Re-mortgaging on the up

It's the property story of the day - re-mortgaging activity has perked up by 17% in February, according to the Mortgage Advice Bureau.

After seeing increased activity in the first-time-buyer and buy-to-let markets for a few months now, re-mortgaging finally appears to be catching up. The source of the change appears to be the continuing drop in interest rates, which many believe is due to the introduction of the Funding for Lending scheme last August.

Similar to previous months, those looking for a better deal are keen to secure a fixed rate mortgage with more than 90% opting for two-, three- and five-year rates.

Good news also for buy-to-let investors where Aldermore have given mortgage distributors 3mc access to a deal starting from 4.8% interest at up to 70% loan-to-value. It's available on loans between £50,000 and £500,000. Certainly one to consider if you are planning on investing in property at the moment.

Whilst our team doesn't directly arrange finance for you, we are happy to put you in contact with one of our trusted partners to help find the best solution for you.

House sales on the up - but prices are down

We've come across a couple of interesting stories on the property market, both in Edinburgh and further afield this morning.

It's mixed news for the Scottish capital where house prices have fallen by 5% on average. Having said that, a number of properties are not only retaining their value but have actually increased in price over the past six months. There's also some good news for first time buyers as starter flats in a number of areas are becoming more affordable. Buy-to-let properties have grown in popularity, too, thanks to a strong rental market driven by both students and professionals.

Across the UK, house sales have hit a two and a half year high in February, according to the RICS. The organisation's members have seen sales gradually increasing over the last few months.

We believe the good news are down to a number of factors coming together: potential buyers are ready to snap up a deal now, many potential sellers have re-evaluated their expectations and are willing to accept a more realistic sales price. Crucially, however, the banks have started lending at more accessible rates, bringing mortgages within easier reach of more potential buyers. It's a great start to the year and should mean more good news for potential investors over the coming months.

Much movement in property & mortgage industries

If you felt that last year brought a lot of contradictory news about property, mortgages, first time buyers etc, this year seems to be shaping up to bring us even more stories.

According to LSL properties, the number of homeowners in Britain has dropped to a 25 year low. Despite remaining in a majority of just over 65% over long and short term renters, apparently owning a home has got further out of reach for many, often due to the high deposits required.

At the same time, there are green shoots as usual - according to e.surv, part of LSL, the number of mortgage  approvals this past month are predicted to be hitting a four year high. The prediction is based on the company's own workload. Whilst it is good news, e.surv believe that the increase is due to borrowers signing on the dotted line of high loan-to-value mortgages, so will still not spell good news for first time buyers.

Confirming the observations above, the Mortgage Advice Bureau even talks of a 'fixed rate mortgage war' having been declared in the 60 - 65% LTV bracket. Good news for those with cash available for this kind of deposit.

What does it all mean for property investors though? What reads like bad news for potential first time buyers, means that there continues to be a substantial number of people who will be looking to rent in the long term.

So, this is a good time to invest in property and become a landlord. Having said that, it is worth investing in quality property and maintaining it well, as these properties will stand the test of time - no matter what tomorrow's news may bring.

Tenancy Deposit Schemes coming to Ireland

Interesting news on the Tenancy Deposit Scheme side of things - TDS has only been mandatory for a few months in Scotland and the schemes are now being launched across the water in Northern Ireland.

Having officially been launched last November, deposit protection will become mandatory across the province from 1 April 2013. Like in Scotland, the aim is to protect tenants from rogue landlords and making it easier and safer to store and return deposits.

Whilst many tenants in Scotland are still unaware of the (not so) new legislation, Northern Irish The Dispute Service are planning a roadshow over the next few months to inform landlords of their new obligations and tenants of their rights.

More regulation? No, thanks! More enforcement, please!

Over the past year, many stories on landlords and buy-to-let property investors dealt with newly introduced regulation, aimed to help ‘good landlords’ and prevent so-called ‘rogue landlords’ from operating. Do we need more regulation? No, we don’t. What we need is proper enforcement of the existing regulations as opposed to more registration, regulation and landlord-related schemes.

The idea of finding and getting rid of ‘rogue landlords’ is a bit old hat: looking back over the past decade or so a few examples come to mind. In 2006, the Scottish Government introduced the Landlord Registration Scheme (LRS), making it mandatory for landlords to register their properties. Ongoing changes to Scotland’s Private Rented Housing Panel (PRHP) are another example.

Figures obtained by the Scottish Conservatives now show that over the past two years, only 11 rogue landlords were 'found out' under the LRS regulations. Since the scheme started, 200,000 landlords registered successfully, whilst 40 ‘rogues’ have been revealed. Hardly an impressive success rate. All of this comes at a cost of £11.2m to the registered landlords. Annual running fees for the scheme’s website alone are estimated to be around £300,000.

The Scottish Conservatives call the scheme “farcical” – and I have to admit I agree. There is simply no benefit in tight regulations when there is no provision for policing and enforcing the scheme. To a degree, this is where the new Tenancy Deposit Scheme comes into play.

In theory, only registered landlords can place their tenants’ deposits with one of the approved schemes. If the deposit hasn’t been placed by a landlord within a set timeframe, tenants have the right to take their landlord to court and may be awarded up to three times the value of their deposit. In theory, this should encourage landlords to register, or should it?

As with so many other bits of regulations in our industry, there is no system of policing the regulation. In fact, the system relies on the tenant to (a) know about the regulations and their existing rights and (b) take the initiative and do something about them. It’s unrealistic and not very fair on the tenant.

What do we need? We do need regulation, but just as much as that, we need the Scottish Government, local councils or an independent body to enforce the rules they make. Otherwise, all regulation is just a waste of money. 

Cullen Property chosen to provide management service for ESPC Lettings

We're proud to announce that Cullen Property has been chosen wo provide a full management service to the newly launched ESPC Lettings division. Click here for more information.

Stay on the safe side

A recent survey found that almost 20% of landlords are not properly ensuring their rented properties, instead relying on standard home insurance policies. It seems like a simple way to cover yourself, but there are a number of pitfalls.

Read the small print and you will see that not only do most of those policies specifically exclude properties permanently rented out, but they're also missing a few areas of cover essential to landlords.

One of the most likely issues with rented property is water ingress or flooding which may require a tenant to be housed elsewhere until the problem is fixed. This is something landlord policies will cover, but ordinary home insurance usually doesn't.

A solid landlord insurance policy will also cover public liability insurance for the landlord. Why do you need that? It covers injuries sustained on your property and damage to neighbouring property. In practice, the Cullen Property team has seen claims varying from a tenant attempting to pull cupboards of a wall, which fell onto him and hurt his back to a postman slipping and falling in a communal stairway and claiming against every flat in the stairway.

As a worst case scenario, regular home insurers may refuse claims outright when they discover a property has been rented out without their permission.

Looking on the bright side, there are plenty of great deals available as it's a very competitive market. Shop around for a good deal - it won't take too long.