Author: Antony Antoniou

Antony Antoniou MAPD, has been involved in property for over two decades, in developing, sales and rental. With an inherent love of property and a comprehensive knowledge of Northampton and the surrounding area, he is well placed to deal with all aspects of the sales process, from sourcing, valuing, marketing and sales progression.
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Plans to force buy-to-let owners to pay up to £10,000 to boost energy efficiency

buy to let
  • Campaigners are calling for plans to charge landlords up to £10k to be scrapped 
  • Plans are for all new rental homes to have an energy rating of C or above 

Campaigners are urging the Government to scrap proposals to make landlords pay up to £10,000 to improve the energy efficiency of their rental homes.

The National Residential Landlords Association suggested that landlords could not reasonably be expected to pick up the tab in the way that the Government is suggesting for stringent new rules affecting buy-to-let properties.

In an official statement, NRLA said that the plans were based on the ‘misguided assumption that all landlords are property tycoons with deep pockets’.

In a consultation that closed in January, the Government proposed that from 2025 where a new tenancy agreement is signed, the property will need to have an Energy Performance Certificate rating of C or above.

From 2028, all rental properties will need to meet the new standard, even where it is not a new tenancy agreement.

The Government has suggested that, in meeting these targets, landlords should be expected to pay up to £10,000 to make the necessary improvements.

However, the NRLA said that this imposed cap fails to accept the realities of different property and rental values across the country.

It follows research from NRLA that showed private landlords making an average net income from property of less than £4,500 a year. (Scroll down for more information about how this figure was calculated.)

The National Residential Landlords Association is calling on the amount that landlords should be expected to contribute to be linked to average market rents in any given area – known as broad rental market areas – as calculated by the Valuation Office Agency.

Under the NRLA’s proposals, this would mean the amount a landlord would need to contribute would gradually taper from £5,000 to £10,000, taking into account different rental values – and by implication, property values – across the country.

VAT and council tax reductions

Alongside this, the NRLA is calling for a package of fiscal measures to support property investment.

It said these should include the development of a decarbonisation tax allowance, where VAT would no longer apply to energy efficiency and low carbon work.

And it said council tax should not be charged where energy improvements are being made to rental properties when they are empty.

Ben Beadle, of the National Residential Landlords Association, said: ‘We all want to see as many energy efficient rental properties in the sector as possible.

‘Besides being good for tenants, improvements made to rental properties ensure they become more attractive to prospective tenants when being marketed by landlords and agents.’

However, he added: ‘The Government’s proposals for the sector are not good enough.

‘They rely on a misguided assumption that landlords have unlimited sums of money and fail to accept the realities of different property and rental values across the country.

‘Ministers need a smarter approach with a proper financial package if they are to ensure their ambitious objectives are to be met.’

David Reed, of Richmond estate agents Antony Roberts, said: ‘We all want to see improvements to energy efficiency but If these proposals come to fruition, there’ll be a rush of landlords with property in vast swathes of suburbs – where older, less efficient properties make up a greater proportion of the stock – selling rather than incurring what could be considerable costs in retaining an investment in property.

‘With yields so low, returns barely meet costs as they are, especially as the latter have grown significantly in recent years either directly (Tenant Fees Act and electrical regulations) or indirectly (unable to offset mortgage interest).

‘Tenants love charming period conversion flats in good commuter territory and seldom is efficiency/an EPC rating at the forefront of the search criteria, whereas location and provision of attractive accommodation win hands down. There are simply not enough newer, in theory more efficient, properties being constructed to meet tenant demand.

‘The private rental sector vitally needs a healthy supply of good property and landlords who own one or maybe two rental properties make up a large sector of the market. Many are already disgruntled by recent changes and longer-term plans are under question. If they leave, the effect on tenants will be hard felt – a further restriction of supply giving more upward pressure on rental and lack of choice.

‘Hopefully consideration will be given to where there is no easy-fix or realistic programme of improvement to achieve grade C status or better.’

