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Tesla’s $1.5 Billion Bitcoin Purchase Continues to Divide Opinion

Tesla’s $1.5 Billion Bitcoin Purchase Continues to Divide Opinion

Tesla has once again been dominating the headlines over the past week, after the company made a historic $1.5 billion Bitcoin purchase. The huge crypto currency investment was not entirely surprising, given CEO Elon Musk’s public praise for Bitcoin for some time now.

Many analysts had always seen it as purely a matter of time before Musk entered the cryptocurrency marketplace, though few had predicted such a monumental investment.

Tesla’s $1.5 billion Bitcoin investment spurred another meteoric rise in the value of the world’s number-one digital asset. Having recently skyrocketed beyond $40,000 for the first time, the value of a single Bitcoin briefly broke the $50,000 barrier, before settling back at $47,000 by Monday February 15.

Confidence in cryptocurrency in general spiked alongside the value of Bitcoin, which on the basis of this single purchase increased by around 9%.

But at the same time, economists and market watchers are questioning whether a major investment in Bitcoin represents a savvy use of the firm’s funds. Whether or not Tesla is wise to begin accepting Bitcoins for purchases of its products has also been called into question.

Differences of Opinion

Unsurprisingly, Tesla’s cryptocurrency investment has divided experts right down the middle. In an interview with MarketWatch, Christopher Schwarz from the Center for Investment and Wealth Management at the University of California insisted Musk had made a mistake.

“I think this is awful strategy on many, many levels,” he said.

“In essence, this is like creating [currency] risk since none of Tesla’s suppliers are paid in Bitcoin.”

Tesla has done little other than delight its stakeholders and shareholders as of late. Within the past 12 months alone, Tesla share prices have increased an astonishing 472%. This is more than what Bitcoin itself has gained over the same period of time, achieving growth of 337%.

Jerry Klein, managing director and partner at Treasury Partners, likewise told MarketWatch that the decision to invest in Bitcoin was unusual and unexpected.

“Tesla’s purchase of Bitcoin is an unusual use of corporate cash, which is typically held in safer and less volatile assets, such as short-term fixed income securities to ensure liquidity and limit volatility,” he said.

“While Tesla shareholders are reacting positively to the news, it remains to be seen how shareholders would react if a decline in Bitcoin’s price negatively affects Tesla’s future earnings,”

“CFOs are willing to accept risk in their overall business, but not with the cash on their balance sheet. While Bitcoin has been surging in recent months, it’s been very volatile over the past few years.”

Meanwhile, there are those who believe simply allowing capital to effectively ‘go to waste’ with traditional holding options is actually the biggest mistake companies like Tesla can make.

“Corporations with ever increasing dry powder have a most obvious cash management option: partial BTC allocation,” commented cofounder of Nexo, Antoni Trenchev.

“Sitting on piles of cash offers little to no return and gets constantly devalued by central banks’ excessive QE measures. Having a treasury policy that diversifies risk and return, as well as looking into ‘the fastest horse’, is not only a sound policy, but is also the one that most adheres to the key principle of maximizing shareholder value.”

Secured Loans

Secured Second Charge Loans for Home Improvement Projects

Homeowners across the UK routinely turn to banks and specialist lenders for help with major home improvement projects.

One of the most flexible and versatile products available is a secured second charge home improvement loan, which can cover the costs of most types of major home improvements, renovations, and extensions.

What is a Secured Second Charge Home Improvement Loan?

As the name suggests, a secured second charge home improvement loan is a specialist financial product provided specifically for home improvement purposes. As a secured loan, the funds issued are taken out against an asset of suitable value – in this instance the home of the borrower.

The amount you can borrow will be determined by how much equity you have in your home – i.e., how much of your mortgage you have so far paid off. A loan is issued with the property used as security, after which the money is repaid over a series of monthly payments at an agreed rate of interest.

A secured second charge home improvement loan can be issued as an extension on your existing mortgage by your current lender. Alternatively, it can be taken out as a separate loan entirely with the lender of your choosing.

How is an Unsecured Home Improvement Loan Different?

