Author: Antony Antoniou

Accord Buy To Let is attempting to improve its service and make its mortgage products more widely accessible by amending its criteria and documentation.

The intermediary only subsidiary of Yorkshire Building Society will now accept a minimum income requirement of £25,000 per application, as opposed to at least one applicant requiring £25,000 minimum income. The move is designed to create greater flexibility for landlords.

In addition, the number of years’ evidence required from self-employed applicants has been dropped from three years to two years.

Chris Maggs, senior commercial manager at Accord Buy To Let, said: “We have reviewed our criteria to improve the service we provide to brokers. These changes will not only increase turnaround times, but will make our products more accessible to a broader range of landlords.

“These latest updates come at the end of a very exciting year for Accord Buy To Let. In the last 12 months we’ve made efficiencies to the application process by replacing signed declarations with a tick box to ensure we can keep our turnaround times as low as possible. We’ve also improved our proposition with the launch of an 80% LTV range, increased maximum age and term and introduced a new income and tax-based Income Cover Ratio (ICR) of 125%.

“Landlords have had a number of challenges to face over the last few years, and it’s likely for the short term at least there will be continued uncertainty, but we are constantly looking for ways we can support the sector and help more property owners grow their businesses.”

Accord Buy to Let recently made modest reductions to the cost of its 80% loan-to-value buy-to-let mortgage range.

The latest products for purchase and remortgage include two-year fixed rates at 3.31% with a £950 fee or 3.85% fee-free.

There is also a five-year fixed rate deal available at 3.63% with a £950 fee.

All mortgages come with a free valuation and £500 cashback or £250 cashback and free legal services for remortgage products.

Simon Garner, product manager at Accord Buy to Let, commented: “We know the present uncertainty in the market is impacting decisions, so following recent improvements to our criteria, we’re continually reviewing the range to offer landlords the most competitive rates.”

Thousands of landlords trapped in developer contracts with spiraling costs could be entitled to compensation, according to legal experts.

Around 100,000 homeowners across the UK, including many buy-to-let landlords, are estimated to be affected by onerous ground rents.

Britain has long had leasehold homes, but only in recent months has the ground rent scandal exploded.

A complete ban on new houses sold as leasehold is now being proposed by the government, while it also wants to reduce ground rents to zero.

In addition, the competition watchdog has now formally launched an investigation into the housing market over the mis-selling of leasehold properties.

Daniel Brumpton, partner and head of Nelsons’ professional negligence team, said: “The Competition and Markets Authority [CMA] has formally launched an investigation into the housing market over the misselling of leasehold properties, which will investigate permission fees, ground rents and other terms associated with leasehold properties.

“The competition watchdog will be consulting with developers, lenders and freeholders requesting information in relation to how leasehold agreements are drawn up, agree and subsequently maintained by the parties. The report will also consider the effects that ‘unfair’ terms have on leaseholders and have asked for people to share how they have affected their lives.

“Developers and freeholders could face legal action if the watchdog finds evidence of leasehold mis-selling.”

The East Midlands-based law firm Nelsons is prepped to take on compensation claims from property owners in the East Anglia, East Midlands, Yorkshire, North East and far North West regions.

Brumpton says that there is a lot landlords can do if they are caught in the ground rent trap.

He added: “There are currently four million leasehold properties in the UK, with around 100,000 of these being affected by onerous ground rents.

“We’re ready to help landlords who have found themselves unwillingly involved in the leasehold mis-selling scandal to bring a professional negligence claim against the conveyancing solicitor they instructed to help with the purchase of the property.

“If the solicitor failed to give you advice about the existence and implications of the onerous ground rent clause, we can assist you in suing for damages.

“Historically, ground rents have been low – no more than around £50 per year. However, in the last few years, housebuilders have started to increase ground rents to an initial charge of between £250 to £500 a year.”