How much do landlords make?

Private landlords make an average net income from property of less than £4,500 a year, according to the The National Residential Landlords Association.

Here is how the NRLA reached that figure… 

The English Private Landlord survey said that the average – median – gross rental income for a landlord before tax and other deductions is £15,000.

 Average costs for landlords would be:

– Repair and replacement of furnishings – based on the previous tax exemption for 10% of annual rent (£1,500)

– Cost of a gas safety certificate (average £80 required annually – checkatrade average)

– Electrical safety check (average £265 performed every 5 years. £53 annually – checkatrade average)

– Deposit protection (£13 from TDS)

– Tenant referencing cost (for two tenants £49 NRLA tenant referencing)

– Interest-only mortgage for the average UK property (£250,000) with a 20% deposit (cheapest available £6,096 annual)

– Insurance (£531.15 for building and contents insurance from Hamilton Fraser using average floor space for PRS property https://www.statista.com/statistics/292206/average-floor-area-size-of-dwellings-in-england-by-tenure/)

– Agency fees (£1200 based on 8% agency fees)

The NRLA based its calculation on an average landlord of a house let to a couple with an interest-only mortgage, and assumed that tenants move annually.

Total gross rental income – £15,000

Repair and replacement costs – £1,500

Tenancy management costs – £726.15 (includes average cost of insurance, gas safety certificates, 1/5 of the EICR cost, deposit protection and tenant referencing)

Agency fees – £1,200

Total deductions before tax and mortgage costs – £11,573.85

Amount that can be taxed – £2,314.77 (£11,573.85 x 0.20)

Tax after mortgage interest relief accounted for – £1,095.57 (£2,314.77 – (£6,096.00 mortgage costs x 0.20)

Remaining balance after Tax – £10,478.28 (£11,573.85 – £1,095.57)

Mortgage costs – £6,096.00 (based on cheapest available 80% Loan to Value mortgage on the average property in the UK of £250,000)

Remaining balance after all average costs deducted – £4,382.28 (£10,478.28 – £6,096.00)

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No Impact: interest rate change not hurting housing market

news 11

The Bank of England has raised interest rates for the first time in more than three years, in response to surging price rises.

Most analysts believe the increase – to 0.25 per cent from 0.1 per cent- will make negligible difference to the housing market.

The decision by the Bank of England will add just over £15 to the typical monthly repayment for a tracker mortgage customer. A standard variable rate mortgage-holder is likely to pay nearly £10 extra a month.

Around 50 per cent of all homes are owned outright anyway, with no mortgage owed on them, and of the rest around three quarters have fixed rate mortgage deals, meaning their repayments won’t change until their current deal ends.

The remaining two million owners are on standard variable rate mortgages or tracker mortgages so their repayments will go up as individual mortgage lenders increase their rates in response to the Bank of England announcement.

Cory Askew, head of sales at Chestertons, says: “We expect the Bank of England’s decision to increase the interest rate to 0.25% to have very limited impact on property buyers and existing homeowners. Further indicating that buyer demand remains strong, is the fact that we have seen no seasonal slowdown this year.”

Simon Gammon of Knight Frank adds: “By raising the base rate it’s clear that the Bank of England believes the economy will shrug off most of the effects of Omicron. Getting a grip on rising inflation appears to be the number one priority.

“Mortgage rates on the high street have been edging upwards during recent weeks in anticipation of this moment and it’s clear the lenders believe there could be at least one more hike in the base rate next year.”

“This rate rise may not be significant but it is a clear statement of intent” says Vanessa Hale, head of insights and residential research at Strutt & Parker.

“The rise has been a long time coming, and with inflation now at decade high levels, there really is little alternative. The rate rise has been priced in to mortgages, and with fixed mortgages making up around 80% of the current market, the housing sector is unlikely to be impacted too dramatically.

“The reality is that demand for housing continues to outstrip supply which will sustain prices for 2022. But with the cost of living continuing to rise, this could have an impact on the housing market for the medium term.”