Unsecured home improvement loans are those that are issued based on the applicant’s strong financial position and credit history. No security (i.e., property or assets) are required, as eligibility is determined purely by way of merit.

While unsecured lending may eliminate the risk of forfeiting your assets in the case of non-payment, it nonetheless has its limitations. Unsecured loans are considered higher risk on the part of the lender, which means you will not be able to borrow as much and may face much higher overall borrowing costs.

Qualifying for an unsecured home improvement loan is also impossible in the absence of an excellent credit history and proof of a strong current financial status.

How Much Can I Borrow on a Home Improvement Loan?

There are technically no limitations to how much you can borrow, as the maximum loan amount will be based on the equity available in your property. Secured loans typically start from around £25,000 upwards and are repaid over the course of an agreed number of years.

Your financial status and credit history may also be considered by the lender, when determining how much you can borrow.

What Can I Use a Home Improvement Loan For?

Most home improvement loans can be used for any major property improvement or extension project. Few lenders impose formal restrictions on how the funds can be allocated, so you are free to use the loan for any purpose you wish.

Some of the most common uses for secured home improvement loans are as follows:

  • Extensions to create additional living spaces.
  • Landscaping and major garden renovations.
  • New kitchen and bathroom installations.
  • Installation of conservatories or outdoor summer houses.
  • Swimming pool planning and construction.

By spreading the costs of the project over several years, the major home improvement project you have been dreaming about could be more affordable than you think.

For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.

Bridging Loans

Bridging Sector Bouncing Back After £278m Fall in 2020

Almost every arm of the financial services sector in the UK was adversely affected by COVID-19 last year. The bridging finance segment was no exception, which according to the latest figures from Bridging Trends fell by £278 million compared to 2019.

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In total, bridging loans valued at £455 million were provided by the lenders incorporated in the Bridging Trends annual survey, down from the £732.7 million in 2019, or 38%.

Q1 saw total bridging finance transactions hit just under £113 million, before experiencing a major fall to just £79.4 million in Q2. Transaction volumes increased significantly in Q3 to reach approximately £115.5 million and climbed to £137.2 million during the last three months of the year.

Regulated vs Unregulated Bridging Loans

Interestingly, 2020 bucked the trend of previous years by recording a near-identical split between unregulated and regulated bridging transactions.  Regulated bridging loans accounted for 36% and 39% of transactions in 2018 and 2019 respectively, last year’s regulated market share was 49.4%.

Borrowers typically found themselves paying more for bridging finance during the first half of the year. According to Bridging Trends, average interest rates during the first three months of 2020 were 0.8% per month, increasing to 0.85% per month in the second quarter. This was followed by 0.87% in the third quarter and a fall to 0.72% in Q4.

The average LTV on bridging loans issued last year was down somewhat to previous years which were recorded at 55.6% in 2018, 52.9% in 2019 and 50.7% in 2020.

An Optimistic Outlook

With interest rates hovering at all-time lows and activity levels once again returning to normal, the immediate outlook for the bridging sector has been called encouraging by most and with some suggesting that the current positive performance could extend far beyond the looming stamp duty holiday deadline.

“The impact of the pandemic on the bridging sector is shown clearly in Q4’s data, but it also alludes to the activity we are now experiencing, some of which, but not all, is related to the stamp duty holiday deadline,”

“It’s clear though that bridging finance is becoming better understood by the wider broker market (not just those in the specialist sector) and there is more confidence about the options it can provide customers, which should mean that 2021 could see a real watershed moment for this type of finance.”

Some have shown surprise that such a buoyant sector experienced such a dramatic decline in the first place with comments such as:

“I am surprised that the fall in lending in 2020 was so great. The market has always ‘felt busy’ and we did not see such a big drop in volumes,”.

“Some big names in bridging closed their doors and some still are not back as they were, however, most of the short-term lending market either carried on throughout or paused only temporarily as working practices were refined and made fit for purpose under the restrictions we faced,”

“The absence of some big names reduced supply and coupled with restricting LTVs, this has had a marked impact on lending levels which is also reflected in the fall in average LTVs over the year, however, as the trend in Q3 and Q4 indicated, we believe volumes will bounce back quite quickly and with people re-entering the market the data is reflecting the stiff competition lenders face for business in terms of lower interest rates.”

