37% of landlords yet to get rents from tenants

National Landlord’s Association (NLA) in its recent research has found that 37% of landlords have not been paid rents by their tenants.

The survey also points out that 44% of landlords could not get their rental payments in last 6 months and NLA suggests that it is one of the major causes for significant rise in mortgage arrears and repossessions among buy-to-let borrowers.

Although the court system is found to be quite right for recovery of rents, NLA reports that only 50% of landlords have sought courts’ help to recover their losses because of inordinate delays, sometimes more than 3 months, in hearing of cases.

According to Davis Salusbury, chairman NLA, tenants must give top priority to payment of rent since delay of one month in today’s difficult conditions could be “the straw that breaks camel’s back.” He insists that mortgage has to be paid regularly.

Salusbury also informs that only 35% of buy-to-let mortgages pertain to rental properties and contrary to media reports, most landlords are not facing any threat of repossession or loss of asset.
His advice to landlords and tenants is to communicate with each other and tackle their financial problems together.

Base Interest Rates can rise again, warn mortgage experts

In spite of the fact that the Bank of England reduced base interest rate to a level seen only in 17th century, mortgage experts warned landlords that rates can begin to rise once again in a matter of time.

It will add new financial burden for the buy-to-let investors. Residential landlords are advised to get prepared for rate hikes that may be introduced in 2nd half of the year.

Hopkinson, at Property Portfolio Rescue, described the situation as “a ticking time bomb which could prove disastrous”. The landlords with flexible rate mortgage contracts or tracker would be the worst sufferer of rising rates. Some of them escaped from high rate over past many months, but could be deprived of this advantage any time. Those intending to re-mortgage later this year will also be required to pay higher rates.

Considering that Hopkinson’s projections will prove to be correct, 20% of landlords will go into repossession by the end of year. Hopkinson warns landlords not to feel secure in the hope of market bounce back, even after increase in interest rates. He advises them to augment their liquid cash reserves during low interest period for the anticipated hike.

Sellers beware, Hips is now in force

The controversial Hips (Home Information Packs) which have been criticised as “waste of time” are now into force from April. The sellers will have to put it in place before going for sale of property.

Prior to introduction of new changes, vendors were able to order a Hip before putting up ‘for sale’ board, but now they are required to furnish additional details in new questionnaire.

The seller is supposed to provide pre-sale information such as council tax band, utilities, parking arrangements and details of structural alterations in the new Property Information Questionnaire (PIQ). This information will help buyer in deciding whether to make an offer.

The Association of Home Information Pack Providers (AHIPP) believes that changes in Hips will be beneficial to the buyers.

Contrary to this belief, the National Association of Estate Agents (NAEA) argues that 89% of property professionals disagree with AHIPP’s views. NAEA, which has been opposing packs since day one, considers them as costly, unnecessary and a total failure.

NAEA also alleges that people are refraining from putting their property on sale because of Hips, as they are required to pay up to £400 for it irrespective of sale or no sale.

However, if any vendor or estate agent puts a property on sale without PIQ or Hips he/she could be fined £200.

As per the new changes, property owners will be required to wait 3 to 5 days to get required information for a pack.

Home prices up by 0.9 per cent, reports Nationwide

Average cost of house has gone up for first time in last sixteen months, but year-on-year values are still reported to be down.

Home prices had gone up by 1 percentage point in March 2009, leading to speculations that UK’s property market was on the way to revival.

According to Nationwide, home cost rose by 0.9%, raising average property price to £150,946 from £147,746. But chief economist Fionnuala Earley and other experts warned that this improvement should not be taken as an end to house price downturn.

Fionnuala pointed out that the Bank of England had already initiated strong measures to help financial and economic markets by lowering rates and commencing quantitative easing. But it will take some more time into the housing market for recovery in home prices.

Nationwide’s report is followed by another good news on housing market that mortgage approvals at the Bank of England had gone up by 19% in February.

According to the Royal Institute of Chartered Surveyors, there is increase in inquiries from potential buyers for the fourth consecutive month. While Nationwide said that upturn in activity in the month of March was indication of return of buyers who postponed buying a home during financial turmoil at the end of 2008.

According to the chief UK and European Economist, Howard Archer, at HIS Global Insight, too much should not be read into house price rise in March, but nevertheless there are strong indications that housing market’s worst is probably over.

Housing market seeing end of the tunnel as approvals for mortgage go up

Bank of England news brought some relief to the UK housing market as number of mortgage approvals went up compared to last month.

According to figures released by the Bank of England, mortgage approvals grew to 38,000, up 6000 in February compared with January and highest since May, 2008.

Many market observers believe that this increasing trend is probably an indication of revival of activity in housing market.

But Capital Economics’ Vicky Redwood opines that approvals are not consistent with falling house prices and need to double in number.

Market got another good news from property analysts, Hometrack, who reported that homes were selling quicker and buyers’ interest was also going up. It reported increase in number of registrations for the second consecutive month, up 9% in March, following 17% rise in February 2009.

The Hometrack’s survey involved 1,800 surveyors and agents across Wales and England and revealed that increase in aspiring buyers looking for good bargains is providing much-needed boost to the housing market.

The survey revealed 19% rise in sales agreed, although it considered this volume much below the normal levels. According to Richard Donnell, estate agents are becoming more optimistic about the market.