Eleanor Bateman, policy officer at Propertymark, comments: “The increase in base rate to 0.25 per cent is a small and necessary step and one that most had anticipated for some time.

“Mortgage rates have been creeping up over the past few months, and while those on variable rates will see payments increase, the cost of borrowing remains low relative to historic levels.

“Though, traditionally, the winter months see a decline in activity, our housing market report shows sustained demand with average sales agreed maintained to the end of October.

“With indications that lifestyle factors are continuing to prompt many into making a move, we do not expect the announcement to have a significant, negative impact on the market.”

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Green Mortgages linked to EPC ratings set to soar in number

news 15

Around a quarter of mortgage lenders currently have ‘green’ products promoting improved EPCs – and the vast majority of the rest say similar mortgages are on their way.

The Mortgage Advice Bureau tested 64 major lenders – some 25 per cent currently offer green or net zero mortgages, and of the others 88 per cent say they have plans to do so.

MAB also sought to uncover how many consumers are being offered green mortgages. Of those who have either bought a property or remortgaged in the past 18 months, just 14 per cent had been offered a green mortgage product.

Research amongst borrowers has found that 69 per cent of respondents have not heard of a green mortgage, despite it potentially reducing monthly mortgage payments based on how eco-friendly their property might be.

When asked if they would pay more for a green mortgage, knowing they would be helping with sustainability and the environment, nearly two in five (38 per cent) said they would.

Two in five said they would not pay more for a green mortgage, even knowing it would help the environment. Delving into the reasons why, 24 per cent said they can’t afford to pay any more, 20 per cent don’t want to have to pay any more for their mortgage, and 12 per cent said they already pay enough.

A further 16 per cent said they shouldn’t have to pay more to help the environment and 13 per cent said they don’t know how it will help.

Ben Thompson, deputy chief executive officer at Mortgage Advice Bureau, comments: “Green mortgages are a well-intended product, but they’re only scratching the surface in terms of helping to make the housing market more energy efficient. Existing borrowers, homeowners, and landlords who have properties below a C rating are encouraged to invest their own money to make their homes more efficient and less polluting. However, grants and incentives being offered by government is comparable to a drop in the ocean.

“Retrofitting a property could cost thousands of pounds which most homeowners may not have at hand to call upon. They’re therefore reliant on potentially borrowing against their property, which is where issues bubble to the surface.

“We welcome recent moves by lenders to look more favourably upon borrowers’ affordability based on them buying more energy efficient homes. This makes good sense and we’d like to see more of this positive action.

“However, we need combined industry thinking and innovation to work out how best and who best can influence those properties not meeting A, B, or C ratings to make sure the challenge is being properly tackled. Only then will the real benefits start to be felt.”

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Mortgage rates: Get a fixed deal as soon as possible

mortgage 3

mortgage 3

The Scrooges at Threadneedle Street are preparing to deliver an unwelcome Christmas present for millions of borrowers and wannabe home buyers: the first Bank of England interest rate rise for more than three years and only the third since July 2007.

The nudge on the interest rate tiller is likely to be tiny, probably only 0.15 per cent, lifting Bank Rate from an all-time low of 0.1 per cent to a still remarkably skinny 0.25 per cent.

But what will it mean for mortgage holders and those looking to take out new home loans?

For the majority that already have mortgages on fixed deals — probably around two thirds of the total and 90 per cent of new borrowers — very little in the short term at least. Their products are locked in to the rates they took them out at until the fixed term expires.

For the minority on variable and tracker rates their borrowings costs will rise in line with the Bank of England rate.

So a borrower with a tracker rate of say, 1.5 per cent, is likely to see that go up to 1.65 per cent.

For a borrower with a £250,000 repayment mortgage that will mean an increase in monthly bills from £999.86 to £1,017.56. Not crippling, but not welcome either on top of all the other rising costs of living such as gas bills.

Will mortgage interest rates rise soon?