Secured Loans

Is Consolidating Debts with a Secured Loan a Good Idea?

On one hand, it is true to say that taking on any form of debt while already struggling with your monthly outgoings is not a good idea. Attempting to solve debt by taking on more debt is usually counterproductive, though there is one exception to the rule.

Debt consolidation involves using one larger loan to pay off multiple debts, leaving the individual in question with just one monthly repayment it is calculated that they can afford. Replacing numerous debts with a single loan at a competitive rate of interest can also significantly reduce the individual’s overall debt level and outgoings, however, consolidating debts with a secured loan is not without its risks, all of which should be discussed in full with an established broker before applying.

Taking out a secured loan to consolidate debts effectively means converting a series of unsecured debts into one larger secured debt. This immediately brings the benefits and risks associated with secured borrowing into the equation, such as the following:


  • A secured loan can often be provided at a significantly lower rate of interest, as they are considered lower-risk products on the part of the lender.
  • Taking out a secured loan provides the opportunity to repay the balance over 5, 10, 15 years or even longer, allowing for comprehensively affordable monthly repayments.
  • Specialist secured loans for debt consolidation do not adversely impact the credit history of the applicant.
  • Provided you have sufficient security (assets) available to cover the total sum of the loan, you have a strong possibility of success with your applicaton.


  • Secured debt consolidation loans are typically issued against the home of the applicant, which may subsequently be repossessed if the loan is not repaid as agreed.
  • Variable interest rates are occasionally used on longer-term secured loans, which means monthly outgoing could increase (or decrease) in the future.
  • You cannot qualify for a secured debt consolidation loan of any kind if you do not have qualifying assets to secure the loan against.

How Can I Ensure I Get the Best Possible Deal?

Before applying for a secured debt consolidation loan, it is essential to ask yourself three important questions:

  1. Will the loan clear all of my debts and therefore put me in a much better financial position?
  2. Can I comfortably afford the repayments on the loan without any issues?
  3. Am I sure I will be able to cope if the interest rate on my loan increases in the future?

If after considering the pros and cons you decide to go ahead with a debt consolidation loan application, ensuring you get the best possible deal means working with an established independent broker.

Your broker will conduct a whole-of-market comparison on your behalf, incorporating countless specialist lenders that do not work directly with the public. This comparison will be provided free of charge, with no fees and commissions payable for the services offered.

For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.

Coronavirus Other Finance News

How is a Third National Lockdown Affecting the UK Property Market?

Where the UK’s property market is concerned, there is one major difference between the current lockdown and the lockdown of spring 2020.

While there may be major complications with property transactions now, the market is still technically open.

This is much different than last year’s initial lockdown, where the market in its entirety was completely closed.

Property transactions can still take place under current lockdown regulations, but the whole process calls for a more strategic and well-planned approach.

Can I Still Buy or Sell a Property?

Not only is buying and selling homes still a possibility under current lockdown restrictions, but there has also been a major surge in real estate activity over the past couple of months. This is largely due to the impending deadline of the Stamp Duty holiday which ends March 31st.

With buyers across the country scrambling to ensure they benefit from the potentially huge discounts available, the real estate market remains a hive of activity – even during these difficult times.

From valuations, to visits and meetings with solicitors and estate agents, the industry is indeed open for business, however, to say that it is ‘business as usual’ would be inaccurate, as there are major differences in how activities are taking place compared to the usual norms.

What Kinds of Restrictions do I Need to Be Aware of?

Primarily, restrictions affecting the real estate industry concerned the additional precautions that need to be taken when conducting the usual inspections, meetings and surveys. Examples of which include:

  • At all times, all participants taking part in property inspections must stay 2m away from each other.
  • Though not a formal legal requirement, experts insist that wearing masks should be considered mandatory during all meetings and inspections for all participants.
  • The current occupants of the property should (if possible) vacate the home a minimum of 30 minutes before the arrival of those visiting it.
  • Keeping all windows and doors open to reduce the risk of virus transmission through the circulation of fresh air.
  • All surfaces and door handles should be thoroughly cleaned and disinfected before and after every visit to reduce the risk of surface transmission.
  • Under no circumstances should meetings or visits be conducted if any participant or current occupants of the property display signs or symptoms of COVID-19.
  • Real estate agents, surveyors and others who are conducting meetings and surveys must take responsibility for reminding both visitors and occupants to follow all applicable social distancing guidelines.

