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Rental sector already cleaning up its act on EPCs, suggests bank

The private rental sector is already attempting to improve its EPC results according to research from Shawbrook Bank. 

From 2025 new rules mean rental properties with an EPC rating of D, or below, will not be able to take on new tenants.

The bank’s study found that 17 per cent of landlords had made efforts to improve the energy efficiency of their property, rising to 22 per cent of portfolio landlords with four or more buy to let units.  

For example, of all the landlords that had undertaken a refurbishment, 22 per cent had replaced the boiler and heating system in their property, a further 23 per cent had replaced the windows, and 18 per cent had installed new white goods. 

Making properties more energy efficient can boost demand from tenants too. 

Indeed, one in 10 private renters contacted as part of the study said that they would stay in their current property longer if their landlord made changes to the property which benefit the environment. 

Tenants were also happy to pay more in rent should landlords make certain changes to their property. 

Some 18 per cent of tenants said they’d pay more if windows were replaced, 15 per cent would pay more for a new boiler and heating system, and 10 per cent suggested that installing solar panels would justify paying more rent.

However, for those investors who own older properties – which are typically less energy efficient – it can be harder to improve the rating. This could mean that by 2025 some properties could be ‘unrentable’ and ‘unsellable’ warns the bank.

According to data from the Ministry of Levelling Up, Housing and Communities there are close to 13m homes in England and Wales currently with an EPC rating of D or below.

John Eastgate, property finance managing director at Shawbrook Bank, comments: “For many property owners in the UK, getting their property to a C rating is going to take a lot more than simply installing a new boiler. The reality is that for older properties – some of which may be listed- it will be an expensive exercise to make the necessary changes.

“It’s welcome news that landlords are already acting ahead of the rule change in 2025 and it’s completely right that we should all be considering how to make our properties more energy efficient and environmentally friendly. Some owners, however, will need support from both lenders, and the government, to make these changes financially possible. 

“Without this, we risk a substantial part of the private rental sector becoming unrentable and therefore unmortgageable and unsellable in 2025. With home ownership still out of reach for many this could leave us with a shortage of quality homes to rent.”

Original Article from Letting Agent Today 09/11/21

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Build-to-rent sector set to triple in size as demand ‘soars’ says Foxtons

Estate agency says nine of London’s boroughs now have more than 1,000 BTR properties within them as popularity increases among young professionals.

Lettings agents who ignore the growing build-to-rent (BTR) sector are missing a huge opportunity as the sector prepares to triple in size within the capital and beyond, Foxtons has claimed.

The estate agency, which likes to position itself as an early champion of the US-style of renting, says BTR properties are witnessing ‘soaring’ demand as many renters put accommodation quality and services ahead of affordability.

BTR developments are more expensive to rent in than traditional lets around them, the agency’s own research shows, including a 9.1% average premium for one-bed flats and an 11.3% premium for two-beds.

“Part of the BTR premium can be attributed to their new, or nearly new, condition,” says Sarah Tonkinson, MD of its BTR arm.

“It is also worth noting that premiums may look higher than the reality. Rent-free periods are sometimes used to entice renters at the beginning or end of a BTR tenancy, yet are not calculated in the average rent.”

The data and claims outlined above are within Foxtons’ latest London Lettings Report, which reveals that 8% of its long-lets this year have been within BTR developments, up from 2.2% four years ago.

“While BTR in the UK still only accounts for 1% of the private rental market, it has huge potential and is a sector Foxtons has supported for a number of years,” adds Tonkinson.

The report also reveals that demand for rented property in central London is ramping up again after falling off a cliff during Covid as many younger renters returned to their hometowns.

In Zone 1 registrations are up by 101% year-on-year and up by 72% in Zone 2. But although rents are still lower than pre-pandemic times, a lack of stock means rents are now rising by up to 7% in central postcodes as demand outstrips supply.

Original Article from The Negotiator 02/11/21

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Two-thirds of self-employed cohort think it’s harder now to get a mortgage

Nearly two-thirds of self-employed individuals think it is more difficult for them to secure a mortgage, and three out of five believe some lenders don’t want to deal with them because of their self-employment, according to new research from Foundation Home Loans.

