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Overhaul of Planning Laws Abandoned by Ministers Following Criticisms

Reports from Westminster suggest that an overhaul of planning laws to speed up the construction of new homes in England is set to be abandoned by the government. In the face of strong criticism from a number of influential figures, the “Project Speed” reforms could either be scaled down or reversed entirely.

The proposed planning laws were outlined in the Queen’s speech earlier this year, as part of the government’s pledge to hit a new target of 300,000 homes built annually in England. With other measures to go ahead, they would speed up and simplify the system for obtaining planning permission for new developments, with the potential to increase the number of homes being built by more than 30%.

Campaigners and critics hit back at the controversial proposals, which they said would result in the “suburbanisation” of important green areas of the country. All while failing to make an impact on the UK’s affordable housing shortage, which is already making it impossible for most private renters to get on the housing ladder.

A Victory for Common Sense

While the government is yet to confirm the rumours, speculation is rife that the proposals will be abandoned due to strong resistance from MPs and voters in the South of England. If the proposals were to go ahead, they would prevent homeowners from formally objecting to planning applications, while giving councils mandatory house building targets.

Speaking on behalf of CPRE, deputy chief executive Tom Fyans called the expected reversal “a victory for commonsense”, stating that all indications suggest “some of the most damaging proposals of what was a top-down developers’ charter have been rightly binned” and dubbed the move a “victory for common sense”.

“The government must not shy away from overhauling a tired planning system to make it fit for the multiple challenges of the 21st century,” he continued.

“Local communities need a stronger right to be heard in local decisions; brownfield sites must automatically be developed first to help protect local green spaces and our green belts in the fight against climate change, and young people and key workers desperately need more funding for rural affordable homes.”

Refusing to confirm or refute the rumours, the Ministry of Housing, Communities and Local Government simply stated that further information will be published “in due course”.

Concerns for Green Space Development

When the government first announced the initiative, it was stated that the overhaul would lead to “simpler, faster procedures for producing local development plans, approving major schemes, assessing environmental impacts and negotiating affordable housing and infrastructure contributions”.

However, critics quickly hit back by labelling the potential reforms an “utter disaster” in the making, warning that the impact on green spaces around England could be devastating.

“We will see a lot more houses on greenfield land and in areas of outstanding natural beauty. The people in the north of England need these green spaces for their wellbeing,” said Debra McConnell, CPRE chair.

According to Shelter, there are now more than 1.1 million people on waiting lists for social housing in England alone.

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Mortgages

Bank Statements Not Mandatory for Some Lenders

One of the most important forms of financial evidence required for a mortgage application has been the bank statement; as part of the application process it has been a standard requirement to provide at least three months’ worth of bank statements for the lender to scrutinise.

Bank statements are inspected and analysed by lenders to get an idea of an applicant’s outgoings and general financial activities, though experts have often argued that this is technically inconsequential as what matters most is how much they earn and their creditworthiness.

Having apparently seen sense after so many years, several of the UK’s biggest lenders have now said they no longer need to see bank statements to support mortgage applications. Santander, Halifax and Virgin Money are instead placing heavy emphasis on applicants’ credit scores along with formal proof of their salary and employment status.

A move that is likely to come as welcome news to many, who despite being in comfortable financial positions may not be able to produce the most attractive bank statements.

Priorities Differ for Bridging Loan Specialists

Many of the UK’s most prominent specialist lenders have entirely different priorities. When considering loan applications, bridging finance specialists are likewise uninterested in bank statements.

Though where bridging finance is concerned, the applicant’s credit score is also unimportant, as is their ability to provide proof of income.

With bridging finance and many similar forms of commercial finance, what matters most to the lender is the applicant’s exit strategy. This means their ability to provide a full disclosure of how and when they intend to repay the loan, verifying that the lender will get back their capital in full and on time.

This can make bridging finance a particularly useful facility for applicants with a poor credit history, or the inability to provide formal proof of income at the time. Issues that often prevent private applicants and business borrowers accessing the financial support they need despite their strong financial position and capacity to repay the loan in a timely manner.

The Benefits of Independent Broker Support

Working with an independent broker comes highly recommended to anyone who may struggle to meet the standard qualification criteria of any lender.  Irrespective of financial history, credit score, proof of income and so on, there are specialist financial products available to suit all requirements.

Many of the UK’s leading specialist lenders offer their products and services exclusively via broker introductions. These are not available on the High Street, nor are they offered directly to the applicant.

Consulting with a broker can help you gain a better understanding of the options available, while ensuring you get the best possible deal on your chosen loan.