These and other restrictions are likely to apply for the foreseeable future, even after current lockdown restrictions are eased.

Will the Restrictions Delay the Purchase Process?

It is perfectly possible that the current complications that the sector is facing could result in delays in completing property sales and purchases and it is advisable to allow additional time and to factor potential delays into your plans.

For more information on any of the above or to discuss property transactions under lockdown restrictions in more detail, contact a member of the team at UK Property Finance today.


Equity Release Holds Steady in 2020 despite Lockdown Complications

The economic impact of the COVID-19 crisis and three national lockdowns is likely to be felt for some time, however, research suggests that the UK’s equity release market coped surprisingly well throughout the turbulence of 2020.

New data from one of the country’s leading equity release specialists – suggests that the total value of the UK’s equity release market decreased by just 4% last year. In total, homeowners released a combined £3.4 billion in equity throughout the course of the year, with general equity release activity levels having remained very similar to the year before.

Specifically, £3.456 billion in combined property wealth was released last year – a slight decrease from the £3.595 billion recorded the year before.

Impressive Q4 Performance

Even more impressive than the sector’s surprisingly strong performance throughout the year was its prosperity throughout the closing three months of 2020. In Q4, total equity release activity was a total of £1.1 billion, with approximately 9,930 applicants successfully releasing equity in their homes.

One of the biggest drivers of elevated equity release activity throughout the year was the availability of some of very low interest rates. In the fourth quarter of 2019, the average interest rate payable on equity release product was 3.15%. During the same period in 2020, average interest rates had fallen to just 2.8%.

LTV on equity release products held at 26% across all types of equity release schemes throughout the year.

Shifting Priorities

Borrowers’ reasons for equity release also shifted throughout 2020. One of the biggest trends among equity release customers was for the purpose of refinancing or debt consolidation, while many intended to use the funds to support other family members during difficult times.

Many borrowers also indicated their intention to lend or gift the funds to family members for use as deposits on homes, in order to take advantage of the Stamp Duty holiday before it expires at the end of March.

Speaking on behalf of Key Retirements, CEO Will Hale outlined his vision of a strong future for the sector over the coming months and years.

“While 2020 is down on 2019, the fact that we have only seen a 4.4% drop in the value of equity released suggests that customer demand remains strong supported by the efforts of advisers, lenders and other service providers in this challenging year,” he said.

“Discretionary spending has fallen as equity release increasingly looks to support clients’ aspirations to help their families and make their finances as resilient as possible by refinancing debt. While most people aspire to reach retirement without any mortgage or unsecured debt, this is certainly not possible for everyone and equity release can help to take the pressure of these families while still providing avenues for repayment,”

“With the end to the stamp duty holiday on the horizon, it is also not entirely surprising to see that many older homeowners have taken the opportunity to pass wealth down the generations and help children or grandchildren onto the property ladder. While this may change as we head in 2021 and the holiday comes to an end, I suspect the desire to help families will remain a strong driver of this market in years to come.”


Interest Only vs Repayment Mortgage: Which is Best?

The vast majority of homebuyers in the United Kingdom purchase properties using one of two primary mortgage types:

  • Interest only mortgages
  • Repayment mortgages

Both options have their own unique advantages and disadvantages, but which of the two is more suitable for your preferences and your financial situation?

Repayment Mortgages: An Overview

A repayment mortgage is when the monthly repayments you make gradually clear both the balance of the mortgage and the interest payable.

When the mortgage is arranged, the total interest cost is added to the initial mortgage value – the combined sum of which is then divided by the number of months over which the mortgage will be repaid.

At the end of the agreed repayment period – usually 15 to 30 years – your mortgage is paid off in full and you own your home outright.