The research, carried out by BVA BDRC on behalf of Foundation, interviewed 300 individuals on their housing aspirations during August.

Of those interviewed, 100 were self-employed and 200 employed, and they were asked to give their views on their current housing arrangements, their ability to secure mortgage and other finance, the potential obstacles they have to overcome, and how their financial situation and credit score might have changed as a result of the pandemic.

59% of the self-employed interviewed believe it takes longer to apply for, and secure, a mortgage because of their self-employed status, and 51% said there is a restricted choice of lenders available to them. This has resulted in only 39% of self-employed people thinking it is now a good time to be a homeowner, compared to 47% of employed respondents.

However, the research also shows there may be a disconnect between perception and reality when it comes to mortgage accessibility, with just 14% of those self-employed individuals saying they had actually been declined a mortgage as a result of being self-employed.

Those questioned offered a number of messages to lenders around the way they work with self-employed borrowers asking lenders to: take full account of all income; consider all of the time spent working for themselves; look at each case individually; and be more flexible.

The self-employed were more likely than their employed counterparts to have used the services of a mortgage adviser or IFA when arranging their current mortgage: 44% compared to 31%. Foundation said this shows the opportunity for advisers with the self-employed especially given the perception that they encounter greater difficulties in securing a mortgage.

Self-employed respondents were also asked to share their financial experiences over the last two years since the onset of Covid. Positively, nearly three-quarters of self-employed respondents said they had experienced no negative financial experiences, and the self-employed were three times less likely to have fallen behind with loan or credit card payments than employed individuals over the last 12 months. 13% of the self-employed respondents stated they had taken a Government grant or loan for their business.

In terms of credit scores, however, the self-employed are, on average, more likely to have a low credit score and were more likely to have seen ‘a big reduction in income for any other reason’ over the last 12 months. Yet almost half – 42% – of the self-employed have never carried out a credit check, again pointing to an opportunity for advisers to outline the reality of their financial situation to self-employed borrowers.

George Gee, commercial director at Foundation Home Loans, said: “What is clear from this exclusive research is we are seeing a disconnect between the perception of self-employed borrowers in terms of what they can secure in the mortgage market, and what might actually be available to them, based on their financial circumstances, their experience over the last 12 months, and their ongoing credit-worthiness.

“There is no doubting however that for many self-employed, that perception of restricted mortgage choice is indeed accurate post-pandemic: their options have been reduced simply because the way these customers are assessed by some lenders no longer meets what is required in this new landscape of more complex employment and income types. A blanket approach based on a very limited view of borrowers’ recent financials, or an assessment purely based on the sector they work in, cannot give a fair view of their creditworthiness, and it’s because of this that more self-employed borrowers would be better served looking at non-mainstream routes.

“However, there is a lot to be positive about here, particularly in terms of the strength of the financials of these self-employed existing, and prospective, homeowners; the majority have not endured negative financial experiences since the onset of the pandemic, and only a small number are being declined for mortgages.

“There are some key messages we need to get across to the self-employed borrower base though and they involve outlining that not all lenders approach them in the same way. There are many calls for flexibility and to be treated as individual cases not a homogenised group, and that’s certainly the way we work with the self-employed at Foundation, trying to understand their individual circumstances, taking into account various income sources, their current situation and recent history to ensure we are able to provide a fully-rounded decision on their mortgage affordability, so these borrowers get the mortgages they require.

“This research also stresses the ongoing need for adviser intervention, and for us as an industry to continue to direct the self-employed down the advice channel because by doing this they will have a much better chance of securing mortgage finance, and their customer experience will be greatly enhanced.”

Original Article from Best Advice 02/11/21

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More than half of tenants would pay more for greener home

More than half of tenants would be willing to pay more in rent in order to live in a greener home, new research has revealed.

The survey, by, found that 98% of renters would prefer to live in an energy-efficient home and 52% would be willing to pay an extra 10% in order to do so.

A third of renters (33%) would accept a 5% rent increase, while 8% would 

be willing to pay an extra 20% if it meant they could rent a greener home.

The vast majority of renters (85%) were happy to consider a so-called “green lease”, which includes clauses designed to ensure the tenant and landlord work together to improve the home’s energy efficiency, while reducing costs and environmental impact.