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

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Mortgages

Mortgage Processing Times Pushed to 16 weeks

As demand for desirable properties continues to outstrip supply in all regions of the UK, mortgage processing times have been increasing for several months. According to the latest figures from Propertymark, a leading UK estate agency body the average property transaction completion times has now reached between 13 and 16 weeks.

Commenting on the growing bottleneck the company’s CEO, Nathan Emerson said that current mortgage processing times were exponentially longer than the typical 6 to 8 week norm. He also attributed much of the backlog to the rush that preceded the partial withdrawal of the stamp duty holiday, which saw lenders and brokers inundated with hurried mortgage applications.

Reports suggest that many prospective buyers who wanted to take advantage of the temporary stamp duty suspension were unable to do so, due to slow mortgage processing times. Even those who believed they were getting their applications under way at an early juncture found there was insufficient time to complete the process before the offer was withdrawn.

Bridging Loans Prove Popular to Prevent Delays

The more difficult it becomes to arrange a mortgage quickly and efficiently on the High Street, the more attention the UK’s specialist lending sector is attracting. Bridging finance in particular is proving a popular option among movers, looking to ‘bridge’ the gap between the purchase of their new property and the sale of their current home.

With bridging finance, it is possible to reduce the lengthy processing time of a typical mortgage to less than two weeks. In some instances, the funds provided by way of a bridging loan can be accessed within a matter of days. For time-critical property purchases and investments, bridging loans can be uniquely flexible and accessible.

Put into context, a homeowner looking to relocate may find their dream home at an unbeatable price in the perfect location. However, their current home has only recently been put on the market and a buyer is yet to be found.

bridging loan, secured against their current home, could provide them with the funds they need to pay for their new home outright. After which, the bridging loan is repaid several weeks/months later, just as soon as their previous property is sold.

Bridging finance attaches a monthly rate of interest, often lower than 0.5%, along with minimal borrowing costs where the balance is repaid promptly.

Assessing Suitability for Bridging Finance

Prior to applying for a bridging loan for any purpose, it is advisable to speak to an independent broker to discuss all alternative options available. Bridging finance is offered exclusively with short-term applications in mind and should never be seen as a viable alternative to a conventional long-term mortgage.

As a way to bypass mortgage processing times and ensure your dream home does not slip through your fingers, bridging finance can be an unbeatable facility.

For more information on bridging loans or to discuss bridging finance qualification criteria in more detail, contact a member of the team at UK Property Finance today.

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Mortgages Other Finance News

UK Adults Not Planning Ahead For Future Care Costs

A growing proportion of UK pensioners may have no choice but to resort to their state pension income to cover the costs of their essential care. Fears are growing of a “concerning number” of over-60s who are looking into the idea of using their state pension to pay for their long-term care, or are already doing so.

The findings of a study published this week by Canada Life found that at least six million adults over the age of 60 would like to use their state pension to cover their care costs. This equates to approximately 30% of all UK adults aged 60 and over who said they would use their state pension income; just under £180 pounds per week to pay for their care.

This represents a 16% increase from last year, when the same question was asked by Canada Life to a sample group of the same size.

Care costs have become a major concern for millions of elderly people and their families, with average care facility costs now falling between £600 and £800 per week in the UK. This would subsequently mean that those counting on their state pensions would need to come up with an additional £400 to £600 weekly payment to supplement their retirement income and cover the costs of their care.

The report published by Canada Life suggested that poor financial planning and unpredictability are the primary causes of the growing deficit.

No Long-Term Care Plans

Canada Life’s study also suggests that a worrying proportion of over-60s have not planned financially for their long-term care needs. As many as 40% said they did not know how they would pay for long-term care, if and when it became necessary.

More over-60s than ever before are also turning to their cash savings to cover their care costs and as many as 35% saying they would use it to fund their essential care requirements.

More worryingly, 17% of UK adults said that they have made no plans whatsoever for such a stage in their life. In addition, 15% said they expect the government to cover the costs of their care requirements in later life.

Consequently, equity release has become a popular choice for elderly homeowners looking to generate significant sums of money, in order to fund their essential care.

Around 8% said in 2021 that they would release equity in their home to help cover the costs of their care; up significantly from the five per cent who said the same last year.

One-sixth of Britons (17%) say they have not considered this far ahead, and 15% expect the government to cover the price of their care needs.

According to the research, equity release is becoming a more popular method of paying for care.

In 2020, 8% of those over the age of 60 said they would transfer equity from their house to support care expenditures, up from 5% in 2020.

The data also show a greater awareness and comprehension of equity release and its applications; only 4% of respondents indicated they had no idea what equity release was.