Interest Only Mortgages: An Overview

An increasingly popular option for many homebuyers, interest-only mortgages differ in that your monthly repayments only contribute to the interest you owe on the mortgage.

You gradually pay off the interest on your mortgage on a monthly basis, but not the actual mortgage balance itself. This means that at the end of the repayment term, you still owe the lender the full mortgage amount, minus the interest you have repaid.

Subsequently, the borrower needs to repay the mortgage balance to take ownership of their home, which is usually accomplished by one of the following methods:

  • Paying off the remaining balance using a different type of mortgage or loan, repaid gradually on a monthly basis
  • Using a lump sum to pay off the mortgage balance outright, perhaps with a pension withdrawal or inheritance

After repaying the interest on an interest online mortgage, it is also possible to sell your home and repay the lender using the funds raised.

Which is the More Cost-Effective Option?

Cost-effectiveness varies when considering the two options from a short or long-term perspective. If you were to take out a £160,000 mortgage at an interest rate of 4%, this is how much you would subsequently repay:

  • Repayment mortgage – £92,316 Interest – Total Cost £252,316
  • Interest only mortgage – £166,175 Interest – Total Cost £326,175

This in turn means that over the course of the loan in its entirety, a repayment mortgage will almost always work out more cost-effective. However, interest-only mortgages bring the benefits of significantly lower initial monthly repayments.

Using the example listed above, monthly repayments on the same £160,000 mortgage would be as follows:

  • Interest only mortgage – £533.92 per month
  • Repayment mortgage – £841.05 per month

In both instances, various additional borrowing costs such as arrangement fees, valuation fees, legal fees and completion fees also need to be factored in.

Before choosing whether to apply for an interest-only remortgage or a traditional repayment mortgage, it is important to discuss all options available with an independent broker and compare the market in full.

Repayment Mortgages: Key Advantages

The biggest points of appeal with a competitive repayment mortgage are as follows:

  • Significantly lower overall interest payable on the loan, as your total outstanding mortgage balance is reduced with every payment. This can result in major term savings over the life of the loan.
  • More competitive rates of interest are usually available on repayment mortgages, though this varies from one lender to the next and is dependent on conducting a full market comparison.
  • You take ownership of your property upon completing repayment of your mortgage, with no additional monthly repayments or lump sum payments to be made.

As outlined above, the primary disadvantage of a repayment mortgage is (often) significantly higher monthly repayments. It is therefore essential to ensure you can comfortably afford the agreed repayments for the duration of the loan term.

In addition, very little is repaid on the balance of a traditional repayment mortgage over the first few years and it is not always possible to overpay without facing steep penalties or additional fees.

Interest-Only Mortgages: Key Advantages

A competitive interest-only mortgage can also be beneficial in many ways, including but not limited to the following:

  • Much lower monthly repayments as you are simply repaying the interest payable on the loan – not the outstanding mortgage balance.
  • The opportunity to turn a profit if you sell your home for a high price after repaying the interest, in order to repay the lender and retain any profits generated.
  • Greater flexibility and financial security due to the less monthly outgoings, enabling you to allocate more of your income to other expenses.

The flexibility of an interest-only mortgage can be appealing, but interest-only loans are almost always significantly more expensive long-term. They can also be much more complex to manage, as you also need to decide on a means by which to repay the mortgage balance in full.

Should I Choose a Repayment Mortgage or Interest-Only?

Interest-only mortgages are only suitable for certain borrowers in very specific situations. If you cannot guarantee that you will have access to the funds needed to repay your mortgage after the initial interest repayment period, it is inadvisable to apply for an interest-only mortgage.

This is something that should be discussed in detail with an independent broker, prior to your application going ahead. After which, a detailed market comparison can be performed to ensure you get the best possible deal from a reputable lender.

What is a Part and Part Mortgage?

A part and part mortgage is a specialist type of home loan, wherein the monthly repayments you make contribute to both the interest payable and the mortgage balance. It is therefore similar in nature to a traditional mortgage, though you will still be left with an outstanding sum to pay at the end of the term to take ownership of your home.