Already, 95% of renters expect their property to have double glazing and 92% expect it to have loft or wall insulation.

Furthermore, 92% expect recycling bins and 73% expect LED lightbulbs, 56% expect smart meters and 38% expect smart thermostats. 

On top of this, 50% of renters expect dual flush toilets, while 26% expect solar panels and ground source heating. founder Jonathan Daines says: “We’ve heard a lot recently about the cost to landlords of making their properties greener, from replacing gas boilers with heat pumps to installing insulation. 

“This survey has revealed that tenants are prepared to play their part too, with over half of renters happy to pay more for greener homes. 

“It is overwhelmingly clear that tenants are demanding greener choices than the rental sector currently offers.

“Clearly, renters know what they want when it comes to green credentials. And while many landlords can’t afford solar panels or heat pumps, smaller eco improvements can help properties stand out and increase renter appeal. 

“Landlords should be mindful of this sentiment and take any steps they can to make their properties greener.”

Original Article from Mortgage Strategy 01/11/21

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Rents fell 9% in October but remain higher than 2020: Goodlord

Average rents in England fell by almost 9%  from £1,104 per month in September to £1,006 in October, although year on year, rents were around 7% higher, according to the latest index from Goodlord.

The company says that void periods have also started to increase, but that demand remains very high in comparison to 2020 figures. 

The South West saw the biggest decrease in the cost of rent, recording a 16% reduction. 

This was followed by a 14% fall in the South East and 11% in the North West. 

Greater London, the North East, East Midlands and West Midlands recorded reductions of between 4-6%.

However, these decreases followed a string of higher than average rental prices between July and September. 

The October average remains higher than figures recorded for May and June 2021. 

In addition, year-on-year rental prices are 7.2% higher than 2020 averages. 

Voids hit the highest levels recorded since May, rising to an average of 19 days during October. 

This is up from September’s average of 17 days. 

There was a big shift in the North East where, after 4 months of historically low voids, numbers returned to more predictable levels. 

The region recorded an average void period of 20 days in October, up from 11 the previous month.

The East Midlands, Greater London, and the South West also recorded a rise in void periods. 

The South West held steady month-on-month at 17 days. 

The North West, however, saw a drop in voids from 25 days to 18 days, and the West Midlands also saw a decrease; 21 days down to 19.  

Year-on-year, voids are currently 17% lower than 2020 averages.

Goodlord chief operating officer Tom Mundy says: “We’ve witnessed huge market demand in 2021 so far and I’m not surprised that void periods are still lower than those recorded in 2020 and that average rents are much higher too. 

“We’ve definitely seen a slight cooling of demand this month, as is to be expected following the summer surge from renters and early autumn demand from students. 

“But this cooling should be taken with a pinch of salt as the year-on-year figures clearly show that the lettings sector is continuing to experience consistently high demand across England.”

Original Article from Mortgage Strategy 01/11/21

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September lending stats boosted by Stamp Duty holiday

The Bank of England has revealed that individuals borrowed £9.5 billion of mortgage debt, on net, in September from £4.4 billion in August.

This is the highest since June 2021 when net borrowing reached a record of £17.1 billion.

The central bank said that September’s increase was driven by borrowing ahead of the complete tapering off of lower Stamp Duty from October.

The net borrowing in September was £2.9 billion above the 12-month average to June 2021, when the full stamp duty holiday was in effect. Gross lending increased sharply to £30.7 billion in September, from £20.9 billion in August. Gross repayments also increased to £20.7 billion from £17.7 billion in August.

Approvals for house purchases, an indicator of future borrowing, fell to 72,600 in September, from 74,200 in August. This is the lowest since July 2020, but remains above pre-February 2020 levels.

Approvals for remortgaging (which only capture remortgaging with a different lender) rose slightly to 41,500 in September. This remains low compared to the months running up to February 2020, but is the highest since March 2020.

Toni Smith, chief operating officer at PRIMIS, said: “Today’s figures highlight the ongoing strength of our housing market. Whilst the September numbers were likely boosted by the extended Stamp Duty holiday, the drivers motivating people to buy or move home remain strong.