The findings were discussed by Alice Watson, Head of Marketing, Insurance, and Canada Life.

“As a society, we are still grappling with the problem of long-term care and who pays for it,” said Alice Watson, head of marketing and insurance at Canada Life.

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Mortgages Other Finance News

Which Are the Best Places in the UK for Property Investments?

Even today, with demand for desirable properties at an all-time high, there is no such thing as a safe haven for landlords. Nevertheless, research conducted by Aviva suggests that as much as 10% of the adult population in the UK could be planning an investment property purchase over the next 12 months.

Anyone looking to get into the buy-to-let market will understandably have a robust and reliable ROI as their top priority. Accelerating house prices and tax hikes are making it more difficult than ever to turn a profit as a landlord in the UK.

Nevertheless, those who invest in the right kind of property in the right place have every opportunity to generate strong and reliable annual profits. According to the latest figures published by Coulters Property, there are some corners of the UK that are offering BTL investors average returns in the region of 3%, adding up to an annual profit of over £6,000 in some areas.

According to Coulters Property, these are currently the 10 best places in the UK to invest in a BTL property, on the basis of potential annual profits generated:

RankCityProfits Per Year (£)% ROI 
1Preston£5,2562.98%
2Coventry£6,0332.74%
3Glasgow£4,8362.67%
4Swansea£4,4782.54%
5Dundee£3,9652.47%
6Manchester£5,0152.14%
7Paisley£2,7462.12%
8Leeds£4,3391.90%
9York£5,4051.85%
10Stoke-on-Trent£2,4811.73%

Preston came out as the surprise winner in the rankings, where average property prices are currently hovering around £176,378. With average monthly rents coming out at £981 per calendar month, this translates to a healthy £438 profit per month and £5,256 per year.

Cities in Scotland performed particularly well in the rankings, with the likes of Paisley, Dundee and Glasgow all generating healthy returns on BTL investments.

Notable by its absence is London, which has traditionally been seen as the Holy Grail for investors looking to generate the biggest possible profits on their BTL investments. However, as property prices across London continue to climb to astronomic all-time highs, it is becoming increasingly difficult for landlords to generate viable profits – even where monthly rents are equally enormous.

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Mortgages Other Finance News

Responsibility for Reaching Net-Zero Targets Falls with the Private Sector

A report published by the Climate Change Committee in June set out a series of urgent climate change risks while outlining opportunities for their mitigation.  The report concluded that policy initiatives currently in place will achieve no more than 20% of required reductions in emissions by 2050.

Consequently, there are those who now believe it is the responsibility of the people operating within the private sector to front the transition to sustainability and ultimately achieve net-zero targets.

“The past year has seen a host of pledges; promises and policies emerge to incentivise the transition to the green economy. A step in the right direction on paper, but the practical implication of each is difficult to measure,” writes Ding Li, Senior Strategy Consultant at Longevity Partners.

“There are a number of competing guidelines and reporting frameworks for reaching net-zero carbon in the real estate sector, each with differing methodologies, and timeframes, making it difficult to work out what these commitments mean,”

“Organisations should proactively audit their operations to set their own carbon reduction targets. It is becoming increasingly straightforward for businesses to begin their journey to net-zero. Adopting best practice ESG will always serve as an advantage in the long-term, as regulation and legislation will catch up regardless.”

The Role of the Real Estate Sector

It is estimated that at least 30% of all CO2 emissions generated annually originate from the built environment. A report from the CCC suggests that in the UK, 17% of all greenhouse gases are produced by buildings. In order for net-zero to be reached by 2050, UN Environment Programme has stated that building emissions will need to be reduced by at least 50% by the end of the current decade.

“Policy-makers and legislation will demand this sooner or later regardless of business practices, therefore it is strategic to pivot towards net-zero pre-emptively,” writes Ding Li.

“The results of net-zero measures equally generate significant financial returns in the long term. Property developers managing environmental and regulatory risk will drive greater value as they are taking a comprehensive and strategic approach to their portfolios,”

“Indeed, 88% of investors believe companies that prioritise ESG initiatives represent better long-term return prospects. And as a result, assets in sustainable investment products in Europe are forecast to outnumber conventional funds by 2025.”

Sustainability a Priority for Most

A poll conducted by JLL on 1,000 senior executive leaders worldwide found that sustainability is one of their top priorities going forwards. A further 83% stated that they were looking into ways to innovate and accelerate their sustainability strategies, having acknowledged real estate sustainability as a key priority.

Just 6% said that they currently saw themselves as ‘leaders’ in the field of monitoring and measuring the environmental impact of their properties.

