than in owner-occupier mortgages in all but one year, people would be quite surprised.” He continues: “There is also an impression there is an exodus in buy-to-let [landlords].” He acknowledges that “there is some evidence amateur landlords have sold some properties”, but is adamant the professionals he works with are stepping into the breach. He also highlights the challenges faced by landlords, including the Renters Reform Bill, which will make it harder to evict tenants.
The Sunday Times The Sunday Times
COMMERCIAL
Government criticised for clamping down on empty property relief for business rates
Landlords have criticised the Treasury and the Department for Levelling Up, Housing & Communities for launching a consultation about business rates avoidance last month. Officials have expressed that the empty property relief, which awards landlords or occupiers a three-month rates holiday when their shop, warehouse or office is not being used, is “not working as intended”. The Local Government Association estimates that around £250m of the £8bn of relief to be granted this year will be lost to business rates avoidance, which the Government accepts is not illegal but “circumvents the spirit and intention of the law”. The Government has suggested that businesses were, in some cases, claiming sequential rate-free periods through “superficial occupation” of the property. However, John Webber, head of business rates at Colliers, the property agent, said that the civil servants who were working on the consultation “don’t live in the real world”. He said: “I speak to retailers and landlords every day, and if they could let their properties they would. If you think it’s a good time to introduce [changes] like this now, then you’re living in cuckoo land. All people are trying to do is manage the tax that they have to pay.”
The Times
AUCTION NEWS
Come and meet the DMI team at live auctions next month
Why not visit a real live auction, see the bidding live and meet some of the DMI team who will be in attendance arranging funding for successful bidders? Upcoming auctions include Barnard Marcus in London on 11th September and Cottons in Birmingham on 13th September. You can review their websites for a list of Lots or just pop in for a coffee and a chat. See you there!
Latest auction news
A round-up of August’s auction news includes a two-bed terraced house in Hartlepool for sale with I Am Sold Property Auctions with a starting bid of £39,000. Auction House Lincolnshire meanwhile has a two-bed terraced house in Hull with a guide price of £30,000 – £35,000, and a three-bed terraced house in Grimsby with a guide price of £20,000. Among other listings is a four-bed terraced property in Sheffield, for sale with SDL Property Auctions with a guide price of £115,000.
Property Auctions
PROPERTY FINANCE
Property prices could fall as buyers face ‘perfect storm’
Experts have predicted that property prices will fall as buyers face challenges due to high mortgage rates and relatively high prices. Charlie Lamdin, founder of Best Agent, has said that buyers at the moment are facing a “perfect storm”, because mortgage rates have risen – meaning monthly costs are expensive – but prices have not dropped dramatically and remain in his view “unrealistically high”. He has said 2024 will be a “very much more of a buyers’ market” and has predicted falls of around 30%, with regional variation of between 15 and 50%. However, Richard Donnell, executive director at property website Zoopla, suggesting falls of 5% from peak are more likely, with the end of 2023 being the lowest point for the market. He said that he thinks once mortgage rates get to between 4 and 4.5%, slight rises in house prices will follow. Tom Bill, head of residential research at Knight Frank: “We’re forecasting a 5% fall over 2023 and then a 5% fall next year. After that we’ll see minimal single-digit growth, nothing like what we saw over the pandemic. Next year is more difficult to forecast because it’s a general election and the market tends to freeze up a little.”
I
Parents offered £2,000 cash ‘gift’ to help first-time buyers onto property ladder
Parents of first-time buyers are being offered a £2,000 cash ‘gift’ to help their offspring onto the property ladder. The Bank of Mum and Dad scheme, run by house builder Persimmon Homes and its subsidiary Charles Church, promises parents or other family members the £2,000 incentive if they contribute at least 5% of the sale price towards their child’s purchase. Parents must provide a letter saying the gift to their child is not repayable and that no interest is being charged on it. Buying agent Henry Pryor says the Persimmon scheme is the first he has seen that incentivises the parents of first-time buyers to help out.
The Mail on Sunday
LENDING CONDITIONS
Majority of owners could not afford their house now
Analysis by data science company Outra shows that the majority of homeowners could not afford their house under today’s mortgage rates. The research looked at more than 30m households and found that just 0.9% of homeowners of working age could afford to buy their own home again now or expand into a larger property. It was also shown that in June 2023, just 5.9% could afford their home but only with more favourable mortgage terms – or with help from a shared ownership scheme. This compares to 22.3% in December 2022. Of those who could not afford to buy their home in the current market, 24% were aged 20-30, while 22% were between 50 and 60.
The Daily Telegraph
Family funding set to hit record
The Bank of Mum and Dad is expected to provide record levels of financial support to the property market this year, with families predicted to contribute £8.1bn to homebuyers. This funding is set to support 47% of all homes purchased by buyers under the age of 55. The average amount given by each family is expected to be £25,600. Of around one million purchases this year 318,400 will succeed due to bloodline donations, says Legal & General and the Centre for Economics and Business Research. It will back 357,200 sales a year by 2025 with the total lent hitting £10bn. Bernie Hickman, of L&G, said: “Family wealth is increasingly becoming a prerequisite for homeownership, effectively locking some groups out for years while they save for deposits, or even altogether. While family gifting has always played a big role in the UK housing market, the value of those contributions has risen by more than one quarter on pre-pandemic levels.”
Daily Express Daily Mail I The Daily Telegraph The Guardian
Searches for interest-only mortgages spike
Research from Legal & General Ignite shows there was an 11% increase in searches for interest-only mortgages from June to July, with a 53% spike from May to June. L&G suggests this jump coincided with the Chancellor announcing the mortgage charter on June 26. Under the mortgage charter, borrowers can contact their lender to discuss alternative options without it affecting their credit score. Financial Conduct Authority analysis shows that the total number of interest-only mortgages halved between 2015 and the end of 2022, hitting just under 1m. The number of interest-only mortgages still outstanding was 749,524, with 244,179 for partly-interest-only deals.
FT Adviser
Mortgage rates slowly decline after lender price war
Mortgage rates are slowly declining after a mini-price war between lenders. HSBC, Nationwide Building Society, and Santander have all made slight cuts to their mortgage rates. Platform, part of the Co-op Bank, has the lowest two-year fix at 5.84% while Virgin Money has a two-year fix at 5.9% and Yorkshire Building Society is offering 5.96%. HSBC and TSB’s lowest rates are 6.04%. However, rates are still far higher than they were in June when the average two-year fixed rate across the market was 4.72%, according to the mortgage broker L&C. Chris Sykes from the mortgage broker Private Finance said: “Lenders are reducing their rates in small steps rather than one large jump.”
The Times The Times
ECONOMY UK economic activity slides as interest rate rises hit demand
The UK economy is on course to shrink between July and September and could tip into recession, a closely-watched survey suggests. The S&P Global/CIPS UK Purchasing Managers’ Index (PMI) found that rising interest rates and weaker household spending led to a sharp drop in demand for goods and services in August. The PMI figures triggered a fall in sterling with the swap market now pricing in a peak interest rate of 5.8%, down from the 6% previously expected. The PMI index fell to 47.9 in August, down from 50.8 in July and the lowest level in two and half years. Anything below 50 marks a contraction. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey was indicative of GDP declining by 0.2% over the third quarter so far. He added that a renewed economic contraction “already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector’s spring revival.” Martin Beck, chief economic adviser to the EY Item Club, warned the findings “may not be enough to deter the Bank of England from raising interest rates [in September], given recent developments in pay and services inflation” but if rates do rise next month it “will likely be the last in the current cycle.”
Financial Times City AM The Guardian
