mortgage market
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Mortgage market subdued after summer highs

Remortgage levels have steadied after a period of strong summer growth as activity across the mortgage market softened, according to trade body figures.

UK Finance found 35,600 homeowner remortgages and 12,300 buy-to-let remortgages were completed in September – down 0.6 percentage points and 0.8 percentage points respectively on the same month a year earlier.

Jackie Bennett, director of mortgages at UK Finance, said the figures showed remortgaging for residential and buy-to-let properties had levelled out after a period of strong growth, reflecting the number of fixed rate loans reaching maturity.

Meanwhile purchase activity across the residential market fell in September, with 29,400 new first-time buyer mortgages completed in the month – from 35,400 in August and 30,800 in September 2017.

New homemover mortgages also fell to 29,400, down from 38,000 the month before and 32,100 in the same month a year earlier.

Ms Bennett said: “Demand for house purchases for both first-time buyers and homemovers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the south east.”

The buy-to-let purchase market also softened in September with 5,200 new mortgages completed in the month, 18.8 percentage points fewer than in the same month a year earlier.

Ms Bennett suggested the lending in the buy-to-let market remained subdued as a result of recent tax, regulatory and legislative changes.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the mortgage market was inevitably subdued as people delayed decision-making while political and economic uncertainty continued.

He said: “This is likely to continue into the spring, until we pass the Brexit deadline in March, by which point some of that pent-up demand may be released and the market could well pick up.”

Mr Harris added: “UK Finance figures do not appear to take into account product transfers, which will have a significant impact on remortgage numbers.

“This market is much larger today than 12 months ago as borrowers opt for the simpler process of sticking with the same lender and moving onto another rate, rather than starting a new application with another lender.”

Source: FT Adviser

Marketing No Comments

Tangled Up in Unpaid Invoices? Here’s How Invoice Factoring Can Help Your Small Business

Unpaid invoices routinely hurt small businesses. Invoice factoring can be a good way of sorting out invoicing tangles and putting your cashflow in order.

In today’s economy, there really aren’t many better ways of balancing financial stability and job satisfaction than running your own business. A cursory look at the stats should be enough to put this idea into perspective. The ‘entrepreneurship bug’ has already bitten hundreds of thousands of first-time business owners in the UK, and many more are expected to join their ranks.

This is definitely a good sign for the overall economy. But there’s always a downside to such ambitious visions. Running a business is not an easy task. You may need to spend every bit of your savings and many years of your life before you see the idea succeed. The motive behind this post is not to discourage – it’s to educate.

While there are numerous hurdles along the way, we will be discussing a common problem that runs across the board – that of getting paid. We will also try to take a look at how invoice factoring can help address these issues for small businesses.

Good Job on Attracting Customers – But Have You Been Paid Yet?

If your business is young and you’re still starting up, this isn’t a problem you are likely to be familiar with. It, however, is one that you should know more about.

We come across dozens of businesses every month that focus solely on growing the business, without making sure that the work is ‘realised’. The idea of ‘realisation’ of work is straight out of accounting books. The ‘notional’ profits are exactly what they say they are – mere notions. Businesses work hard to sell their services and products, but it’s all for nothing until your bank has confirmed the incoming payment.

This is why your job does not end at sending an invoice. You need to see to it that the customer receives it, approves it and – most importantly – pays it. It’s a rather annoying task, but this is the top line of every business and hence, cannot be ignored.

The Curious Case of Small Business Invoicing

The invoicing problems plague businesses that are not directly consumer facing. The consumer facing businesses seem to get off the hook in this sense – but they have their own billing problems to look after. As far as invoice factoring goes, we will restrict ourselves to discussing small businesses of the non-consumer-facing variety. These primarily include B2Bs and trade businesses.

If you have ever run a business previously or you know how things work for B2Bs, you wouldn’t be surprised to hear this. The waiting time for invoices to get settled is so excruciatingly high that it almost always forces the business to borrow on credit. This, in turn, exhausts their borrowing capacity, leaving them pinned against the wall should the need arise to invest in marketing, growth or research.

Here’s an interesting analysis that sheds some light on this problem.

