The Rental Factor - Landlord Dilemmas

Landlords facing a dilemma – to raise rents or support tenants 

 Landlords are facing a real dilemma at the moment in dealing with the continued rising cost-of-living crisis. This is causing concern among many landlords, as they face a decision to raise rents or support their tenants by taking a financial hit themselves, according to research[1]. 

 Around three-quarters (74%) of landlords say they feel a responsibility to support their tenants during times of financial hardship and, with the cost of living continuing to rise, more than four in ten (44%) have financially supported their tenants during the last 12 months, such as reducing or pausing rent.  

 Financial challenges 

 The research shows that some landlords are prepared to reduce their rents by an average of 7.6% before coming under pressure – equating to around £50 per property a month based on a typical landlord’s rental income[2]. 

 While many are able to reduce rent, close to half (45%) of all landlords say any reduction would harm them financially. Around four in ten (38%) said they intend to keep rents the same for the next year despite the financial challenges, while more than half (55%) say they need to increase rents over the next 12 months. One in four (25%) plan to raise the rent on all their properties. 

 Larger portfolios  

 Landlords with larger portfolios are more likely to increase rent on at least some of their properties, the research highlights. Three-quarters (75%) of those who own more than ten properties aim to increase their rents over the next 12 months, compared to just 44% of landlords owning between one and three properties. 

 In fact, 46% of those landlords with a small portfolio plan to keep rents the same. Across the regions, landlords in Yorkshire & The Humber (68%), outer London (65%), the North West (63%) and Wales (63%) are most likely to increase rents on some or all of their properties over the next 12 months. 

 Rental payments 

 Those landlords using their rental properties to offset their mortgages are also more likely to raise rents, with nearly two-thirds (63%) planning an increase compared to just 44% of unleveraged landlords. 

 Despite the plan to increase rents, well over half (57%) of landlords are concerned about whether their tenants can maintain their rental payments, with more than one in ten (13%) admitting they are very concerned. This increases to nearly three-quarters (74%) of landlords who let to claimants of Local Housing Allowance and 71% of landlords who let to retired people. 

 Support provided  

 Regionally, landlords in East Midlands (74%), Wales (70%) and Yorkshire & The Humber (62%) appear to be most concerned about the ability of their tenants to pay the monthly rent. However, perhaps unsurprisingly, only around a third (32%) of landlords in Central London are worried about receiving their rent. 

 In terms of the support offered to tenants by 44% of landlords, temporary rent reductions and rental payment holidays are the most common options. Support provided includes: temporary rent reduction (22%); rental payment holiday (15%); permanent rent reduction (4%); and lent money to support their day-to-day living (3%). 

 Smaller portfolios  

 Landlords with smaller portfolios are able to reduce rents by a slightly higher amount. Compared to the average of 7.6% for all landlord types, those with one property can reduce by an average of 8.7%, while those with two or three properties are able to reduce rents by 9.3%.  

 Of those who could reduce rents, nearly half (47%) of them say they could sustain it for six months or more, while 42% say they could keep the reduction going for between three and six months. Those landlords making a full-time living from their lettings activity (60%) and those who are retired (51%) are significantly more likely to say they could sustain the rent reduction for more than six months.  

Looking for a buy-to-let mortgage? 

 Whether you’re thinking about buying to let or expanding your property portfolio, to discuss your options contact The Surrey Mortgage Broker– telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk 

Source data: 

 [1] Research conducted by BVA Group / BDRC with 729 UK landlords between January and March 2022. 

 [2] Source: BVA BDRC’s Core Landlords Panel tracker. Mean annual per property gross rental income: £7,625.

Moving home?

Tips to help you get ultra-organised for your big move 

 Making the decision to move home is a big one. From changing lifestyles to the ‘race for space’, there is no shortage of households looking to up sticks. 

 Whether you’re moving to be closer to the great outdoors, or simply for work and family reasons, there’s no doubt that getting the keys to a new place is an exciting prospect. But it’s also true that all this upheaval brings the potential for stress.  