“However, as we start to see an increase in the cost of living and a potential rate rise looming, many households will find their finances squeezed. Within this context, the role brokers play in supporting their customers to access the best possible deal for their circumstances will be vital.

“With the last quarter of the year also set to bring a surge in remortgage activity, there is huge opportunity for those brokers proactively having conversations with their clients. As borrowers across the country look at their refinancing options, having the support of a broker who can guide them to a product that suits their specific needs, will be invaluable – and it will likely further strengthen their relationship with the broker for years to come.”

Original Article from Best Advice 29/10/21

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Agents to extend Deposit Alternative scheme to existing tenants

Some agents allied with deposit alternative service flatfair – and who previously offered the service to new tenants – are now going to extend it to existing renters as well.

Flatfair says participating agents include Spicerhaart and a number of Hunters branches, and believes this will effectively unlock millions of pounds in the coming months.

It says the existing average deposit is over £1,400.

“We all feel the financial strain in the run up to Christmas, which is why we’re pleased to be offering some light at the end of the tunnel” explains flatfair chief executive Franz Doerr. 

“It’s our mission to put millions of pounds that are pointlessly locked away back in the pockets of tenants across the UK, while providing landlords with the cover they need.”

And Elisa Bayliss, assistant lettings manager at Hunters Bingley, adds: “Hunters Bingley have been using the flatfair deposit alternative for around two years now … we have recently got on board with unlocking traditional deposits, with flatfair deposit unlocking. All the landlord feedback so far has been extremely positive, and landlords are happy to offer it to good tenants, whilst doubling their protection.”

Original Article from Letting Agent Today 28/10/21

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Number of homes selling over asking price dips as market softens

The proportion of properties selling above asking price has dipped according to Propertymark – a likely sign the market is softening at last.

Even so, the proportion is still 27 per cent, albeit down from 37 per cent in August.

The trade body’s latest market snapshot, reflecting the position at the end of September, says activity is still strong as sales agreed per branch rose from nine in August to 11.

The number of properties marketed stays at 23 per branch in September, the same as in August. This figure is uncharacteristically low and is a 44 per cent decrease from September 2020. 

Agents attribute this low figure to what they call “unrelenting” demand meaning properties sell faster than new ones are coming to market.

Meanwhile the average number of house hunters registered per branch stood at 458 in September, a steady increase from 435 in August and 428 in July.

The number of sales made to first time buyers is holding steady at 27 per cent, a marginal fall from 28 per cent in August; the number of buy to let sales fell from 11 per cent in August to nine per cent in September.

Propertymark’s chief executive, Nathan Emerson, says: “Figures from September tell an interesting story of a market that may be beginning to shift. Sales being agreed has increased, but the number of sales achieving over the asking price has reduced, meaning we may start to see an end to the bidding wars that have been so prevalent.

“It’s also interesting to note that although the number of properties available to buy is lower than we have seen before in September, it hasn’t dropped since August meaning that just enough properties are coming to market to satisfy demand.”

Original Article from Estate Agent Today 29/10/21

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Budget: Government outlines details of £24bn housing package

In today’s Budget, Chancellor Rishi Sunak has confirmed that £1.8 billion will go towards building homes on derelict or unused land in England as part of the government’s £24bn housing package.

Under the plans, 160,000 greener homes will be built on brownfield land, with combined authorities and councils receiving £300 million to develop smaller brownfield sites for housing.

Sunak said: “We’re investing more in housing and homeownership too, with a multi-year housing settlement totalling nearly £24 billion: £11.5 billion to build up to 180,000 new affordable homes, and we’re investing an extra £1.8 billion, enough to bring 1,500 hectares of brownfield land into use, meet our commitment to invest £10 billion in new housing and unlock a million new homes.”

Director of Benham and Reeves, Marc von Grundherr, commented: “Disappointing to see such a brief mention for the UK property market in today’s Budget.

“The Chancellor has chosen to give the sector a bit of the cold shoulder with just a handful of headline figures, clearly believing his job is done having fuelled house prices to record highs via the recent stamp duty holiday.

“We need more homes to satisfy our ever-growing appetite for homeownership and an insignificant level of brownfield development is more of a slap in the face than it is an outstretched hand.

