|UK house prices hit 10-year low in May – November 6, 2020
British house prices were at a 10-year low in May, according to a survey by The Royal Institution of Chartered Surveyors (Rics), but there are signs that confidence is returning to the market after the government lifted its coronavirus lockdown for buyers and sellers in England. Rics said its headline house price balance slumped to -32% in May, its lowest since 2010, from -22% in April. But expectations for house prices in 12 months were less negative than a month earlier and new buyer enquiries recovered from a record low of -94% in April to -5% in May. Near-term sales expectations were now broadly neutral and the 12-month outlook improved, Rics said.
|Valuers share COVID-19 inspection requirements – November 5, 2020
Valuation and audit services provider, VAS Group, have canvassed 40 of their top valuers during lockdown who shared with them feedback on their minimum requirements for property inspections. The resultant list of criteria for inspections included building keys to be left separately with a two-meter exclusion zone maintained. Properties should be vacated, and people told in advance that a surveyor will be attending; doors should be left open with lights on and all communication conducted via phone or email. If anyone is unable or unwilling to abide by these, it would result in the cancellation of the appointment. Most valuers are not currently looking to do HMO or student accommodation. Valuers should wear PPE and taking require precautions regarding hand sanitisation pre and post inspection.
|Buy-to-let tax relief changes for landlords – October 4, 2020
The new tax year got underway earlier this week, bringing with it a new set of rules.
Since April 2017, the amount of money landlords can write off for tax purposes has dropped 25% year-on-year.
From this month landlords will no longer be able to deduct any of their mortgage expenses from rental income to reduce their tax bills and instead they will receive a tax credit, based on 20% of mortgage interest payments.
The reforms to mortgage interest relief are likely to adversely affect many buy-to-let landlords, as the new system will potentially increase tax bills in a number of ways.
Higher and additional rate taxpayers will no longer receive all tax back on mortgage repayments, as the credit will only refund tax at the basic 20% rate.
In addition, as landlords must declare the income used to pay the mortgage in their tax returns, they could now be forced into a higher tax bracket as a consequence.
The government was urged last week to consider postponing upcoming tax changes because of the COVID-19 outbreak, but chose to proceed with the changes anyway.
The Residential Landlords Association (RLA) and the National Landlords Association (NLA), now part of the newly formed NRLA, wanted to see the government delay implementing the final part of the loss of tax relief on borrowing to buy a rented property.
In a joint statement, the RLA and the NLA said: “To support landlords in this we are calling for a package of measures from government and mortgage providers. This includes a temporary scrapping of the five week wait before Universal Credit claimants get their first payment, pausing the final phase of restricting mortgage interest relief to the basic rate of income tax and ensuring lenders look sympathetically on requests by landlords for mortgage payment holidays where their income is being affected through reduced or non-payment of rent.”
|COVID-19: Lending industry updates – September 4, 2020
With CBILS struggling to have the desired impact, UK Finance have shared data revealing that just 2,022 loans (totalling £291.9m) have been drawn down through the loan scheme. Their figures reveal that just over 300,000 applications have been made so far, meaning a paltry 0.65% of enquiries have resulted in a coronavirus business loan. Some lenders are blaming British Business Bank officials for delays, citing a lack of resources and cumbersome processes. Elsewhere, NACFB brokerage Bespoke Business Finance, have launched a guide for borrowers and brokers that seeks to help navigate the many potential CBILS ‘traps’ for the unwary applicant. Precise Mortgages have shared a useful guide to help those adjusting to working from home. And finally, a petition has been launched pressuring the Government to provide a COVID-19 support package for directors and shareholders of small limited companies, in line with that offered to the employed and self-employed.
|Stamp duty holiday could save average English buyer £7,000 – July 7, 2020
Chancellor Rishi Sunak is expected to announce plans in his Summer Statement for a temporary stamp duty holiday that could save the average English buyer £6,915 – and make 88% of English property transactions exempt from the tax, according to Savills. Mr Sunak is predicted to raise the threshold at which buyers start paying tax on their purchases from £125,000 to as much as £500,000. The holiday would come into effect at the moment analysts are expecting the economic impact of coronavirus to hit the property market hard. Both mortgage holidays and the furlough scheme are due to end in the autumn, meaning there could be a spike in forced sellers, and a fall in the number of people able to purchase.