The fixed rates available in the market to first time buyers, movers or remortgagers are unlikely to go up on the day of the announcement from the Bank of England’s Monetary Policy Committee next month or possibly in December.

They are linked to the swap rates at which banks and building societies can borrow in the City’s wholesale markets and  have already been creeping up, albeit from remarkable lows, over recent days in anticipation of the Old Lady’s move.

What’s the cheapest mortgage deal I can get now?

Although sub-one per cent fixed rate deals are still available to borrowers with deposits of 40 per cent or more, they are steadily drying up.

Over the past fortnight they have fallen from 131 to 116 — mainly two-year fixes — according to data from Moneyfacts with more being withdrawn virtually every day.

The increases are still small. One of the biggest high street players Barclays, for example, raised its two years fixed rate this week from 0.86 per cent to 0.91 per cent.

Its five-year fix for borrowers with a 25 per cent deposit went up from 1.21 per cent to 1.31 per cent. At the very bottom of the market five year fixed rates were available below one per cent earlier in the year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “If you are one of the lucky ones who got a five year fix at below one per cent that is probably as low as it’s going to get — but they are still historically low rates.”

The market remain incredibly competitive with lenders sitting on vast lakes of cheap money that they struggle to know what to do with.

Mr Harris said lenders were caught in a game of bluff, reluctant to be the first to raise rates and lose market share, or be the last and get squeezed on their profit margin.

What are the best mortgage deals for first-time buyers?

Ray Boulger, senior technical manager at broker John Charcol, pointed out that at the other end of the loan to value spectrum some rates are even falling, good news for London first time buyers struggling to clamber onto the ladder at a time when prices are rising again.

For example Newcastle Building Society announced this week that it is reducing its rate on two year fixes for borrowers with only a five per cent deposit by 0.3 per cent to 2.79 per cent, while its five year fixed rate has gone down by 0.29 per cent to 3.19 per cent.

Should I lock in a cheap mortgage now?

When the puff of white smoke finally emerges from the metaphorical chimneys of the Bank of England next month or December, it will come as no shock to the City, the mortgage markets or borrowers.

A rise has been on the cards ever since it was clear that inflation will remain stubbornly above its two per cent target well into next year.

The more interesting questions are how far and how quickly will rates rise.

Next month’s increase may only add a few tens of pounds to typical mortgage bills, but further steps will see that accumulate to significant and painful sums.

If ever there was a time to lock into rates that remain lower than almost any point in the history of lending it is now.

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Cost of moving soars for second year in a row

news 15

news 15

Research by price comparison service MoneySuperMarket has itemised the additional fees incurred by people moving home.

This year’s 12 per cent rise in the cost of moving home follows an eight per cent rise in 2020, when costs jumped from £3,417 to £3,688.

Now the average cost is £4,116 excluding the cost of the property and mortgage.

After agency fees, legal services and stamp duty, additional charges – mostly for removals, cleaning and storage – now average £748.

MoneySuperMarket’s findings uncover significant cost differences between cities. Aberdeen is the most expensive location, with additional moving costs of £1,020.

The five most common additional costs are buying new furniture, purchasing new household items such as bedding and kitchen utensils, paying for post to be re-directed,  changing utility providers, and removals.

Jo Thornhill, money expert at MoneySuperMarket, comments: “The cost of moving house is … an issue that has come into sharp focus over the past 18 months with the housing market booming in response to government incentives like the stamp duty holiday.

“What is less well known are those additional costs of moving that can add a significant amount to your bill, over and above items like stamp duty, legal and estate agency fees.”

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Referral fees and sales and finance back-up offered to agents

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A new service has been launched claiming to offer ‘a new supportive partnership opportunity’ for agents to earn referral fees.

Cox & Flight Financial Solutions also claims agents using the service will speed up individual sales.

It suggests it offers mortgage and protection products from across the market, as well as access to exclusive mortgage deals not available on the High Street.