“This decade is seen as the tipping point for climate change. With the built environment responsible for nearly 40% of global carbon emissions, reducing the environmental impact of real estate is a key priority for Investors and corporate occupiers,” writes JLL.

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Mortgages Other Finance News

UK Property Finance Completes £2.25m Bridging Loan

A client approached UK Property Finance seeking a bridging loan of £2.25 million, to cover the purchase cost of investment properties, carry out refurbishments and later sell on the developed properties for a profit.

The client wanted to take funds out of his unencumbered buy to let London property, although the tenants of the property had COVID. The client needed to move this forward quickly, therefore we applied with Hope Capital, who agreed to carry out a drive by valuation.

In order to meet the clients deadline it was paramount that all parties worked together to answer all points quickly and efficiently, this was completed by members of staff at UK Property Finance, Hope Capital and the lenders legal team, Freeths.

Swift Turnaround

Laura Carr, Head of Underwriting at Hope Capital, commented: “It’s always a pleasure working with our friends at UK Property Finance and Freeths. Swift and transparent communication was key in ensuring we could get this deal across the line in time. A huge thank you to Lisa and Sian at UK Property Finance, Luke at Freeths and everyone else involved, who helped us to pull this case off so quickly and efficiently.”

Sian Taylor, Processing Executive at UK Property Finance, commented: “Working alongside the team at Hope Capital was a joy, they were very efficient and worked quickly to resolve any issues that arose during the process. The client wanted fast finance and that is exactly what was delivered by the team at Hope Capital and everyone else involved. The smooth process delivered by Hope Capital was a relief to the client and for the processing team at UK Property Finance.”

If you require property finance through a bridging loan, contact the team at UK Property Finance for a quick and efficient solution.

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Mortgages Other Finance News

Wayhome Launches New 5% Deposit Partial Home Ownership Scheme

First-time buyers looking to get on to the property ladder without a conventional mortgage now have the option of an innovative new scheme from Wayhome. Albeit, with a significant stamp duty catch and major restrictions on subsequent home improvements.

The new scheme will enable first-time buyers to purchase a property with a 5% deposit, without having to obtain a mortgage. Announcing the initiative, Wayhome said it will form partnerships with home buyers on their purchases, with the buyer responsible for paying a deposit of 5% to 30% and the company covering the rest of the costs.

After which, the buyer pays a monthly ‘rent’ to Wayhome on the basis of the outstanding amount, rising annually in accordance with inflation. The buyer will also have the opportunity to pay lump sums to Wayhome to increase the share of the property they own over time.

It is essentially a slightly new take on the classic rent-to-buy model, where the ‘buyer’ makes a continuous series of payments to increase their ownership stake in the property. But with 5% deposit mortgages now available on the High Street, under what circumstances would a rent-to-buy agreement with Wayhome be preferable?

A Case of Qualification Criteria and Loan Size

Quizzed on the benefits of the scheme, Nigel Purves, chief executive of Wayhome says applicants will be able to borrow much more than would be possible with a conventional lender.

With most High Street loans, first-time buyers are restricted to no more than around 4.5 times their annual income. With the Wayhome scheme, they will have the opportunity to move into homes valued at up to 8 times their annual income.

This could subsequently give first-timers the buying power to move into much more desirable homes, rather than settling for basic ‘starter homes’ on the basis of affordability.

According to Wayhome, properties eligible under the scheme will be priced between £200,000 and £500,000, in a guaranteed good state of repair and will require no major building works or alterations. They will also be located exclusively in desirable areas in 41 locations across the country.

“If you can get the size of home you want in the location you want with a mortgage of four times your income, we tell people that – obviously they should take advice – but that is something they should probably do if they can,” commented Nigel Purves.

“The problem is that most of our customers are living in areas where properties are six, seven times’ income or more, and the only way to bridge that gap is by saving for decades or having family members able to help you, which of course most people don’t have.”

Terms and Conditions Apply

As for the catch, various restrictions will be placed on those purchasing properties under the Wayhome scheme. For example, major renovations and structural adjustments to properties will not be permitted, such as putting in a new kitchen or building a conservatory.

In addition, buyers will face top-band stamp duty liability – the same as if they were purchasing a second home. In addition, Wayhome will only allow its customers to build a maximum 40% stake in the property they live in.

“We expect there will be some people who see it as a way to access a property now that they would only have been able to get with a mortgage in ten years’ time: they will chip away at the equity and their salary may increase, and eventually they will be able to get a conventional mortgage and buy us out,” Purves explains.

“Others we think will find during that time period that they might want to change location, they might want to move to somewhere less built-up, maybe where their income to value ratio is lower, and therefore they will ask us to buy their stake back off them and they will go and buy a home somewhere else.”