Suitability for part and part mortgages and the long-term cost effectiveness of such loans varies significantly from one agreement and applicant to the next. Your broker will help you build an understanding of the potential pros and cons of this specialist type of home loan, before applying, you could even use our UK mortgage calculator to find our costs more accurately.

Is it Possible to Switch from Interest-Only to Repayment?

Many interest-only mortgage payers make the decision to switch to a repayment mortgage towards the end of the loan term, in order to allow them to repay the outstanding balance on their home on a monthly basis. However, doing so will result in a significant monthly repayment increase, as repayment mortgages attach higher monthly repayments than interest only.

It is also possible to switch the other way, in order to reduce monthly repayments by repaying only the interest on your mortgage. Though in doing so, the total amount you will repay long-term will increase significantly.

If you would like to discuss any of the above in more detail, we would be happy to provide you with an obligation-free consultation at your convenience. Call UK Property Finance anytime, or email us with your request and we will get back to you as soon as possible.

Other Finance News

End to Complex Leasehold Costs Promised by the Government

The British government has announced plans to overhaul England’s controversial and highly criticised leasehold system, in order to eliminate the excessive costs homeowners often face when extending a lease.

In particular, owners of former council properties who purchased their homes in the 1980s are likely to benefit from the planned reforms, which according to estimates could save up to four million homeowners across the UK thousands of pounds.

But while the proposed protections for leaseholders have been welcomed by many, some experts have suggested that those who have already paid excessive fees and charges over the years should be provided with a refund and appropriate compensation.

Amendments to the “Fleecehold” System

Many properties across the United Kingdom continue to be sold on a leasehold basis, wherein a lease on the property is granted by the freeholder for a specific period of time. This period of time usually ranges from 99 years to 125 years but can be as long as 999 years.

This therefore means that when the property is purchased on a leasehold basis, the buyer does not in fact gain outright ownership of it. They simply purchase the entitlement to occupy the property for a set period of time. After which, they have the option of applying to their freeholder for a lease extension, which they are expected to pay for.

One of the factors used to calculate these extension fees is the ‘marriage value’ of the property, which refers to the property value’s increase when the lease extension is granted. Following recommendations by the Law Commission, this marriage value fee system is set to be abolished, so as to improve transparency and affordability for those applying for lease extensions.

“Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive,” commented Housing Secretary Robert Jenrick.

The announcement of the new legislation was welcomed in general by the Leasehold Knowledge Partnership, though some have already said that the new protections do not go far enough and further clarification should be provided on how the new legislation will benefit all leasehold property owners.

Zero Ground Rent

One important aspect of the policy overhaul will result in leaseholders being able to apply for lease extensions of 990 years, so as to ensure they do not run into major difficulties when selling their properties.

Where a home is fast approaching the end of its lease, it can be extremely difficult to sell as the subsequent buyer would be forced to pay the appropriate costs to extend the lease.

Developers remain adamant that the leasehold system in its current form is fair and effective for most people, but the government has again stated that zero ground rent should apply with all new leasehold properties.

“While we welcome the government’s initiative to reduce ground rents to zero for all new retirement properties, we would argue this needs to be extended to all retirement properties to create a level playing field,” said Propertymark chief policy adviser Mark Hayward.

Other Finance News

Extension on Eviction Bans Confirmed, But What Next?

As part of the UK government’s Coronavirus relief efforts, an extension on bailiff-enforced eviction prohibition was recently confirmed.

Having previously been due to expire on January 11, communities secretary Robert Jenrick confirmed that the same legislation would now cover renters until February 21. The extension was announced to safeguard private renters encountering financial issues due to COVID-19, who may be unable to pay their rent through no direct fault of their own.

The most egregious cases can still be brought forward by landlords, such as in the case of willful property damage/destruction or withholding rent with no justification for doing so. However, the eviction of tenants due to their inability to pay their rent as a direct result of the Coronavirus crisis will be prohibited until late February.

Mr. Jenrick spoke with confidence about the extension, insisting that it would help thousands of the “most vulnerable” renters in the UK avoid eviction.

The ban was initially enforced in September, at which point the government stated that the rules and the deadline would continuously be revisited to ensure the nation’s private tenants are protected throughout the crisis.

