A number of people become ‘reluctant landlords’

CML and the FSA tackle mortgage fraud

Retailers call for rents to be paid monthly

Buyers believe in positive effects of healthcare

Merseyside developers appointed to north east regeneration

A number of people become ‘reluctant landlords’

According to Knight Frank’s London Residential Review Summer 2008, the problems faced by residential sales are strengthening the lettings and professional property investment markets.

The review found that many potential buyers are continuing to rent as mortgage lending continues to tighten and so many tenants now see themselves remaining in the private sector for the medium-term. In the past, potential buyers saw rent as ‘dead money’ which could have been spent on the mortgage of their own property, but falling house prices and the threat of negative equity has allowed renting to be seen as a ‘safe’ option which offers value and flexibility.

The Capital has seen an increase in the number of rental properties available. For those people who need to move but are unable to sell, renting their property has become the only viable option and they have become what the review describes as ‘reluctant landlords’. A number of developers have also begun to take on the role of landlord. Unwilling to sell their properties at too great a discount, some developers have begun to find tenants for the short to medium-term until house prices begin to rise again.

Liam Bailey, head of residential research at Knight Frank, told PIN: “There is currently strong supply for rentals and the market is not oversupplied. Rents have shown strong growth over the last year although I think there is only limited scope for increases this year as they will rise with wages. The rental market in London can be adversely affected by corporate employment, the effect of redundancies is not something we are seeing at the moment but may start to become a feature next year.”

CML and the FSA tackle mortgage fraud

The Council of Mortgage Lenders’ (CML) efforts to tackle mortgage fraud has been recognised by the Financial Services Authority (FSA) in a public letter which admits the priority that the industry has given to fraud issues even in the current challenging market conditions.

The FSA encourages more lenders to become involved in the FSA/CML voluntary initiative to combat broker fraud, welcomes the anti-fraud measures that the CML is taking and emphasises the priority that the FSA is giving to investigating and, where appropriate, prosecuting organised mortgage fraudsters.

Michael Coogan, CML director general, said: “The FSA rightly identifies that the best way to tackle mortgage fraud is for lenders and the regulator to work together, along with law enforcement agencies, to root out fraudsters. People may not think of lenders as victims of crime, but unless fraudsters are tackled then honest customers are the ones who end up paying more. 

“We welcome the FSA’s focus and practical approach in this area, and we expect that even more lenders will now participate in the voluntary initiative designed to identify and investigate broker fraud.” 

The CML has undertaken a range of work on fraud recently, in addition to the joint initiative with the FSA. As well as industry guidance and information, the latest CML initiative is a change to the standard instructions that lenders give to their conveyancers, to ensure that newly-built properties are accurately assessed for value.

Retailers call for rents to be paid monthly

A number of Britain’s largest retailers have called for landlords to collect rent only one month in advance instead of the traditional three.

Retailers including Argos, Debenhams, Next and Boots have argued that quarterly advances for rent are hitting businesses harder than ever while they are struggling through the current economic downturn. The British Retail Consortium (BRC) recently estimated that quarterly rental payments add £145m to retailers’ costs.

Quarterly advance rental payments have been a long-standing component of retail leases and landlords are expected to fight the proposed change. Retailers will put forward a case that although they have entered into a legally binding contract with their tenancies, in the current economic conditions they need flexibility from their landlords if they are to survive.

The BRC has argued that it is in the landlord’s best interest to see a thriving retail sector and that this will not happen if retailers continue to have to struggle with meeting rental costs. Retailers hope that changes to rent payments will help ease the pressures on smaller businesses, who are hardest hit as their profit margins are lowest, and in the worst cases help avoid them going into administration.

Michael Green, chief executive of British Council of Shopping Centres (BCSC), told PIN: “As is the case with any issue relating to lease conditions, the BCSC advises both landlords and tenants to work closely together to find the most appropriate arrangement for their particular circumstances.”

Buyers believe in positive effects of healthcare

According to research by FindAProperty.com, 77% of buyers believe that the opening of new healthcare facilities will have a positive effect on local property prices.

The survey asked buyers about the pros and cons of having a hospital open in their area. Almost half (48%) felt that a new hospital would lead to increased traffic and 29% said that they would be concerned about the construction effects while the hospital was being built. When asked whether they would move to be close to a good hospital, 38% said that they would. The research also found that half of buyers believed that the closure of a local hospital would have a negative effect on property prices.

The introduction of polyclinics, one stop shops for healthcare, has been high on the healthcare agenda over the last year and PIN asked Michael O’Flynn, content editor for FindAProperty.com, whether its introduction would also have an affect on house prices: “Our research shows that people place considerable value on medical services and believe that they boost local house prices so we can probably conclude that the opening of a polyclinic would have a similar impact. That said, there is some debate over how polyclinics would work, will they be additional to existing services or will they replace GPs’ surgeries?

Merseyside developers appointed to north east regeneration

Regional development agency, One NorthEast, has appointed Merseyside-based developer Langtree Group as its preferred partner for 24 of its industrial and commercial site developments.

The £30m deal will see Langtree manage and modernise sites across 1,100 acres of brownfield land. The regeneration of these sites is a key part of One NorthEast’s plans for the area as it wants to create 22,000 new businesses and put 70,000 more people in work by 2016. It plans to do this with an annual investment of £280m.

In PIN’s latest weekly mortgage recap, Tim Warburton reports…

HBOS has cut rates on 48 of its products across the group. Halifax has reduced 20 of its fixed-rate deals by up to 0.15%. Bank of Scotland (BoS) has reduced four of its buy-to-let deals by up to 0.25% and three of its self-certificate trackers by 0.1%. BM Solutions has reduced three of its buy-to-let deals by up to 0.2%. Intelligent Finance has reduced 15 of its tracker deals by up to 0.3%.

Nationwide has also cut rates on a number of its fixed-rate and tracker products by up to 0.46%. A two-year fixed-rate has been cut to 6.18% from 6.48% with a 75% loan-to-value (LTV) and for those borrowers with a 90% LTV the rate has been cut to 6.58% from 6.88%. Both products come with a £599 arrangement fee. The lifetime tracker has been cut to an initial rate of 5.98% from 6.44% and £599 fee with a 75% LTV.

Michelle Slade, an analyst with Moneyfacts.co.uk told PIN: “HBOS are following Nationwide and other lenders who have cut mortgage rates in recent weeks. This is good news but we would have expected to see it sooner. Lenders, who were quick to increase interest rates, have been slow to react to the falls in swap rates over recent weeks.”

Simon Wilson, managing director of New Deal Finance, added: “Interest rates are still at a massive premium compared to where they were 12 months ago. This does little to stimulate an overly depressed market.”

Leeds Building Society has launched a five-year fixed-rate mortgage. It has an interest rate of 5.99%, an 80% maximum LTV up to the value of £250,000 and a £1,499 completion fee. The product also benefits from no early repayment charges.

Cheshire Building Society has launched a Family Value mortgage for its existing customers. The product offers those customers a saving of £500 on the £999 arrangement fee for its two-year fixed-rate. The product is available with a rate of 6.49%, a 90% LTV and free annual overpayments up to £5,000.

Market Harborough Building Society has launched a two-year fixed rate deal at 5.99%. It has an 80% LTV up to the value of £300,000 and a £749 fee. The product is subject to early repayment charges within the first two years.