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Recent years have been fairly unkind to the UK’s buy-to-let landlord community. With further tax hikes on the cards over the coming years, it is entirely likely that more BTL property owners than ever before will struggle to make meaningful profits.

Aside from this, there are those who see other issues on the horizon that could result in an exodus away from the sector. Specifically, the adoption of mandatory energy performance improvement measures is likely to represent a significant challenge for landlords and investors across the country.

Current figures from the Office for National Statistics (ONS) indicate that most private rental homes across the country have a better-than-expected median energy efficiency score. However, this average score is still significantly lower than the wider average for the housing sector in the UK.

In England, the average rented detached property has an energy efficiency score of 58. This increases to a score of 60 for semi-detached rental properties, 62 for terraced homes, and 68 for maisonettes.

Average scores are similar in Wales, coming out at 56, 61, 61, and 68, respectively.

Except for flats and maisonettes, all the scores are significantly lower than the general national averages. Data from the ONS suggests that the average home energy efficiency score in England is 66, and in Wales it is 64.

The main issue facing landlords is the government’s goal of ensuring as many homes as possible have an energy efficiency score of at least 69 by 2035. Something that is likely to prove difficult or impossible for many landlords who own housing stock in need of significant improvements to hit this target.

Speaking on behalf of Propertymark, policy manager Timothy Douglas emphasised the challenges on the horizon for many UK landlords.

“It is now well over twelve months since all properties rented on a relevant tenancy in the private rented sector in England and Wales must meet the EPC band E rating, so it is good to see agents and landlords meeting the requirements and adhering to the rules; everyone wants to see a rented property that is safe, secure, and warm,” he said.

“However, the government’s latest proposals for EPC band C present a much tougher challenge for many properties across the country.”

“With the wide range of property types in the private rented sector and proposals for a £10,000 cost cap, landlords across the country are being presented with financial and practical challenges, which, if not tackled, could result in a reduction in supply and landlords exiting the market.”

Whether the issue results in a mass exodus from the sector remains to be seen, but it will inevitably mean major costs being incurred by many landlords across the country.

With increased reports of mortgage fraud, it is becoming increasingly important to protect yourself from scams when considering buying a property.

We all think we would be too clever to fall for a scam, but with the recent case of a victim being conned out of a whopping £640,000, experts are warning home buyers to be vigilant.

Figures from the Office of National Statistics Crime Survey reveal that there were around 4 million cases of scams reported in England and Wales in 2020 alone. From email, text, and phone scams to online shopping and property scams, criminals are becoming increasingly sophisticated in their methods.

Recent information revealing a marked increase in conveyancing fraud has prompted the National Economic Crime Centre and the National Crime Agency to offer guidance on how home buyers can ensure that they are protected against such threats.

Conveyancing fraud

Also referred to as “authorised push payment fraud” or “payment diversion fraud,” this is one of the most lucrative scams for criminals.

It involves the scammer posing as a lawyer and convincing the buyer to transfer outstanding balances and deposits into the criminal’s account. The victim becomes liable due to the fact that they authorised the payment.

In more detail, it involves the scammer intercepting correspondence, usually emails, between the buyer and their solicitor, where they are able to gain valuable information related to the purchase. The scammer then creates a “spoof” email that mimics the account of the solicitor and then sends a request for the exact amount owed, leading the victim to believe that the email has come from a reliable source.

Fraud threat lead at the NECC, John Shilland, told conveyancers: “Payment diversion fraud is increasing, and it is vital to be alive to the threat as criminals are targeting home buyers due to the scale of the transactions.”

“Whenever a client is making a payment for a house purchase, they should be highly suspicious of any change in account details or new instructions. Remind them to always check with a trusted, known contact, and if they have any doubt, not to transfer the money.”

How to protect yourself

The average loss victims see as a result of conveyancing fraud is around £100k, prompting the government to set up a task force to tackle all scams in the UK.

The following advice can be used to safeguard yourself against unscrupulous scam artists:

Double-check the bank details

Ensure to ask for bank details either in person or over the phone (you should initiate the call) right from the offset. You could also request a copy of the details by post as an added precaution.

