View more on these topics

End of the B2L honeymoon in sight

Kevin Paterson takes a weekly look at the latest developments in the market and brings you what’s hot and what’s not in the world of mortgages

The buy-to-let sector has enjoyed stability over the past decade but Allsops, the country’s largest auctioneer, recently reported that investment property repossessions now make up more than half of its properties for auction.

Lenders typically auction property when traditional routes fail so the auction market is a useful barometer, though not infallible. Indeed, many areas of the industry attacked the report which first appeared in the Financial Times so it’s difficult to isolate the truth from the vested interest.

But there’s no doubt that repossessions are up, as is bankruptcy, individual voluntary agreements and debt overall, so the fact that investment property repossessions are up should be no surprise.

The buy-to-let sector has been attractive for would-be property millionaires for years with a cottage industry springing up to support this ‘if it looks too good to be true it probably is’ dream, and it could be that many amateur landlords are feeling the pinch.

While interest rates have continued to climb over the past 18 months, rental yields have fallen and it could be this that is fuelling repossessions.

Overzealous property developers selling investment property at inflated values with a short-term rental guarantee have played a large part in damaging the investment market, leaving would-be investors with property they cannot rent at the levels they need to fund their mortgage debt when the rental guarantee comes to an end.

When interest rates were running at 3.5% a rental yield of 5% was attractive even after costs but with interest rates exceeding 6% for buy-to-let properties a rental yield of 5% takes the property into negative income territory.

It is no surprise that there are more repossessions and we all know where the bulk of these are coming from. In fact many of us probably arranged the mortgages for the amateur landlords who now find themselves in trouble. How many of us can honestly say we advised them correctly?


Avoid the festive bling if you want to sell

Christmas lights are a big turn-off for buyers, apparently. Yes, this week’s prize for stating the bleeding obvious goes to propertyfinder.com.

A survey it carried out last summer put Christmas lights at number eight in the top turn-offs list. Only eighth?

When you go to view a property you want to see it furnished but uncluttered, decorated but not garish. I’m not sure what type of idiot sees Christmas as a good time to sell their home but apparently there are some. (And more worryingly there are people out looking at property over Christmas – get a life.)

We’ve all seen these houses that look like they have a direct feed from the national grid to keep the lights on. Don’t get me wrong, I’m all for festive spirit but some of these houses are over the top and, surprise surprise, this is a turn-off for potential buyers.

This comes on the back of a report by Alliance & Leicester predicting that the number of single occupancy households will top 9.9 million by 2026. These are presumably the same people who are viewing properties at Christmas – they are bored because they are on their own.

It is also the driver for the yawning shortfall in new homes. The breakdown of the family unit and the rise of the ‘me’ culture take most of the blame here, although Labour has done a good job of making marriage an unattractive and financially punitive option. It’s no wonder we are where we are.

Buyers don’t know how lucky they are

A recent poll found that many home buyers are green when it comes to understanding what goes on in the house buying process.

The poll, conducted for an organisation I have never heard of with the catchy name of the Council for National Land Information Service found that many people think estate agents do the conveyancing. Many estate agents can’t even spell the word, let alone know what it is. They also fail to understand the importance, relevance or deal-breaking potential of local searches.

The C-NLIS also found that people do not know what their conveyancer does for them. No surprise there, as I’m still not sure either.

But one thing they should all understand is that estate agents, unregulated, untrained, and largely unaccountable, work only for the vendor as it is they who are paying their bill.

We, on the other hand, have a level of regulation that protects and informs our customers. And while they may not always know what is going on, they have a professional looking after them and the comfort of knowing that if it all goes wrong they have a comeback in law with teeth, unlike the National Association of Estate Agents which is a club of toothless wonders.

Recommended

A&L complies with Basle II

Alliance & Leicester says it has become the first UK bank to comply with Basle II regulations. Basle II, which imposes regulatory capital requirements to lending risks, will affect most lenders next year but smaller banks and building societies are looking to comply now.

E-trading system for Nationwide

Nationwide will launch an e-trading system on January 16 to service it and its subsidiary UCB Home Loans.

InterBay offers commercial mortgage seminars

InterBay is launching a series of business building seminars to give advice to intermediaries on commercial mortgages.The free seminars will help intermediaries target clients and build their businesses with a new income stream from commercial loans.Anna Bennett, head of marketing for Interbay, says: We have been delighted with the success of our first series of […]

Brokers must provide clients with a choice of solicitors

From Alan DringIn a letter last year (Mortgage Strategy December 11) John Sparks expressed dismay at the poor service provided by many solicitors undertaking free conveyancing on behalf of lenders and suggested that lenders need to give clients the chance to use their own solicitors. I agree but suggest that brokers as well as lenders […]

Auto enrolment – so far so good?

Jamie Clark – Business Development Manager The recent report from the Pensions Policy Institute demonstrates the sheer scale of auto-enrolment so far and what we can expect in the future. We’ve pulled out the key information to save you reading the full report. Auto enrolment in numbers Sources: Pensions Policy Institute, The Future Book: Unravelling […]