 Once you’ve put your property on the market, there’s a lot to think about – from finding the right buyer to dealing with the legalities of selling up. 

 But don’t worry, we’re here to help. Follow our top tips and you’ll be moving into your new home in no time: 

 1. Get your paperwork in order 

 The first step is to get your paperwork in order. This includes things like your mortgage offer, proof of income and ID, and any information relating to the sale of your property (such as estate agent contracts). 

 2. Find a good conveyancer or solicitor 

 Once you’ve got your paperwork sorted, it’s time to find a good conveyancer or solicitor. They’ll be able to help with the legal aspects of selling your property, and it’s worth getting a few quotes before you make your final decision. 

 3. Get your home valued 

 It’s also a good idea to get your home valued by a professional. This will give you an idea of how much your property is worth and can help you negotiate with prospective buyers. 

 4. Find the right estate agent 

 When you’re ready to put your property on the market, it’s important to find the right estate agent. They should be experienced in selling properties like yours and should be able to give you advice on things like pricing and marketing. 

 5. Set a realistic sale price 

 Once you’ve found an estate agent, it’s time to set a price for your property. You need to be realistic, as overpricing your home can put off prospective buyers. 

 6. Prepare your home for viewings 

 Once you’ve set a price, it’s time to start preparing your home for viewings. This includes things like decluttering, cleaning and making any necessary repairs or improvements. 

7. Handle viewings and offers 

 When you start getting viewings, make sure you are prepared. Your home will need to be available for viewings to show people around at short notice, so be ready to answer any questions they have. 

 If you receive an offer on your property consider it carefully before making a decision. If you’re not happy with the offer, you can negotiate with the buyer or look for another buyer. 

 8. Exchange contracts and move out 

 Once you’ve accepted an offer on your property, it’s time to exchange contracts. This is a legal agreement between you and the buyer, and means that the sale of your property is now legally binding. 

 After exchanging contracts, you’ll need to start packing up your belongings and arrange for them to be moved to your new home. Once everything is ready, you can hand over the keys to the new owners and start your new life in your new home! 

Ready to discuss finding the right mortgage for your new home?  

We’ll help make your move a good one. If you’re thinking of buying your dream home, we’re here to help find the mortgage that’s right for you. To find out more, contact The Surrey Mortgage Broker – telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk

Retirement location, location, location

Choosing where to spend your retirement is an important decision 

 Many people are reaching retirement age and looking to leave behind towns and cities in favour of rural or coastal areas, and areas of natural beauty. When it comes to thinking about where to live when you retire, you might be considering a similar change of pace. 

 Some people have been thinking about it for a while, and if you asked them where the best place to retire in the UK is, they wouldn’t hesitate to answer. For others, there’s more to consider. When it comes to deciding your perfect retirement location, it’s common to consider a range of factors. Wanting to be close to family, or favouring somewhere peaceful or by the sea are popular choices. 

 Sizeable budget 

 The most popular retirement locations have lots in common, with picturesque landscapes, quaint villages and a long coastline. While these areas are beautiful, their house prices can reflect their popularity. 

 Relocating or downsizing could open up more options in your retirement relocation. If you’re selling up in a big city and moving to somewhere more remote, you could find yourself with a sizeable budget. 

 Closer to loved ones  

 Among the most important retirement location considerations, second to your budget, may be proximity to loved ones. Many people move to be closer to loved ones in retirement, especially when grandchildren arrive and the extra support is welcome. 

 Making this move can be quite an adjustment if you’re leaving a busy city with excellent transport links and relocating to a rural town with limited bus timetables and no local train station. If you don’t drive, having access to public transport to visit friends and family, as well as amenities such as shops, doctors and your favourite social activities, is an important consideration. 

 Long-term move 

 Medical and care facilities are also particularly important if you’re considering where to live when you retire as a long-term move. Living within easy travelling distance to your local doctor or hospital could be something you should consider now, as you will likely need to think about it in the future. 

 Other considerations include your safety and crime rates. Low crime rates and feeling safe in your new home are really important. You might have a neighbourhood watch programme in your local area, which can be reassuring. 