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Mortgages Other Finance News

Is it Possible to Cover Your University Costs as a Landlord?

It may appear a bizarre concept on the surface but student BTL mortgages do in exist, the idea being that with a ‘student mortgage’ you purchase a property with no down payment and earn money by renting it out to your friends.

Only because it is technically possible does not necessarily make it an appropriate pathway for most students; covering living costs is a real concern for most university attendees, but purchasing a property to rent out is not without its complexities.

An Interesting Proposition

Several small lenders have put together a range of innovative products aimed exclusively at students. Examples of which include Bath, Loughborough and Vernon building societies, all of which are providing students with the opportunity to buy a home with no deposit required.

Those taking advantage of the products will subsequently be able to rent space in their properties to other students in order to cover the mortgage payments.

‘Mortgages and students are not usually two things that you’d associate as a package,’ commented L&C Mortgages associate director, David Hollingworth.

‘Students are unlikely to have much if any income and therefore will always struggle to meet the primary requirement of a mortgage lender in demonstrating affordability to take on a mortgage,’

‘They also aren’t likely to have a deposit to use a buy-to-let mortgage, let alone the minimum income or home ownership that many lenders would expect,’

‘These issues have seen some lenders offering students a chance to buy a property rather than rent – but with the help of their parents.’

How the Scheme Works

Eligible applicants are offered a loan to purchase a property with an LTV of 100%, meaning no deposit is required. A guarantor is required to co-sign the mortgage agreement along with the student, typically a family member.

The funds can subsequently be used to purchase a property and rent out spare rooms to friends or other students. From which, monthly payments are collected to both cover the mortgage repayments and make money to cover the owner’s living costs.

‘’The mortgage amount is based on the rental income the property could yield from letting out of the spare rooms.

‘The guarantor will be on the mortgage deeds but not on the property deeds, and their income can be used to help the application,’ explains Chris Sykes, associate director and mortgage consultant at Private Finance.

‘If no deposit is available then the guarantor can either put money on account with the lender to the value of 20 per cent of the mortgage, or they can use their own home as security for the loan.’

An attractive initiative, but must be carefully considered from a longer-term perspective. The ongoing costs of homeownership are at an all-time high in the UK, as are those of running a BTL business of any kind.

Anyone interested in becoming a student landlord is therefore advised to seek independent broker support, in order to establish their suitability and determine whether it is something they can realistically afford.

Categories
Mortgages

Stamp Duty Changes Result in Major Decline in Mortgage Approvals

The partial withdrawal of the stamp duty holiday did little to quell the appetites of those still looking to make the best of the remaining incentive; for those who act fast, there is still the opportunity to make considerable savings by sidestepping stamp duty liability on property purchases that fall below the £250,000 threshold.

Prior to the end of June, the threshold had been held at a much higher £500,000 for several months.

The housing market maintained much of its momentum throughout July and August, in spite of predictions of a major slowdown. However, new figures from the Bank of England suggest that mortgage approvals have taken a tumble throughout July.

A total of 75,200 mortgages were approved in July, compared to the 80,300 approved in June, this indicates performance better than the same period last year, but significantly down on pre-pandemic norms.

Signs of a Return to Normality

House builders and estate agents experienced unprecedented demand throughout most of the pandemic, movers and first-time buyers alike were forced to rethink their priorities during lockdown, which combined with the temporary stamp duty holiday triggered frenzied competition for desirable homes.

As the countdown to the full withdrawal of the stamp duty incentive continues, experts are now expecting to see gradual signs of a return to normality.

“We’re likely to see more volatility in sales over the coming months as the tax break tapers further, but all-in-all this marks the beginning of a return to more normal housing market conditions,” commented Hina Bhudia, partner at Knight Frank Finance.

Others believe that the next couple of months at least could see the housing market’s momentum continue, if not step up somewhat while the opportunity remains.

“We may see another increase in activity in the next couple of months, as buyers line up transactions before the stamp duty threshold returns to its normal level of £125,000 from October,” said Martin Beck, senior economic advisor to the EY ITEM Club.

“But once the stamp duty holiday has ended, the EY ITEM Club expects demand to soften and that there will be a modest correction in prices.”

A Strong Future in Uncertain Times

Despite the fact that the economic outlook for the UK in general is anything but certain, the housing market is expected to continue performing with strength indefinitely.

“We suspect that home purchase demand will remain robust even after the stamp duty holiday ends altogether in October,” said Andrew Wishart, property economist at consultancy Capital Economics.

“Web searches for the property portals Rightmove & Zoopla remain well above pre-virus levels.”

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