However, the Halifax house price index showed 2.3% fall in February and an annual drop of 17.7%.

Shortage of properties to cater rental demand boosts investment

There is spurt, for the first time in last 2 years, in purchase of more homes by landlords than in selling. Developers are also keen on letting rather than selling properties.

But it does not mean that developers are desperate or landlords are foolhardy. The data regarding demand for rentals points out that it is set to rise due to acute shortage of mortgage and increasing realisation among people about benefits of rental accommodation.

As a result of increasing repossessions, long wait for social housing and owning a home becoming almost impossible for young people, demand for letting is going up more than supply, as revealed in the findings of most surveys. It will be even more difficult for the firs-time buyers to get mortgages if the Financial Services Authority decides to ban 100% mortgages and puts “three times a borrower’s income” cap on home loans, as reported in the media.

According to report by the Centre for Cities, by 2021 demand for rental will be so high that one in five homes will have to be a rental property. Hometrack’s research head, Richard Donnell, believes that rental sector does have a larger role to play. According to him in the last few months rents have been increasing continuously in some areas as many prospective buyers were opting for renting. He predicts this will gather momentum as fewer people will afford to buy.

Roger Bootle of Capital Economics paints grim picture for the UK housing market

Roger Bootle, economist at forecasting agency, Capital Economics, has forecast gloom for the UK housing market in 2009. The former chief economist of HSBC was speaking at the Annual Conference and Exhibition, organised by the Chartered Institute of Housing South East in Brighton this week. He is predicting increase in number of owners entering negative equity and huge rise in repossessions.

His forecast indicates repossession to cross 90,000 figure in 2009, while around 3.5 million households are likely to fall into arrears, twice the number witnessed in the early 1990s downturn.  However, the forecast by the Council of Mortgage lenders indicates repossessions to touch figure of 75,000 for the current year.
Analysts and observers of the UK housing market are expecting a further peak-to-trough fall of 40 t0 45% in house prices.

According to a report by Halifax, house prices crashed by 2.3% in February, taking average UK home price to £160,327. With this fall the annual rate of decline for house prices has touched 17.8% level, informed Halifax.

Bootle believes that current economic downturn is the worst since 1945-48 economic slump which was the aftermath of fierce world war II.

Bovis Homes suffers huge losses

Housebuilder Bovis Homes joined other rivals in loss making as it suffered huge pre-tax loss of £78.7 million in 2008, after making an impressive profit of £123.6 million the previous year.

The value of Bovis Homes’ land bank had to be written off to the tune of £77.4 million, in addition to £10 million write off on account of expected benefits from Elite Homes’ acquisition in 2007.

The fall in company revenue is 49% to £282 million due to slump in sale of homes and continuous fall in house prices. Bovis Homes was to build 3,500 homes during 2008, but could build only 1,782 homes by the end of year.

Like many house builders, Bovis Homes also had to take a harsh step of reducing workforce due to slump in demand. According to company chief, David Ritchie, toughest economic conditions, insufficient mortgage finance and crashing house prices led to fall in revenue and profits.

Since beginning of year to date, company could secure only 772 reservations, down by 39% compared with same period in 2008. Story is not different from those of other big players in the housing industry. Persimmon made pre-tax loss of £780 million in 2008 compared with £583 million profit in 2007. Redrow reported £46.2 million pre-tax loss while Barratt suffered loss of £592.4 million.

Upturn in buy-to-let-market for Gladedale in North East England

There is at last some news of upturn in the buy-to-let market! Leading housebuilder Gladedale in North East England has reported significant increase in number of buy-to-let investors since beginning of year. Investors are lured by the major increase in yields from rented properties.

Sales Director, Richard Jones, of Gladedale, North East England, believes that people are once again looking to property as good investment for return on money. Low interest rates coupled with attractive deals on new homes are providing higher yield with some investors succeeding in getting yields up to 6%.

The existing bank rate at the Bank of England is just 0.5%. A large number of people who invested in shares lost big amount. Also under prevailing economic climate many people who are unable to buy new home are opting for rental property. As a result investors are turning to buy-to-let property which becomes not only a guaranteed source of regular rental income but also a long term asset for them.

Gladedale is offering no deposit homes at prices ranging from 52,496 pounds to 69,995 pounds across the region. This is an excellent value for money offer with wide choice of selection of beautiful homes.

Good news from British banks for buy-to-let loan seekers

Buy-to-let loan seekers who have been hearing negative news for last so many months can rejoice as several British banks are coming forward with offers of more easily available mortgages and other loans.

Northern Rock Bank has reversed its earlier decision and has allocated 14 billion ponds for mortgages and other loans during year 2009 and 2010. Following this announcement, the Bank of Scotland also has come forward with offer of total 1.7 billion pounds to mortgage seekers. The only condition, according to media, is that RBS mortgages and buy-to-let loans will be available only to its Scotland based clients. RBS intends to offer loans to first-time homebuyers up to 90% of property’s value and would also provide funds to buy-to-let businesses.

RBS chief executive, Paul Geddes, declared that RBS would be “more than ever, open for business.”

However, financial experts suggest that banks should focus more on helping those who had been struggling to get funds for last several months, particularly those prospective homeowners and buy-to-let investors who have steady income but very insignificant savings in banks.

Industry experts believe that if banks make funds more readily available to residential rental sector, Britain’s struggling housing market will get an early chance to revive once again.