Invoice Factoring

Comparison of average waiting time for invoice payment by annual turnover for UK businesses – 2016-17 (Courtesy: Statista)

The average waiting time before the invoices are paid stands at around 45 days for all UK businesses. What this means is that every business needs to be able to have enough cash reserves for at least one and a half month to operate normally.

Now, take a look at this number for small businesses (annual turnover less than £5m) – it comes out to be around 62 days. For businesses that turn over less than £1m annually, it further jumps to an astonishingly high 71 days. If you operate in this range, your business needs to have cash reserves for two and a half months.

This, quite obviously, isn’t easy, especially for young businesses.

Failing to see their hard-earned money arrive in their bank accounts on time, these businesses are left no choice but to default on ongoing instalments and mortgages, defer staff salaries and borrow more money than they really need to. This curious case of not getting paid takes an enormous toll on SMEs in the UK. Forbes reports that nearly 1 in 3 SME invoices remains unpaid two weeks beyond the due date, and more than 60% of SME invoices are never settled on time.

What, in such times, should a small business strapped for cash do? Where can and will the next paycheque for the staff come from?

It’s a serious issue – but definitely not one without a reasonable way out. Invoice factoring is a tailor-made solution to common invoicing bottlenecks faced by small businesses.

What Is Invoice Factoring?

Invoice factoring is a type of invoice finance. It’s a commercial finance product that allows businesses to liquidate unpaid invoices with the help of an external lender (the factor).

“Invoice factoring is used around the world by businesses of all sizes. While big businesses and corporations can broker customised deals with banks, the real value of invoice factoring comes to the fore for small businesses that don’t have easy access to credit.”

To understand how invoice factoring works, we need to understand how a typical business goes around invoicing their customers and clients. The process involves four steps:

1. Generation
The business needs to generate the invoice as per standard business practices. The terms of invoice are pre-decided between the two parties involved. In the UK, it’s customary for small businesses to operate on a 30-day invoicing window – the client will be required to pay the invoice amount within this time frame.

2. Dispatch
The generated invoice is dispatched to the client.

3. Approval
The client receives, assesses and approves the invoice (in principle). The approval should ideally come immediately upon receipt, and much before the actual payment.

Remember – if your invoices aren’t subject to invoicing windows, the client may not necessarily have to follow this step. If you don’t have the client’s approval, it will be difficult to factor the invoices.

4. Payment
The client settles the invoices within the invoicing window as per their convenience.

Where Does the Problem Lie?

The problem usually lies between the third and the fourth step.

  • Long Waiting Times

There are times when a business has to agree to invoicing windows that are in favour of the client. This is a common ‘closing’ tactic that allows businesses to snag more customers. The downside is that the invoices stay unpaid for weeks – if not months.

  • The Client Doesn’t Pay on Time

We have already seen how it’s very common for small businesses to have to deal with clients that fail to pay on time. This means that the services you have offered actually depreciate in value – an unfortunate thing.

How Invoice Factoring Works

Invoice factoring aims to address both these problems in one go. Here’s how it works:

  • You compile the unpaid invoices in your sales ledger into two categories – approved and pending approval. Lenders are usually not too keen on buying unapproved invoices unless you have a strong business history with that particular client.
  • You ‘outsource’ the collection of approved invoices in bulk to the lender.
  • Once the paperwork goes through, you receive a cash credit equivalent to the factored invoice amount (minus the lender’s fees).
  • The lender assumes the responsibility of collecting the payment from the client, and your business receives the much-needed liquid cash.

The Advantage of Invoice Factoring for Small Businesses

Being a leading whole of market finance broker, we – at Commercial Finance Network – have seen the impact a good invoice finance deal can have on small businesses. Here are the advantages that invoice factoring brings to the table:

Easy Access to Cash

Cash – no matter how things change – is the lifeblood of small businesses. If you don’t have enough liquidity in your business accounts, it’s nearly impossible to carry out day-to-day operations. With the help of invoice factoring, small businesses can add extra liquidity to their books, eliminating the need to borrow each month.

Flexible Amounts

Other commercial finance products are not as flexible as invoice factoring. With invoice factoring, you decide how much you wish to borrow and at what cost. It’s relatively easier to find a lender who’s willing to accept your terms, given that you work with an experienced invoice finance broker like Commercial Finance Network.