Initially, only send a small sum of money by transfer, and then ask your solicitor to confirm that it has been received before you transfer the balance.

Should you receive an email stating any changes in bank details, call to confirm that the details have in fact been changed before commencing with any transfers.

With advances in technology, scammers can spoof any number on your caller ID, so make sure you hang up and call back the number to make sure it is genuine. Also, double-check the telephone number on their website or previous correspondence.

Check your online security

Ensure that you use a secure network when opening or replying to any correspondence received from your solicitors. Unsecured Wi-Fi can be easily hacked into by scammers.

Install anti-virus protection and update it regularly to ensure you are secure, and make sure passwords are strong and that you have a different one for each account.

Stay off social media

Although you may want to announce your exciting house-buying plans on social media, avoid doing this until all contracts have been signed and all funds have been exchanged. Fraudsters are constantly scouring platforms such as Facebook, Instagram, and Twitter to find victims to target.

On September 24th, the concept of buy-to-let, as we know it, celebrated its 25^th birthday. Unveiled by the Association of Residential Lettings Agents at a major event in London, buy-to-let was launched with significant fanfare and equally significant scepticism.

There were those who predicted nothing but bad tidings and turbulence for the somewhat controversial new concept. Some had even predicted the buy-to-let scheme to be relatively short-lived, particularly as it grew into a sector rife with misconceptions, misunderstandings, and misleading myths.

Fast-forward 25 years, and the UK’s buy-to-let sector is one of the most robust and attractive in the world. But what is important to remember is that buy-to-let is not exclusively about generating massive profits for those who bought the right homes at the right times.

It has also had a major social impact on countless communities across the UK that have benefited significantly from the private rental sector (PRS).

Disproportionate focus on profiteering landlords

All manner of shadows have been cast on the buy-to-let sector over the years, giving it a somewhat undesirable image for many. Oftentimes, criticism focuses on profiteering landlords, who are accused of making easy money at the expense of their tenants.

When you consider just how many multimillionaires the buy-to-let sector has made over the years, you see the logic in such associations.

What is routinely overlooked is the way in which buy-to-let landlords are simply running a business, complete with the same risks and responsibilities as any other venture. Not to mention the increasingly strict and complicated government policy designed to hit investors where it hurts.

Contrary to popular belief, making a success of buy-to-let business venture in the UK is not easy. It involves a lot of hard work, can be surprisingly stressful, and comes with an endless list of associated costs and tax liabilities. Not to mention the constant threat of further issues prompted by problematic tenants.

The majority of tenants are as amicable, responsible, and well-meaning as it gets. But there will always be a small minority that appears intent on making things as unpleasant as they can for their landlords. Anti-social behaviour, damage to property, ongoing rent arrears, and so on are all everyday issues private landlords must contend with.

Investment in quality housing

The UK’s private landlord community must also be credited with supporting the redevelopment of the private rental sector, which at one time was in a rather sorry state of collective repair.

In the 25 years since its debut, buy-to-let has seen billions of pounds pumped into homes of all shapes and sizes across the country. Today, it is illegal for a landlord to let out a property that does not guarantee a certain level of safety and good overall living standards.

For those who cannot afford to buy their own homes or simply do not wish to do so, the PRS continues to play a pivotal role in the UK’s housing landscape. Even today, it is a sector that still has unfair and unjust connotations, with greedy investors looking to make easy money at the expense of their tenants.

 

Equity release has become an increasingly popular option for retirees, as many homeowners face the daunting prospect of insufficient retirement income.

Official guidance from the Pension & Lifetime Saving Association’s ‘Retirement Living Standards’ states that to meet their basic living requirements, retirees need a minimum of £10,200 in their pension pots. In 2020, figures suggest that more than 85% of newly-accessed pension pots contained less than £10,000.

This would suggest that even with full state pension contributions, those concerned would find their finances stretched uncomfortably.

Meanwhile, average property prices in the UK have spiked by more than 13% over the past year alone. In the 10 years from July 2011 to July 2021, average property prices in the UK grew from £169,866 to £255,535.

