Organisations call for regulating sale-and-leaseback schemes
The Council of Mortgage Lenders (CML), Citizens Advice and Shelter have called upon the Treasury to allow the Financial Services Authority (FSA) to regulate sale-and-leaseback schemes in order to provide greater protection for consumers.
In a letter to the Economic Secretary, Kitty Ussher, the organisations expressed concern that some of the schemes may not be treating consumers in a fair manner.
Sale-and-leaseback schemes allow owner-occupiers to sell their homes to a company and then to remain in the property by leasing it back. However, concerns about these schemes include the fact that many offer very little security of tenure, and properties are often purchased at a discounted rate without an independent valuation. Some schemes have been criticised for the way in which they treat consumers at a potentially vulnerable time when they may be facing repossession.
Teresa Perchard, Citizens Advice public policy director, said: “This is a growing problem in a completely unregulated sector which we think the Government needs to look at. We have seen a number of cases where people in mortgage arrears and facing the threat of repossession have gone ahead with a so-called 'mortgage rescue' scheme on the understanding this would allow them to remain in their home in the longer term, only to find themselves homeless within a year.
“These schemes can be difficult to understand, and the information about them can be misleading. Usually people will be required to sell their home at much less than its market value and they will have very little security of tenure as a tenant, but this is not always made clear.”
Letting agents need to be licensed, says ARLA
The Association of Residential Letting Agents (ARLA) believes that the Law Commission’s proposals for enforced self-regulation for letting agents shows the way forward but still believes that all letting agents should be licensed.
In a response to the commission’s consultation document ‘Encouraging Responsible Letting’, ARLA points out that it believes that only half of all letting agents belong to self-regulating professional bodies and that most new entrants to the industry are untrained and unaffiliated. ARLA now hopes that the Government will consider legislation requiring all letting agents to be members of a professional body before they can begin to trade.
Robert Jordan, ARLA president, said: “We would like to see all letting agents licensed, but the private rented sector still needs regulating. This experienced regulation can be organised and policed by professional bodies such as ARLA who provide qualifications, complaints and disciplinary procedures and maintain the safeguards for tenants' deposits and landlords' rents. This blueprint is needed for the whole of the rental market, not only for our members.”
60% of Government’s new homes target will be built on brownfield land
A first-ever nationwide review of the skills needed to successfully re-use brownfield land in support of the Government’s housing growth targets has been announced by English Partnerships and the Academy for Sustainable Communities (ASC).
Of the three million new homes proposed by the Government in the recent Housing Green Paper, a minimum of 60% will be built on brownfield land. The review is designed to identify the true extent of a perceived skills gap in the brownfield sector. The results will inform a new national strategy to ensure an adequate supply of brownfield professionals to help meet the 60% target in the future.
Professor Paul Syms, national brownfield advisor at English Partnerships, said: “This initiative takes forward one of the National Brownfield Strategy recommendations submitted to the Government earlier this year, and supports its target for three million new homes across England. Re-using brownfield land for housing and other uses protects greenfield land and tackles the blight of dereliction on communities. Ensuring that people have appropriate brownfield skills is fundamental to meeting these objectives.”
UK favours intermediaries when taking out buy-to-let mortgages
UK property investors favour the use of intermediaries when taking out buy-to-let mortgages, according to Birmingham Midshires.
The lender’s study has revealed that 70% of landlords in the UK use an intermediary to arrange their mortgage deal, compared with 26% in Germany, 23% in Poland and 6% in Portugal.
In addition, void periods are also much lower in the UK, with the average period of 15 days seen over the past year, which is 73 days lower than the figure for German landlords. Void periods are also often lower on student properties due to the practice of offering annual lets.
South East housing market alive and kicking
Despite current reports of a slowdown in the housing market, the new homes market is still very active in the south east, according to Knight Frank.
Paul Hogarth, partner and head of new homes sales and marketing for Knight Frank in the south east, said: “ Sales are active throughout our residential division which covers Kent, Surrey, Sussex and Berkshire. Demand is still outstripping supply, particularly in commuter towns.
