Monthly Archives: December 2009

Regulations to Protect Buy to Let Borrowers

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In a move that many have been calling for and predicting for a very long time now, the Government has announced that the buy to let sector will now be regulated to protect the borrower.

This follows a comprehensive investigation by the government into the causes of the latest financial crisis, and means that people entering into a BTL agreement can now do so with some sense of security.

Exchequer Secretary, Sarah McCarthy-Fry, says “We are determined to reform the system for the future, to offer both stronger protection for consumers and greater stability in the housing market.” And most of us can only say “about time!”

Apparently, the sticking point regarding the regulation of the BTL industry involved the fact that expenditure in this area was regarded as investment finance. Many have rightly pointed out though that given the huge number of amateur landlords involved in BTL this is a bit of a misnomer.

The bad news about this regulation is that some mortgage lenders have issued a thinly veiled threat about how it will affect the number of BLT loans available. Anyone involved in this area knows that it is very hard to secure this kind of mortgage at the moment and it seems that mortgage lenders are saying that this regulation will make it even harder.

I am not sure why this should follow. If the regulations are designed to protect the consumer then surely only those loans that were abusing the rights of the consumer will disappear. The mortgage industry must agree that those should never have existed in the first place?

New Laws Will Govern Landlords in 2010

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We have known it was coming for some time but the news that laws governing landlords are nearly upon us.

These laws, which are designed to provide a better service for council tenants, will come into effect in April 2010. They are apparently supposed to make sure that the landlord gives the tenant more rights over the management of their homes, keeps maintenance to a pre-arranged schedule and, quite bizarrely in my opinion, does more to tackle anti-social behavior.

I will have to investigate further exactly what this means but on the face of it landlords being responsible in any way for anti-social behavior sounds like nonsense. I could have sworn that is what the police were for and that the government we elected should be responsible for making sure it is done.

Apparently, the Government has appointed the Tenant Services Authority (TSA) to keep check on the new laws. Peter Marsh, Chief Executive of the TSA, said:

“We welcome the Government today confirming that our powers will be extended and the standards we’re developing for landlords will apply to local authorities as well as housing associations from April next year.”

This seems very handy for the government and does smack a little of a huge washing of hands. I may stand corrected once I have learned a little more about it. I will keep you up to date on this one.

Property Prices to Fall in 2010

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According to Bloomingberg, UK house prices are more likely than not to fall next year. Furthermore they state that it will be 2014 before house prices get back to the highs of 2007 when the UK was at the peak of its housing boom.

The economists and estate experts surveyed say that the rebound of 2009 was as surprise and highly unlikely to continue into the following year.

Most predict, on average, a 1.6 percent fall in UK house prices:

“The market is still overvalued, whichever measure you use, prices need to fall a further 20 percent to 25 percent to get back their long-term trend.” said Seema Shah of Capital Economics Ltd.

This was quite an extreme view for the survey with this group being the most bearish in their predictions but there is definitely a trend in the report towards thinking property is still well over valued in the UK.

In terms of what this means for landlords, it could be seen as a mixed blessing. While we all like to see the value of our investments growing, a lower price on property gives many a chance to further add to their portfolio. This means that in the long term they will find themselves with a much more valuable collection of property.

In the end it probably comes down to whether you are in property for the long haul. This research once again enforces the point that property is not necessarily the way to go if you are after making a quick buck. Most of us knew that anyway.