Cox & Flight also suggests it can help estate agents convert their sales pipeline into revenue by providing a value added service managing property sales from start to finish.

It adds that this will reduce fall-throughs.

Director Simon Cox comments:”We are tremendously excited to launch our new service. With an established background in estate agency and a long history of residential sales behind us, we are confident we can offer estate agency businesses the kind of complementary mortgage support package needed to compete in today’s home buying marketplace”.

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House prices will still rise even after interest rate hike, says senior analyst

news 13

Business consultancy Hargreaves Lansdown is predicting house prices will still rise, even after a possible hike in interest rates later this year or early next.

Sarah Coles, personal finance analyst at the consultancy, made her prediction after the latest government house price data showing values bouncing back close to their record highs in August, after a small dip in July.

She says the erratic movement in price growth was inevitable after the stamp duty holiday changes, but insists that “when these fall out of the figures, there’s every sign that prices will remain resilient – even after interest rates rise.

“Most of the value of the stamp duty holiday was lost at the end of June, so we saw a big surge in average prices in June as people rushed for the deadline and pushed prices up. After this passed, the market took a breath, and prices dropped back slightly in July. Then, in August, the final stamp duty holiday deadline started exerting an influence.

“And while people could save far less at this point, there was still the psychological effect of the final deadline at the end of September urging them on. Price rises bounced back in August, and there’s every sign they’ll remain strong in September too.”

Coles says an interest rate rise is on the cards, because of movement amongst financial levers such as swap rates – but she says the signs are that an interest rate rise will not trigger house price falls.

“The banks are currently prepared to increase their exposure to risk in a way they would be wary of, if they thought prices would fall. So, for example, HSBC has increased limits on how much wealthy buyers can borrow. Those with incomes of £75,000 or more can now borrow five and a half times their income – up from five times – and there’s every chance other banks will follow suit”

“Likewise, the Bank of England Credit Conditions survey last week showed that banks were increasingly willing to lend in the three months to September, particularly to those with less equity in their homes. They expected to make borrowing even easier towards the end of the year. When asked what affected their decision, while better economic conditions dominated, they were also positive about the future of house prices.”

Coles believes the immediate prospects for the property market aren’t tied so directly to the Bank of England base rate as they once were, partly because most mortgages are currently fixed over two or five years.

“Those who are locked into rock bottom rates are protected from rate rises for a significant period. Those who have deals coming to an end within the next six months can arrange a new fixed rate right now, which will kick in immediately after their deal expires.

“And while rate rises will be unwelcome, and will eventually feed into higher mortgage payments over the coming years, as yet, rate rises are being predicted at relatively modest levels, so there will still be deals available at historically affordable rates. So while we may see some of the heat come out of the market, we’re not currently expecting prices to fall.”

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Another jump in house prices confirmed by government figures

news 14

news 14

House price inflation accelerated to 10.6 per cent in August, up from 8.5 per cent in July as buyers rushed to beat the end of the stamp duty holiday.

Government figures from the Office for National Statistics data show that the average house price across the UK reached £264,000 in August, some £25,000 more than a year earlier.

Scotland saw the highest annual growth, with prices up by 16.9 per cent to £181,000; followed by Wales, where average prices were up 12.5 per cent to £195,000; England, where prices rose 9.8 per cent to £281,000; and Northern Ireland, where prices were up 9.0 per cent to £153,000.

Yet again London saw the lowest annual growth – for the ninth consecutive month – with prices up 7.5 per cent annually but on a monthly basis prices jumped 5.6 per cent in August alone in the capital.

Director of Benham and Reeves, Marc von Grundherr, commented: “Yet further proof that the drop in property prices following the initial stamp duty holiday deadline was merely a pause for breath in an otherwise marathon run of positive market momentum.

“There’s little sign of this letting up and should an increase in interest rates materialise, the likelihood is that it will be fairly palatable for the average homebuyer. Therefore, we don’t expect it to have any notable impact on the nation’s insatiable appetite for homeownership and the market should continue moving forward at pace well into next year.”