“As for the £11.5bn pledged for 180,000 affordable homes, it’s a start, but hardly news given it was announced by Robert Jenrick a year ago.

“It simply isn’t enough and with the government consistently failing to meet their previous housebuilding targets, it will be a miracle if we see a brick laid on brownfield land or a meaningful level of affordable homes delivered in our lifetime.”

Philip Woolner, managing partner at Cheffins said: “The Chancellor’s pledge today of almost £2bn-worth of funding for development of brownfield sites is a savvy move from the government and is welcomed in its mission to help build out neglected potential sites across the country. With the ability to ‘unlock one million new homes,’ the funding will work in a two pronged approach in both helping to create additional housing which is so crucially needed, whilst also protecting the greenbelt. As brownfield sites are often in locations where demand for housing is lower or economic growth is weaker in comparison to other parts of the country, it can often be difficult for developers to justify building these out, particularly when assessed against easy-to-develop greenfield sites in high demand locations. For developers, brownfield sites which frequently come with additional complications, higher costs and potential contamination issues can be a rather unattractive proposition and hopefully this injection of cash from the government ought to encourage developers to take on these sites which have been calling out for rejuvenation or to get cracking with building out the sites which have already been banked by many of the national housebuilders. The results of building out brownfield can be spectacular, for example at the Queen Elizabeth Olympic Park or the Gasholders site at King’s Cross, and they can bring huge economic and social benefits to a given area. Finally the government has seen the potential for many of these sites across the UK and has been willing to help ensure that it is still within housebuilders’ interests to make use of these types of areas, instead of setting vote-getting housebuilding targets to be achieved at random, spoiling much of the countryside in the process.

“However, it also must be remembered that whilst it would be great to have these sites cleaned up with rows of shiny new properties, there will still need to be a significant level of greenbelt development in the coming months if the government is going to meet its housing targets, particularly in London and the congested south east. And the important element here is the delivery of green, affordable housing, which will allow the government to work towards its net zero carbon goals, whilst also addressing the housing shortage. Affordability continues to be a major issue for vast swathes of the population and whilst the government’s aim to build an additional 300,000 homes per year for the next five years is all very laudable, these need to have a large proportion offered at affordable price points in order to help the millions still struggling to get onto the property ladder. Thankfully the Chancellor’s announcement of a dedicated £11.5bn towards solely affordable housing ought to help this, however the proof will be in the pudding as to whether 180,000 new affordable homes is enough to really make an impact on this perennial problem which successive governments have repeatedly tried to tackle.

“These are muddy waters ahead and the government will need to review both its housing targets and its changes to the planning system regularly in order to navigate them.”

Original Article from Financial Reporter 27/10/21

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Energy Efficiency still not a hot topic for most house buyers

New research shows that despite media attention and new government policies, better energy efficiency is not a key issue for the large majority of buyers. 

A study by NatWest and IHS Markit, based on responses from 4,500 people across the UK in the third quarter of 2021, found that only a small percentage of homebuyers considered EPC rating a ‘very important’ factor if purchasing a home in the next 10 years; it was the fourth lowest among the 12 factors surveyed.  

Only 15 per cent of households said that having an EPC rating of C or above was essential when selecting a property.

The EPC rating ranked below other environmental factors, such as air quality, amount of local green space and levels of noise pollution. 

Out of all the environmental factors listed, risk of flooding was considered by far the most important, even beating internet speed for importance. 

And although 52 per cent of homeowners have plans for green home improvements over the next decade – this is only if they are cost effective. 

Just one-in-seven homeowners are ‘very confident’ of being able to replace their gas boiler with a more sustainable alternative at an estimated cost of £5,000. Some 57 per cent were either ‘not very’ or ‘not at all confident’.

Lloyd Cochrane, head of mortgages at NatWest, says: “With COP 26 fast approaching, the tracker shows that there is a noticeable proportion of homeowners who firstly don’t consider an EPC rating or energy efficiency as important and secondly, have no plans to make improvements in the next decade..

“… There is much more we all need to do across industry and government to raise consumer awareness, provide relevant information and appropriate support. The switch to greener lives and homes should be accessible to all – not just those who can afford it.”

Original Article from Estate Agent Today 26/10/21