 New destination  

 If you have an active social life that you’ll miss when you move, it can be reassuring to know that your new destination has plenty of community groups and activities to look forward to. Visiting ahead of your move or reaching out on social media could help you connect with the local community and find people who have similar hobbies. 

 So if you’re looking to retire in the UK, there are a few key locations to keep in mind.  

 Popular retirement property hotspots in the UK 

 The Cotswolds 

 This picturesque region of England is a top retirement destination for many reasons. It’s close to major cities like London, Oxford and Birmingham, but it also has a slower pace of life that makes it ideal for retirees. There are plenty of quaint villages and country towns to explore, along with gorgeous countryside views. 

 Cornwall 

 Cornwall is another popular retirement destination, thanks to its beautiful coastline and mild climate. It's a great place to enjoy outdoor activities like walking, cycling and golf. And, with plenty of small towns and villages to choose from, you can find the perfect place to settle down. 

 The Lake District 

 The Lake District is a stunning region of England that's perfect for retirees who love the outdoors. With its picturesque lakes and mountains, it’s easy to see why this is such a popular destination. There are plenty of walks and hikes to enjoy, along with other outdoor activities like sailing and fishing. 

 Devon 

 Devon is another county in England with a lot to offer retirees. It has a beautiful coastline, lovely countryside, and plenty of quaint towns and villages. Like Cornwall, it has a mild climate, making it a great place to enjoy retirement. 

 Dorset 

 Dorset is another county in England that’s popular with retirees, thanks to its sprawling selection of coastline towns. From Poole to Sandbanks and Bournemouth to Christchurch – there are a whole host of towns that suit the retiree perfectly. 

 These are just some of the retirement property hotspots, but if you’re looking for a place to retire, these are all great places to keep in mind. 

Mortgages for older people  

If you’re 55 or older, you might be thinking about your retirement options, or you may have already retired. Equity release could help you use some of the value you’ve built up in your home to put your retirement plans into action. To discuss your options contact The Surrey Mortgage Broker– telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk

What is a Joint Borrower Sole Proprietor Mortgage?

Helping young people to get onto the first rung of the property ladder 

 A Joint Borrower Sole Proprietor Mortgage (otherwise referred to as a JBSP mortgage) is a type of home loan that allows two people to borrow money together while only one of them is named on the mortgage. This can be beneficial for people who want to buy a property but don’t have enough money for a deposit or who have bad credit and need someone with good credit to co-sign the loan. 

 A JBSP is primarily used as a way of helping young people to get onto the first rung of the property ladder, and can assist in securing a mortgage and potentially increase the borrowing scope too. JBSP mortgages allow individuals to accept the financial support of their family, while retaining a sense of independence through sole ownership of the property. 

 Financial responsibilities 

 The main difference between this type of mortgage and other types of loans is that both borrowers are legally responsible for repaying the debt. This means that if one borrower fails to make their payments, the other borrower is still liable for the full amount. 

 A joint mortgage is one in which you buy a home jointly with someone else – be it a relative, friend or partner – and you share both the ownership and the financial responsibilities. Therefore, both parties are responsible for repaying the mortgage, and both have a legal claim to the property ownership.  

 Guarantor mortgage  

 By contrast, with a JBSP mortgage, the other applicant, usually a parent, takes on joint responsibility for the debt and repayments, yet has no legal claim to ownership of the property. 

 The only way in which a guarantor mortgage is similar to a JBSP mortgage is that the parents have no legal claim to property ownership in either. With a guarantor mortgage, parents only assume responsibility for the debt if their son or daughter can no longer meet the repayments. Conversely, with a JBSP mortgage, they agree to contribute towards the mortgage repayments from the beginning. 

 Combined income 

 Typically, a JBSP mortgage lender will consider up to four applicants for a single JBSP mortgage, although this figure can differ between providers. Usually, only two incomes will be formally considered, with any others only being taken into account as additional financial guarantees. 

 The amount that can be borrowed will vary between applications as well as differing lender criteria. Typically, a JBSP mortgage will allow up to four applicants and most lenders will cap your potential borrowings to 4.5 times the combined income, although some lenders may offer more. 