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Housing Market: supply shortage for fifth month in a row

news 11

news 11

Another market snapshot has identified low supply as the chief characteristic of the sales landscape this autumn.

Landmark Information Group’s latest Property Trends Report has identified a fifth consecutive month of low property supply levels, with new listings reporting lower numbers than pre-pandemic figures in 2019.

The report, covering England and Wales for the past three months, shows that listings were down by an average of nine per cent compared to 2019 data, while demand continued to outpace supply, maintaining a sustained imbalance in the market.

Completions peaked at 44 per cent up in September this year (ahead of the stamp duty holiday end) versus September 2019, although the previous two months both recorded fewer completions compared to the prior two years.

LIG says: “This has been a rollercoaster period for property lawyers and conveyancers as they navigate the various SDLT holiday deadlines and consequential activity peaks.”

In more detail, the report says:

Property Listings: Last quarter, new property listings were down every month when compared to the same period in 2019: down six per cent in July, down 13 per cent in August and down eight per cent in September, even though demand has remained steady. “Unless a rebalance occurs, there is the potential to see stock levels continue to decrease as we head towards the end of the year, which could continue to affect house prices.”

Sold Subject to Contract: For properties converting to Sold Subject to Contract, the data was relatively stable compared to previous quarters with a gradual trend that moved closer to the SSTC data from 2019 from month to month: July reported a nine per cent decrease, August seven per cent down and September a one per cent difference from the pre-pandemic stats.

Legal Conveyancing: Property search order-volumes were a more consistent picture, month to month, with volumes marginally higher than 2019 figures; three per cent up in July, four per cent up in August and two per cent in September. “Even though property lawyers and conveyancers were working hard to meet the stamp duty deadline, it is most likely that a large proportion of searches were ordered in the previous quarter, due to typical order patterns and turnaround times.”

Completions:  Data shows that completions in September peaked 44 per cent higher than in September 2019 driven by the need to beat the conclusion of the stamp duty incentive. The data shows however that completions were much lower in both July (down 35 per cent) and August (down 19 per cent) compared to 2019, illustrating a slowdown in mid-summer, most likely as legal professionals took some well-deserved time off after the exceptionally busy previous quarter.

Simon Brown, chief executive of Landmark Information Group, says: “The property industry has shown great resilience over the last 18 months as it has had to traverse so many challenges – from the market closure amid the height of the Covid lockdowns, to surges in market activity driven by the Government’s stimulus activities, all the while managing home-working, furlough and unpredictable market conditions.

“As much of the property industry breathes a sigh of relief following the various surges in market activity ahead of the stamp duty deadlines, many aspects of the market are starting to present more stable figures, including SSTC, legal search order-volumes and mortgage valuations.

We are however seeing the demand for properties continuing to exceed supply. This market imbalance has the potential to lead to depressed sales, placing increasing pressure on property prices, as sellers are able to command higher asking prices. We look to see if this adjusts as we head towards the pre-Christmas sales period.”

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Think tank proposing annual property levy

council tax bill

Council tax should be scrapped and replaced with annual payment equivalent to 0.5% of homeowner’s property, says think-tank

  • Labour-leaning think-tank suggests council tax should be replaced by annual levy
    The Institute for Public Policy Research called for a ‘proportional property tax’
    Under their system, someone living in a house worth £1million would pay £5,000

As well as replacing council tax, the new levy would also replace the stamp duty which people pay when they move house.

The think-tank said the move would lead to a fall in house prices of 3 per cent in London and other well-off places in the South.
Shreya Nanda, IPPR economist, said: ‘Those who did not own property during the long house price boom have been locked out, and too many face steep rents, cramped flats and eye-watering mortgages.
‘A proportional property tax would instead ensure that these gains were shared more fairly across society.’

A property tax of 0.5 per cent could mean three quarters of households in England paying less than what they do now.

Last night, a Treasury source said there were no plan to introduce such a property tax.