“Although interest rate rises have had a short term negative affect on rental yields, buy-to-let investors are still very active in the market, seeing bricks and mortar as a safe investment for long term capital gains, and with the introduction of a single capital gains tax of 18% in April 2008 as announced in the pre-budget report, owners of buy-to-let properties and second homes could save thousands of pounds when they come to sell. Whilst there continues to be a supply shortage of new homes and a sustained demand, I believe it is unlikely that the market will significantly slow down.”
Rating Act 2007 applicable to Wales
Owners of empty properties in Wales face a tax burden thanks to new legislation coming into effect next April.
The Welsh Assembly Government has decided to fall into line with England on the Rating (Empty Properties) Act 2007, which affects industrial, office and retail sectors. But the industrial market in Wales could be particularly hard hit, said King Sturge, with 14m sq ft of empty factory space which currently benefits from 100% business rate relief.
Susanne Thomas of King Sturge said: “Many empty factories across Wales receive rate relief. After an initial six-month period of grace this will be withdrawn and the full impact of liability will be felt in the region, which has seen a rate of closure unprecedented in modern times. However, if the factory has been empty before 1 April 2008, then the six months period of grace will run from vacation.”
At present, nothing is paid on empty offices and shops for three months, and then only half the applicable business rate after that. Now the full rate will apply after three months.
Mayor of London has more power to meet the housing challenge
The Greater London Authority (GLA) Act has received Royal Assent, meaning that the Mayor of London and the London Assembly have more power in key areas ranging from climate change to housing.
Under the provisions of the GLA Act 2007, the Mayor will publish a housing strategy next year setting out his strategic housing investment priorities for London, and be able to determine planning applications of strategic importance in London amongst others.
John Healey, local government minister, said: “The Mayor provides the strong, visible and accountable leadership London needs as a world city to meet the challenges ahead. This act gives the Mayor more powers to make a positive difference to Londoners’ lives such as meeting the challenge of more affordable housing.”
Developing a code of practice for sale and leaseback
The Money Centre, a UK buy-to-let mortgage broker, is to set up the National Association of Sale and Rent Back (NASARB) to represent property investors’ interests in the sale and leaseback market.
This follows news earlier in the week in which Shelter, along with the Council of Mortgage Lenders (CML) and the Citizens Advice Bureau, wrote to ministers expressing their concern regarding regulation in the sale and leaseback sector.
NASARB intends to work with the CML, property investors, landlord associations and housing charities to draft a voluntary code of practice in an effort to regulate an industry that currently has no control. It is hoped the code will be registered with the Office of Fair Trading in the near future.
Mark Alexander, managing director of The Money Centre, said: “If properly regulated, sale and rent back schemes can help people who find themselves struggling financially to stay in their family homes, which makes a rewarding investment for landlords. I'm challenging the industry to get its act together and join me in developing a code of practice.”
Rent payments not meeting mortgage repayments
Rent payments are not covering the costs of a mortgage for an increasing number of buy-to-let investors, according to Heritable Bank.
Up to 33% of investors say the rental yields they receive on a property barely covers the cost of a mortgage, while a further 10% say they do not receive enough rent, according to Heritable Bank’s survey of 200 property investors.
However, 43% of investors regard property price growth as the most important element of property ownership, compared to 11% who see rental yields as the primary income.
Adrian Scott, managing director of residential mortgages at Heritable Bank, said: “The outlook for the property market is mixed, with price growth having slowed in most regions. This is an ideal time for professional mortgage advisers and expert lenders to help investors squeeze potential value out of poorly structured buy-to-let portfolios.”
More students are joining buy-to-let sector
According to Abbey Mortgages, more students are looking to join the buy-to-let sector by buying and letting their own properties.
The lender has said that a total of 110,000 students now want to buy such properties either on their own or with friends, with the parents of a further 44,000 being similarly inclined.
Around 22,000 students currently live in properties bought for them by their parents, said Abbey, a demographic which looks set to grow in size in the future.
