Homeowners can overcome credit crunch with the help of lodgers

Lodgers could provide great relief to homeowners who are struggling to cope up with the rising costs of living. According to Abbey Mortgages, spare bedrooms in the UK homes could fetch £60 billion every year.
Abbey Mortgages’ data reveals that 18.2 million British homeowners have a minimum of one unoccupied spare bedrooms, which could be rented to overcome severe cash crunch. It claimed that a spare bedroom could fetch on an average £289 per month amounting to £3,468 each year as rental income.

Those renting their rooms could join the Government’s rent-a-room scheme and gain tax exemption on gross rental income up to £4,250 per year. This is an optional scheme under which a homeowner is entitled to receive income by renting a furnished room in the main or only home.

According to Abbey Mortgage’s figures, nearly 388,000 British homeowners have already been getting extra income by renting out their uninhabited rooms. A further 1.6 million are likely to make use of the attractive income alternative.

Director of Abbey Mortgages, Phil Cliff, considers this as the right time for taking in a lodger to raise extra funds for easing the cash crunch. He cautions homeowners to inform their lenders before renting a room.

Government’s tenancy deposit protection scheme for the students

Students opting for rental accommodation have the benefit of a Government-approved tenancy deposit protection scheme.

Under the scheme, a student is given right to seek details about where and with whom his/her cash is being protected. This mandatory scheme is now a part of the legal responsibilities of a landlord.

Though the onus lies on landlords for compliance with the legislation introduced last year, students are expected to inquire about the protection of their deposit and question their landlords if they fail to provide confirmation within 14 days.

The landlords can satisfy the tenants and letting agents by registering with the Tenancy Deposit Solutions Ltd. which operates under the trading name mydeposits.co.uk. It offers a free service in resolving disputes regarding deposit amount at the end of a tenancy agreement.

The mydeposits.co.uk scheme, which was put into action over 16 months ago, has so far protected 200,000 deposits. It is a unique scheme designed to enable landlords to hold on to the deposits during the tenancy. It charges a nominal fee in a pay-as-you-go format.

Students can visit the mydeposits.co.uk website to confirm protection of their deposits.

Tenancy Deposit Solutions Ltd. has entered into contract with Councils and Local Government to deliver insurance-backed tenancy deposit protection scheme.

Falling UK house prices are helping to reduce divorce rate

The turmoil in the property market has created a positive effect on married UK couples. It is strengthening the bond of togetherness under the weak economic climate.

The data compiled and analysed by the Office of National Statistics revealed that a surprising yet pleasant consequence of the housing price crash.  There has been a significant decline in the rate of divorce among married homeowners, in the last ten years.

Property research experts, Savills, has found a strong correlation between divorce rates and the house prices.
According to the supposition by director of research Lucian Cook, the rise in house prices made the homeowners feel that they were wealthier and could afford divorce. He predicts that falls in property prices, though unwelcome for the majority would override the downward trend of the divorce rate in the UK.

The divorce rate pertaining to the prime property market is found to be 6% of all the house sales. It significantly rises to 13% among houses costing £1m and jumps to 18% among houses costing more than £2m. Mr. Cook explained that at lower rate of property prices, there was less equity at stake whereas the stake was much more at a higher rate of property price. This difference has made couples stay together longer. The research also pointed out that the chances of divorce increased when the couples moved out of big cities and shifted to commuter belts.

Property professionals urge government to support market revival

The professionals of the Royal Institution of Chartered Surveyors (RICS) have urged the Government to help the housing market with rescue packages and reforms in order to pull it out from the worsening condition.

RICS opined that Government’s efforts in reviving the market have been inadequate. It was time to take significant and decisive actions, with long-term reforms in the property related legislation.

The Government is likely to announce measures in next few days which may include improved support on repossession and introduction of shared equity schemes for the first-time buyers.
According to the research reports, housing sales have reached their 30 years’ worst level, wherein an estate agent could sell just one property per week during last three months.

RICS wants the Government to issue mortgage-backed securities with a provision to sell home loans to other investors while allowing the original lender to issue additional mortgages. It also wants the Bank of England to guarantee those assets after the sell, until revival of the market.

RICS, in its 15-point rescue plan has urged the Government to introduce a holiday for short-term stamp duty and to float tax free saving schemes to enable people save money for their first property deposit.

The Government is likely to allow purchase of unsold homes to the housing associations in the open market and expansion of shared equity schemes.

Government announces rescue measures for housing market

The UK government has announced exemption of stamp duty on properties costing less than £175,000, effective 3rd September 2008, for the next 12 months.

The current threshold of £125,000 has been raised to £175,000 to facilitate revival of the housing market, which had been facing the worst downturn due to mortgage squeeze and the falling house prices.

The government claimed that half of the property transactions would benefit from the exemption of stamp duty. The average cost of property in the UK is currently £164,000.

The first-time buyers in inner London, where the average property cost is £285,268 will not get the exemption. The buyers in the South West, South east and East Anglia would also not benefit due to the prevailing high prices.

However buyers in the North of England would be the biggest beneficiary of the government’s measure, since the average housing price over there is only £129,700.

Soon after meeting the Prime Minister, Gordon Brown, the Communities Secretary, Hazel Bears, informed that stamp duty exemption was the first of many announcements which would be made to help people in the prevailing economic climate.

The new relief measures announced by the government include a scheme to help those at risk of losing homes in repossession.