Brumpton points out that some developers have also added clauses in the lease that allow them to review the ground rent periodically, for example, every five, 10 or 25 years. Typically, the review clause allows the freeholder to increase the ground rent at each review.

He continued: “In theory, a ground rent that doubles every 10 years doesn’t sound too bad. However, most leases are set for the long-term such as 999 years. If a ground rent of £250 per year doubles every 10 years, you can expect to pay £16,000 per year after 60 years. For many people, that’s simply unmanageable. This is also not something a landlord of a buy-to-let property could expect to pass on to tenants either.

“If you are a leasehold owner who purchased a new build property in the last 10 years, you should check your lease to see what it says about ground rent and what you can expect to pay.”

Despite the recent tax and regulatory changes, buy-to-let continues to look an attractive income investment at a time of low-interest rates and volatile stock markets, but which city ranks best for buy-to-let investment?

Aldermore’s new Buy-to-Let City Tracker, which analyses 25 cities across the UK to understand the best places for landlords to invest in, has found that Oxford narrowly ranks number one, ahead of Manchester.

The Buy-to-Let City Tracker comprises of five core indicators: average rent per room per month, short-term yield for a new buy-to-let purchase, average property price rise over the last 10 years, the proportion of vacant properties in the city and size of the private rental market.

The index uses a series of secondary data sources including the ONS, Census and other official housing statistics.

Oxford, which scored well on four out of five metrics, has one of the largest private sector markets of all 25 cities, with 28% of all residents in the city renting privately.

Oxford also offers above average rental ability, at an average of £596 per room per month, a low level of vacant properties, and security in investment with property prices having increased yearly by on average 4.8% the past decade.

The only sore spot is that short-term return through yield is one of the lowest on the list.

Seven of the top ten cities for landlords are in southern England. Both Bristol and Oxford fare particularly well for long term returns, with an average 4.8% increase in property prices. Brighton scores well for rent, yielding an average of £507 per room. The city also has one of the largest market sizes across the UK, with a staggering 28% of inhabitants privately renting.

Damian Thompson, director of mortgages at Aldermore, said: “Aldermore’s Buy to Let City Tracker shows there are still great short and long-term investment opportunities for landlords.

“The number of people renting in the UK has been rapidly growing, up 1.7 million in ten years, so private landlords are an increasingly central part of the housing market as supporting a robust and strong Private Rented Sector becomes more essential.

“The UK housing market has never been a singular thing, instead made up of multiple smaller markets with their own unique conditions and challenges. There have been numerous regulatory changes recently and persistent economic uncertainty but this affects every region differently.

“Going forward, landlords will need continual backing and advice from lenders and the wider industry so they can provide choice, diversity of tenure and quality properties for renters.”

The cost of the average deposit paid by renters has dropped to £1,299, new figures show.

The latest research from Hamilton Fraser’s deposit replacement scheme, Ome, reveals that in 2019 to date, existing tenants have collectively paid deposits worth £1.9bn.

But the amount paid for the average deposit is due to drop for the first time in five years, already down 3% from last year’s average of £1,336, although it is still 7% higher than in 2015.

So far in 2019, the number of new deposits being taken has dropped by 17% when compared to last year, while the total value of these deposits is also down 19% from some £611m to £496m.

Looking over the last five years, the number of new deposits being taken has fallen by 22%, while the total value is down 17% when compared to last year.

Matthew Hooker, co-founder of Ome, said: “We’ve seen a decline in the number and value of new deposits being taken over the last few years and a driving factor behind this is a change in our lifestyle choices to rent for longer, which reduces the number of deposits being taken and the total value as tenants opt to stay put in the same property.

“Although the average cost for the individual tenant has continued to climb due to increasing rents which form the basis of the deposit calculation, this year looks to be the first in a long time that we might actually see this cost drop.

“This has largely been driven by new legislation that has reduced the number of weeks rent an agent or landlord can charge for both a holding and tenancy deposit.”