No Repayments

The best part is you don’t have to worry about making monthly repayments. When you factor your invoices, you essentially sell them to the lender. This makes invoice factoring more of a B2B transaction than a commercial loan.

Relatively Cheaper

Invoice factoring is usually much cheaper than a comparable business loan. Since the risks associated with approved invoices are usually on the lower side, lenders can afford to pass the savings on to you. This results in lower fees and more quotes to choose from.

Focus on What You Do the Best

Small businesses have their plates full. Administrative tasks – from bookkeeping to taxes and HR to PR – routinely take your focus off the main goal – growing the business. ICAS estimates that small businesses, on an average, lose one work day every week in managing admin tasks.

Unpaid invoices only add to this never-ending stream of tasks. By factoring invoices, you have one less thing to worry about. Submit the deliverables, get the invoices approved and move on to the next big thing!

Less Burden on the Collection Infrastructure

Small businesses usually don’t have a dedicated team for collections or receivables. Factoring invoices significantly reduces the burden on the personnel who are responsible for ‘chasing’ the clients for money.

Many Lenders Offer Bad Debt Protection

Running a business means coming across all sorts of people. There are bound to be unsavoury experiences and the proverbial ‘bad apples’ that just refuse to pay. You can add a bad debt protection feature to your invoice factoring agreement to safeguard your business from such instances.

Nothing is Perfect. Invoice Factoring Too Has Its Downsides.

Make these considerations before you get into any invoice factoring deal:

Is the Lender Trustworthy?

When you factor invoices, you essentially invite the involvement of a third-party into your business operations. This is one reason that puts many small businesses off. That said – as long as you work with a reliable and reputable lender and broker, there should be little to worry about.

What About the Clients? What Will They Think?

This is a common and very valid apprehension.

It’s also a reason why you should never work with lenders who don’t have a demonstrable factoring experience. You don’t want your clients having to deal with pestering, unprofessional and – worst of all – unethical collectors. A good way around this problem is to use confidential invoice factoring services.

Should You Just Borrow Instead?

It’s entirely up to you and the situation you find yourself in.

Invoice factoring is a faster process than conventional loans and alternative finance products. If you can afford to have a loan on your books each month or quarter, there’s no reason not to go that way. Invoice factoring is best seen as a permanent fix to all invoicing problems, and not as a primary source of capital for a business.

Invoicing Problems Are Common. How You Deal with Them Is What Matters.

You can either choose to get bogged down under the weight of unrealised revenue, or you can leverage the unpaid invoices to your benefit. It all depends on the health of your business, your relationships with your clients and your access to credit.

At Commercial Finance Network, we help you choose from multiple invoice finance offers from the most reputed, experienced and responsible lenders across the UK. Having grown our business from the ground-up, we know exactly how important this is to you.

Don’t let unpaid invoices hurt the top line revenue. Contact us today to request a free, no-obligation invoice finance quote today!

Landlords
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Landlords warned of 2019 rate rises

Landlords must act on competitive mortgage deals before looming buy-to-let rate rises, a broker has warned.

Andrew Turner, chief executive at buy-to-let broker Commercial Trust Limited, urged borrowers to take advantage of cheaper deals while they were available – predicting rates were due to rise in 2019.

Mr Turner said “historically low” rates in the buy-to-let sector had been prominent for some time and reflect a “hugely competitive” marketplace.

But he warned this trend might begin to change as 2019 approached, with rates tied to another potential Bank of England rate rise and Brexit uncertainty.

He said: “The Bank of England’s monetary policy committee have implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

“In my view this will have to change.”

Mr Turner added: “The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

Monthly figures from trade body UK Finance identified a recent trend in buy-to-let remortgage growth while purchases in the same market had droppedamid recent tax and underwriting changes.

Last month Jackie Bennett, director of mortgages at UK Finance, suggested the recent relatively strong growth in buy-to-let remortgages showed many existing landlords remained committed to the market.

Mr Turner said he feels the surge in landlord activity around buy-to-let remortgages was no coincidence.