Halifax’s spokesperson welcomed the Government’s announcement, saying that the measure would help the housing market.

Pace of Letting Homes fastest in the decade!

A large number of desperate homeowners, unable to get a reasonable sale price for their property are rushing to rent their homes. The number of instructions received by the letting agents during second quarter of the year has increased at a record pace.

A quarterly residential letting survey by the Royal Institution of Chartered Surveyors (Rics) reveals that the pace of letting is the fastest in 10-year history of surveys. It indicates that homeowners now prefer to rent out their homes rather than selling them at throw away prices.

According to Rics’ spokesman, James Scott-Lee, sales in the housing market are drying up and many homeowners are rushing to let their properties. However some owners are still willing to wait till the sale prices start going up. He informs that established investors are extracting benefits of the housing slump and finding renting as a profitable option. But he apprehends that increasing supply of rental homes could affect growth of rental income due to increase in options for the tenants.

The prices of properties have gone down by 10% during the year, while the number of buyers also fell sharply. The rents have been gradually rising in most of the places bringing in hefty incomes for the home owners.

Tips for landlords to overcome credit crunch

It will be nearly a year since landlords in the UK began feeling the pressure from the adverse impact of economy downturn.

Many professional landlords were helped by the increasing demand for rental properties, which subsequently led to a rise in the rental income.

However, some landlords are still concerned about the future of their financial condition, due to daily reports of crash in the housing prices.

Letting your property is one of the best solutions to overcome present credit crunch. You must undertake a search of the rental market in the respective area. This search would guide you in fixing the right rent for the property so that you do not charge prospective tenant out of the prevailing level in the market. It is better to charge slightly less so that you do not wait long in searching for a good tenant.

You must prevent rental voids. Always search in advance for the next tenant before expiry of the current letting agreement. This would help in keeping your property tenanted throughout, without a break in the flow of income. You can also persuade existing tenant to continue as long as possible.

Careful screening of the prospective tenant can eliminate many problems. A tenant with good credit record would ensure that you receive payments regularly. He would also be taking proper care of property which would minimise your maintenance expenses.

Develop a habit for saving some amount of money every month which could be utilised for replacement of utilities or repair of infrastructure.

Things you must know before letting rooms to five or more students

Families earn lot of rental income by letting their homes to students. But many of them do not know rules pertaining to letting rooms in a house of three or more stories to five or more students. It is necessary to get license from the local authority for a House in Multiple Occupation (HMO).

You are supposed to pay HMO license fees, up to £1,100 in some cases, to the local authorities. You are also legally bound to adhere to standards on safety, health, and room size (6.5 sq. m for single person and 10 sq. m for couples).

When you are letting your home for more students in their late teens or early 20s, you must equip it thoughtfully. The equipment must be durable and should require low maintenance.

The kitchen worktops should be easy-to-replace. Install vinyl floors and cupboard doors. Do not conceal shower units in the walls to avoid breaking of tiles for repair of showers.

Provide locks for windows since student rooms are more prone for thefts. If you intend to provide a garden space, make it a plain lawn which would not require daily care except for the occasional mowing.

You should ensure that you provide broadband internet connection which is a must for students.

If you can afford it, take out specific insurance against fire, flood and theft.

Some tips on tenancy deposit and sharing of rental property

Moving into a rented property some times turns out to be a nightmare if certain precautions are not taken at the time of signing a tenancy contract.

Content inventory and condition of property

The foremost thing you must ask from the landlord is the inventory of contents and a report on the condition of the flat. It is your responsibility to check everything before signing the relevant document. Confirm and report any missing items or damage. Report those items which are present but missed out by the landlord in the inventory list. This will eliminate issues which normally crop up when the landlord is supposed to return your deposit amount. Landlords accept deposit at the beginning of the tenancy contract to cover any damages to contents or the property during tenancy. Charges for unreported damages will have to be borne by you if you fail to list them at the start of tenancy.

Property Sharing

If you decide to share rented property with more people, ensure that all of them sign the tenancy contract. Otherwise, you will be responsible to pay the full rent even if somebody sharing the property decides to leave. It is advisable to allow sharing only with those whom you can trust.

The landlord is not supposed to disturb your privacy and interfere in matters not related with tenancy. During tenancy period, he cannot enter the property without your permission. He is solely responsible for the maintenance of the structure and exteriors of the property. As a good tenant, you are expected to take proper care of landlord’s property contents and interiors.

Sales are down despite cuts in property prices

Property sellers have started cutting the asking prices for their homes in order to stop the slump in sales.

According to an online agency report, a cut in the asking price for an average British home was 2.3% last month, amounting to a drop of £5,403. The sellers in London offered a higher discount, to the extent of 5.3% last month alone equalling a reduction of £21,000 in the asking price in 4 weeks to August 9.

The agency reports that the cut, the largest ever in August, is the indication that asking prices are falling at a much faster pace, escpecially when compared to the 1.8 per cent and 1.2 per cent in the preceding months.

According to commercial director Miles Shipside of Rightmove, sellers are motivated to flock to the market in the middle of holiday season, and London is perhaps buzzing with the special summer sale where prices are down by 3.8% compared to last year.

According to Rightmove, national asking prices were highest at £242,500 in May compared to prices measured as per the Nationwide and Halifax indices which were highest last autumn. The increase was caused by some sellers who did not enter the market.

Many housing market surveys are reporting distressing sales in the South and East Anglia and other places.