An Uncertain Future for Private Renters

Under the current legislation, private landlords are prohibited from evicting tenants without first providing them with a minimum six-month notice period. Speaking on behalf of Citizens Advice, acting chief executive Alistair Cromwell welcomed the decision by the government to extend the deadline of the prohibition policy.

“The government has made the right decision to extend this protection,” he said.

“Renters who are struggling with arrears shouldn’t face the prospect of losing the roof over their head when everyone is being asked to stay at home.”

However, Mr. Cromwell also highlighted the fact that while the extension may offer a temporary lifeline for some, it does nothing to address the potential areas that will “continue to hang over” those affected long-term.

While the eviction ban extension enables struggling tenants to take extended payment breaks due to COVID-related financial hardship, it does nothing to address their escalating levels of debt.

This therefore means that when the eviction ban comes to an end, tenants across the country could face insurmountable debt with no additional financial support having yet been outlined by the government.

“For tenants, accruing arrears cannot be ignored,” commented Oli Sherlock, head of insurance at lettings platform Goodlord.

“These debts will eventually catch-up with them and the small proportion who aren’t engaging proactively with their landlords will eventually find themselves facing county court judgements, which can have a long-term impact on their credit ratings.”

National Residential Landlords Association chief executive, Ben Beadle, echoed Mr. Sherlock’s sentiments, calling on the government to implement measures to support private renters long-term, not just for the next few weeks or months.

“It means tenants’ debts will continue to mount to the point where they have no hope of paying them off leading eventually to them having to leave their home,” he said.

“The objective should be to sustain tenancies in the long term and not just the short term.”

Mortgages Other Finance News

UK House Prices Now 900% the Average Annual Salary

In what is likely to come as a blow for first-time buyers and a boom for existing homeowners, property prices in the UK are a full 5.4% up over the same period last year. This now puts the average market price for a home in the UK at a record high of £245,000, according to the latest figures from the Office for National Statistics (ONS).

Published this week, the data suggests the most rapid year-on-year growth for average house prices in four years. The figure also provides further confirmation that the UK public’s post-lockdown appetite for sales and purchases remains peaked, irrespective of ongoing economic uncertainty.

The temporary stamp duty holiday and additional land tax cuts across the UK have also been credited with fuelling the market’s impressive return to strength.

Additional Challenges for Aspiring Homeowners

Real estate market prosperity may be beneficial for the economy as a whole, though continues to cause a serious headache for many first-time buyers. A separate report published by the ONS detailing average weekly earnings demonstrated how the vast majority of workers in the UK are being almost entirely priced out of the market.

According to the ONS, the average annual salary in the UK is £26,624 – or £512 per week. In which case, the average property price in the UK is no more than 900% higher than the average employee earns in a year.

Despite assurances, the Bank of England announced that a review of mortgage lending rules would make it easier for first-time buyers to obtain a mortgage, the figures above paint an entirely different picture. The vast majority of major banks and lenders in the UK cap their mortgages at five-times the annual salary of the applicant – nowhere near enough to cover the costs of the average UK home.

First-time buyers could therefore find themselves only able to qualify for around 50% of the funds needed to purchase a property, resulting in impossibly elevated down payment requirements to cover the rest. To find out costs more accurately use our Mortgage calculator UK.

Loan Criteria Relaxation and Maximum Loan Adjustments

The Bank of England confirmed this week that it was considering an alteration to existing rules that place limitations on how much people can borrow as a multiple of their annual salary. Nevertheless, the likelihood of this being increased to nine times or even ten times a person’s average salary by any major lender is more or less zero.

Commenting on behalf of Andrews Property Group, chief executive David Westgate predicted a continuation of highly elevated property prices for some time to come.

“For now, house prices are being driven upwards by the stamp duty holiday but rising unemployment and the small matter of a potentially messy No-Deal Brexit will almost certainly see average values cool off during 2021,” he said.

“Rising redundancies and reduced mortgage availability at higher loan to values will invariably hit demand but the feel-good factor generated by a working vaccine, coupled with the continued lack of supply, could prevent the steep drop in prices some are expecting.”


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