 Financial problems  

 However, there are some risks associated with a JBSP mortgage as well. If the person who is named on the mortgage defaults on the loan, the other person is still responsible for repaying the debt. This can lead to financial problems for both parties involved. 

 A JBSP mortgage is one way of helping family members buy a home, but a guarantor mortgage or a housing scheme could be more appropriate, so it’s important to understand all the options. 

Want to discuss your mortgage options? 

 If you are considering taking out a Joint Borrower Sole Proprietor Mortgage, it is important to weigh the pros and cons carefully before making a decision. This type of mortgage can be a great way to buy a home, but you need to know the risks involved. To discuss your requirements, contact The Surrey Mortgage Broker – telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk

Mortgage market uncertainty

What’s happening with mortgage rates?  

 A series of unfunded tax cuts announced by the new Chancellor of the Exchequer, Kwasi Kwarteng, forced the Bank of England to issue an emergency statement pledging to lift rates ‘as much as needed’ to control inflation, following major volatility caused to the pound and UK gilts. 

 The Bank of England had already raised the base rate seven times from 0.1% to 2.25% since December, which has pushed up the cost of borrowing, because the swap rates banks use to price fixed-rate deals have also risen sharply. These swap rates jumped rapidly in the aftermath of the Chancellor’s Mini-Budget on 23 September, which sent government borrowing costs soaring. 

Since that statement we have had a change of heart, changes in policy, a new Chancellor and a new Prime Minister. Has this helped?

 Market uncertainty 

 As a result of the uncertainty over future interest rates, many lenders within days of the Mini-Budget pulled nearly a thousand mortgage deals from the market. First-time buyers and those looking to remortgage are likely to be most affected.  

 Subsequently, there have been reports of some property sales falling through as lenders backed out of previously agreed mortgage deals due to market uncertainty. This is not something that I have witnessed, in fact if you gave a mortgage offer with a high street lender they will, in my experience, alway stand by that offer.

 Current mortgage 

 The Halifax, part of Lloyds Banking Group, put up the interest rates on a range of deals for new borrowers to well over 5%. ‘The new rates reflect the continued increase in mortgage market pricing over recent weeks,’ a spokesperson for Halifax said. 

 According to Moneyfacts, the interest rate on a typical two-year fixed rate mortgage has now breached 6% for the first time in 14 years. An average of at least 100,000 people a month are coming to the end of their current mortgage and face a significant rise in their monthly repayments. 

 Higher increase  

 The interest rate on a new, average two-year fixed deal on the morning of the Mini-Budget fiscal event was 4.74%, compared with 6.07% on 5 October. The result of this, for somebody borrowing £200,000 on a 30-year mortgage, is in the region of an additional £170 a month on repayments. A five-year fixed deal has typically risen from 4.75% to 5.97% over the same period. 

 Following the Mini-Budget, mortgage rates subsequently jumped with the expectation of a faster and higher increase in the bank rate in the coming months. Other major lenders such as NatWest, Nationwide and Virgin Money also increased their rates. 

 Monthly repayment  

 Moneyfacts highlighted a scenario whereby a homeowner borrowing £200,000 on a 30-year mortgage may have been looking at a rate of 3.5% and a monthly repayment of £898 during mid-September. However on 5 October, this is more likely to have risen to a 5.5% rate and a monthly repayment of £1,135. 

 On the morning of the Mini-Budget there were 3,961 deals available, compared with 2,262 at the start of October, a 43% fall, according to Moneyfacts. 

 Mortgage products  

 We do not know what will happen to the market next.   

In fact we have seen some lenders shaving a little of the rates available, however with the Bank of England raising the base rate to 3% and with further rises in the pipeline the outlook is for higher interest rates for the foreseeable future.  

Want to discuss your mortgage options? 

If you are concerned about the rise in mortgage rates it is essential you seek professional advice to assess the options and deals available to you right now. To discuss your situation, speak to The Surrey Mortgage Broker – telephone 01252 759233 – email richard@thesurreymortgagebroker.co.uk