In total, combined equity wealth among adults over 50 in the UK is somewhere around £3.8 trillion. Retirees who own their own homes could, therefore, be sitting on all the capital they need to get the most out of their retirement.

With a lifetime mortgage, aka equity release, those who are asset-rich but cash-poor could leverage some or all of the equity they have tied up in their home—precisely what millions are doing—in order to raise cash for a variety of reasons.

Applications for equity release

The latest figures from Legal & General indicate a number of patterns among intended applications for lifetime mortgages. One of the most common reasons for releasing equity is funding home improvements, with 41% of applicants indicating their intent to renovate their homes.

Around 17% said they intended to give some or all of the funds raised to their loved ones. Helping family members with mortgage deposit requirements to purchase their own homes is another popular application.

In the wake of the COVID-19 pandemic, there has been a major spike in the number of equity-release customers simply releasing funds to sustain their lifestyles.

Further growth is projected for the equity release sector

Speaking on behalf of Legal & General Home Finance, Chief Executive Officer Claire Singleton predicted further growth for the sector going forward.

“In recent years, people have become more accepting of the concept of equity release, which has helped the market grow. However, many potential customers are still unaware of the product’s flexibility and the broader benefits this can have both for individuals and wider society,” she said.

“We anticipate that as more people see the value in their property wealth increase, lifetime mortgages will cease to be seen as specialist’ option and instead become a more standard consideration among other at-retirement products.”

“Looking ahead, we anticipate that products on the market will evolve to better serve the diversity of consumer needs, whether it’s innovation that helps people improve their quality of life, support their loved ones, or ‘green’ improvements to help better manage their impact on the world around them. The home is a vital part of an estate and is often an individual’s largest asset.”

“As people are living longer, accessing property wealth will become an increasingly important consideration to help meet financial goals and fund the retirement they dream of.”

UK mortgage brokers are advising property owners to carefully check the terms and conditions of their mortgages following news that there could be a huge increase in rates by 2023. This, in real terms, means that monthly mortgage repayments will potentially rise by hundreds of pounds if the BOE’s baseline is to rise, as has been forecast by the Office for Budget Responsibility.

Currently sitting at an all-time low of 0.1%, the base rate is expected to rise in the coming months in order to tackle rising inflation. It is not yet known what the rise will be, but we have been warned of a “worst-case scenario” where decreased wages and increased energy costs may cause the baseline rate to rise to as much as 3.5% by 2023. This, in turn, could see mortgage repayments rise by as much as 33%.

Director at mortgage broker Your Mortgage Decisions, Dominic Lipnicki, said: ‘For many borrowers, the idea that the Bank of England base rate could increase to 3.5 per cent by 2023 is very scary indeed.

‘Those used to record low fixed rates would be shocked to see their payments balloon if such an increase became a reality.

‘The market has not seen rates as high as this since 2008 and many borrowers would find such an increase devastating.

‘Many borrowers who are either on the lender’s standard variable rate or a few months away from their fixed rate scheme expiring will be keen to secure a new deal now to avoid that risk.’

Considering we are currently experiencing some of the lowest rates on record, the expected rate increase has come as somewhat of a shock. Lenders are suggesting that sooner or later the rates had to increase substantially.

‘There are early signs of upward pressure on mortgage rates, with markets anticipating a base rate rise.

Competition cannot hold prices back indefinitely

‘At some point we will start to see movement, and the historically low rates that we have today may have a very short shelf life. We could see upward momentum as early as the first quarter next year’, commented John Eastgate, managing director of property finance at lender Shawbrook Bank.

Brokers are urging people to carefully check their mortgages, particularly those with standard variable rates, and are encouraging them to consider switching to fixed-rate mortgages. Fixed mortgage deals at lower rates will allow households to budget more effectively for the coming years, which is vital with other household costs rocketing.

Chief executive at The Mortgage Lender, Peter Beaumont, said:’ For some, depending on the deal they are on, the financial benefits of remortgaging could outweigh any charges, especially during this period of record-low rates.

‘For anyone tied to a standard variable rate, then the best bet is to refinance as soon as possible.’