|2m taking mortgage holidays – July 5, 2020
Analysis by Capital Economics shows that around 2m home-owners are on mortgage holidays. This equates to almost a fifth of mortgage holders in the UK and is 400,000 more than the last official figure of 1.6m. The analysis looked at data from the five biggest banks and scaled up for the wider industry, including building societies. The five largest banks, which account for 57% of residential mortgages, reported 1.15m customers on mortgage holiday last week, led by Lloyds with 404,000 and Barclays with 238,000.
|75% see BTL investment as ‘worthwhile’ – June 1, 2020
A survey conducted by Perrys Chartered Accountants shows that 75% of people still believe that investing in buy-to-let is worthwhile, with the proportion jumping to 83% among millennials. Among reasons that may deter people from BTL investment, 28% said Brexit uncertainty was a factor, while 29% pointed to increased tax and stamp duty rates.
|Day two of ‘simple, quick, and easy’ Bounce Back loans – May 5, 2020
Lenders received more than 45,000 applications yesterday for the new Bounce Back Loan Scheme (BBLS). As outlined by Rishi Sunak last week, the BBLS scheme went live at 9am on Monday morning, with Barclays seeing 200 applications in the first minute and Lloyds 5,000 within three hours. The new loan scheme is designed to complement the existing CBILS facility and is available for loans of up to £50,000. Brokers should note that the BBLS and CBILS loans cannot be used in conjunction with each other. Last week, the number of CBILS loans agreed was 8,638, down from more than 9,000 the previous week. Of the 52,807 loans applied for, almost 28,000 have still to be approved. The NACFB has also issued guidance to all Members yesterday, advising brokers to signpost all BBLS enquiries straight to an accredited lender on the scheme.
|Watchdog calls for end of mortgage payment holidays – April 8, 2020
The Financial Conduct Authority (FCA) has suggested that homeowners struggling with mortgage repayments should not be offered payment holidays, saying that that further breaks are “unlikely to be the appropriate solution” for borrowers. While lenders have been offering three month repayment breaks on mortgages, credit cards and personal loans amid the coronavirus crisis, the FCA says new measures may be more appropriate, such as extending the term of the loan or allowing borrowers to resume payments at a lower level than they were before the crisis. Analysis shows that while one in every five mortgages in Britain went unpaid at the peak of the crisis, far fewer borrowers applied for a second three-month pause on payments.
|Growth in buy-to-let business predicted – April 2, 2020
An increase in buy-to-let mortgage business over the next year is predicted on the back of strong remortgage levels and portfolio expansions, with research by Paragon finding a fifth of brokers expect more buy-to-let business this year, compared to 11% who believe there will be less. Richard Rowntree, managing director of mortgages at Paragon, commented: “Buy-to-let lending has been driven by remortgage business in recent years, so it’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years.” He went on: “It’s also encouraging to see that the balance of brokers expecting to write more buy-to-let business is positive for 2020 as confidence has been subdued for much of the past four years.”
|House prices and mortgage approvals fall – March 6, 2020
House prices fell 1.7% in May from the previous month to an average of £218,902, the largest monthly fall for 11 years, according to Nationwide. As well as the biggest monthly slump since February 2009, annual growth in house prices slowed to 1.8% from May 2019, down from 3.7% in April and the slowest rate since December. Elsewhere, Bank of England data show a record collapse in mortgage approvals in April, with 15,800 home loans given the green light. This marks an 80% dip on February, when the market had yet to be affected by the coronavirus outbreak. The figures represent the lowest monthly total since Bank of England records began in 1993.
|What will the election mean for the markets? – December 12, 2019
The Telegraph’s Tim Wallace looks at various predictions for the market with different election outcomes, with ING predicting 10-year bonds could almost double to 1.5% by late 2020 under a high-spending Labour government. However, investors favour Labour’s Brexit plans as they are much closer to simply remaining in the EU than the Conservatives’ proposals.
|Commercial Broker: We are not an island – December 11, 2019
Throughout 2019, the NACFB has received dozens of articles from lenders, brokers and other industry voices seeking to share an opinion on Brexit. Whilst the articles often read well and their point is well made, we know all too well that by the time they go to print they are likely be out of date and redundant, such is the blistering pace of current political development. It is with that caveat that Norman Chambers opted to write in October’s issue of Commercial Broker on a matter that remains central to the Brexit debate, one that is now more pertinent than it has been for over 70 years, exporting. In the article, Norman argues that whatever outlook the future brings, a close trading relationship with our neighbours remains vital for UK SMEs. Read his full feature on the importance of trade finance here.
|UK economy stagnates ahead of general election – November 12, 2019
The economy suffered its weakest three months since early 2009 with ONS data showing growth flat in October after two months of declines. The ONS said: “Increases across the services sector [were] offset by falls in manufacturing with factories continuing the weak performance seen since April. Construction also declined across the last three months with a notable drop in house building and infrastructure in October.”
|Anger as scammers go unchallenged – November 11, 2019
An investigation by the Times reveals that Google is making tens of millions from scammers who are using its search engine to lure savers to invest in high-risk or potentially fraudulent schemes. The Financial Conduct Authority (FCA) has issued warnings over six savings websites reported by the newspaper, which is calling for more action to protect the public from web predators.
|Small builders hit by housing market uncertainty – October 12, 2019
Research by Price Bailey has found that more small housebuilders have gone out of business in the most recent 12-month period than at any point since 2015, with 343 lost in the year to September due to stagnating house prices and rises in both raw materials and labour costs. “Subdued activity in London and the South East and falling prices as people defer purchases due to Brexit uncertainty have all taken their toll,” said the firm’s Paul Pittman.
|Second charge lending rises 20% – July 11, 2019
The number of new second charge mortgage agreements rose by 20% year-on-year in September, the Finance and Leasing Association (FLA) has revealed, with lenders agreeing 2,355 over the month, a 20% year-on-year increase, bringing the annual total to 27,092. The value of new business was £105m, up by 18% from September 2018. FLA interim director general Fiona Hoyle says: “The second charge mortgage market reported another month of double-digit growth, with the latest annual new business volumes reaching more than 27,000, a decade-high”, although she added “While the market has returned a strong performance so far in 2019, new business volumes remain well below pre-crisis levels”.
|Auditors questioned over Thomas Cook collapse – July 10, 2019
MPs on the Business, Energy and Industrial Strategy Committee have heard from Thomas Cook’s former auditors. The hearing saw the Committee accuse PwC and EY of being complicit in the failure of the tour operator, questioning why accounts were signed off when the board had been told of risks to the firm’s financial stability and concerns over some accounting practices were raised. Committee chair Rachel Reeves warned that accountancy firms have not shown a “learning curve” from the collapse of several large companies. She added that legislation is needed to deliver tougher regulation as the industry “is not willing to make the changes needed.”
|PFS in PI insurance warning – June 11, 2019
The Personal Finance Society (PFS) says the Financial Conduct Authority (FCA) and the Treasury need to shake up the professional indemnity (PI) insurance market, with firms seeing premiums soar. The body says while some businesses that offer defined benefit transfers have been quoted a 500% increase in their PI insurance premiums, others have been “unable to secure any ongoing professional indemnity cover whatsoever”. The FCA increased the Financial Ombudsman Service’s (FOS) award limit to £350,000 from £150,000 in April, prompting the PFS to warn that this delivered an instant impact on the cost of PI insurance. Keith Richards, chief executive of the PFS, said the increase – coupled with the possible outcome of the FCA’s supervisory focus – “is driving PI insurers away from the market, restricting access to advice and therefore preventing people from being able to exercise their rights under pension freedoms.”
|CBI expects modest growth – March 12, 2019
The latest report from the Confederation of British Industry (CBI) suggests economic growth for the next two years will remain “modest”, at 1.3% this year and 1.2% in 2020 before rising to 1.8% in 2021. The CBI says this is based on an assumption that the UK leaves the EU by 31 January and has “clear line of sight” to a trade deal involving alignment with EU rules. CBI chief economist, Rain Newton-Smith, said: “Transforming a lost decade of productivity will only be possible if supported by a good Brexit deal – one that keeps the UK aligned with EU rules, essential for frictionless trade, along with protecting the UK’s world-beating services sector, which accounts for 80% of our economy.”