He said: “For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Liz Syms, chief executive at Connect Mortgages, said the market was still in a very low interest rate environment and fixed rates, including longer term fixed rates, were very well priced.

She said: “All borrower types should look to take advantage of the low fixed rates as there is no guarantee on how long these will continue at the current level, and predictions expect a continued gradual increase of rates.”

But Ms Syms stressed borrowers must also consider future plans when considering longer term fixed rates.

She said: “Most fixed rates have early repayment charges if they are repaid within the fixed rate period, so if there is a chance the borrower may wish to sell the property or change their funding requirements during this period they should consider all options available and not just fixed rates.”

Source: FT Adviser

UK debt BREXIT
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UK debt to soar to financial crisis levels over next five years

UK debt could rise to £6.7 trillion by 2023, from £5.1 trillion in 2017, according to new research.

The UK’s debt as a percentage of gross domestic product (GDP) is predicted to rise to nearly 260 per cent of GDP, a level not seen since the financial crisis.

The debt increase is expected to largely come from increased borrowing by companies and households, which are both predicted to borrow at a faster rate than economic growth, the analysis from accountancy firm PwC said.

The government is likely to reduce the size of its debt relative to GDP over the next five years, but even so, the net effect is set to be a gradual rise in the economy’s debt-to-GDP ratio from 252 per cent in 2017 to just under 260 per cent in 2023.

Total debt repayments could rise from a little above £150bn in 2017 to around £250bn by 2023 if interest rates rise two per cent.

Low income households could be hit particularly hard due to rising debt interest payments.

Chief economist at PwC John Hawksworth said: “While the financial crisis led to the private sector deleveraging, we’ve seen a change in behaviour among households and non-financial companies since 2015, when they began to accumulate debt at a faster rate than nominal GDP growth.

“The unusual amount of uncertainty facing the UK economy in 2018-19 due to Brexit, London’s stumbling housing market and the likelihood of further interest rate increases, means a pause in debt accumulation relative to GDP is possible in the short term.

“But if a smooth Brexit transition is agreed with the EU and UK business and consumer confidence recovers, the private sector is likely to resume faster rates of borrowing that could cause the debt stock to rise further relative to GDP.”

Source: City A.M.

Brexit Hammond
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Brexit deal remains most likely outcome, says the Bank of England

The Bank of England predicted today that a deal remains the most likely Brexit outcome, despite ongoing uncertainty around UK and EU negotiations.

“I still think it’s the most likely outcome, but obviously over time, every day there are headlines – positive, negative – which will send the currency in particular one direction or the other,” deputy governor Ben Broadbent told CNBC.

“But for our part we have to make a particular assumption on which to condition our forecasts, that seems to me still to be the most likely outcome and that’s the one we choose.”

His comments come after former education minister Justine Greening said this morning that parliament would reject Theresa May’s Chequers deal.

Meanwhile, the Prime Minister suffered a setback after the EU reportedly rejected her proposal that the UK can decide to quit a so-called backstop agreement on the Irish border that would put the whole of the UK into a temporary customs union with the EU.

Sterling fell one per cent amid ongoing uncertainty.

In the event of a positive Brexit deal, Broadbent predicted businesses would begin to invest more after relatively weak spending since the referendum.

“If we get a good deal, a good transition, I think we can expect to see investment spending pick up, domestic demand growth pick up,” he said. “On the other hand, sterling presumably would also be stronger, and those act in different directions on inflation.”

However, the Bank predicts that the UK economy’s growth will slow in the fourth quarter, though there are signs that pay pressure is gradually building.

“The signs are we’ll have somewhat weaker growth in the fourth quarter,” Broadbent said.

But the BoE said pay pressure has been increasing, according to business surveys the Bank has conducted as well as official figures.

Wage growth hit its fastest rate since before the financial crisis in the three months to the end of August, the Office for National Statistics revealed last month, after a 40-year unemployment low helped push wages up.

“In terms of inflationary pressure we are seeing some signs of that domestically now,” Broadbent said.

The Bank monetary policy committee decided to hold interest rates at 0.75 per cent at the start of the month, in light of Brexit uncertainty, and Broadbent attempted to reassure businesses and households that rates were not going to rise quickly.

While the Bank has predicted “limited and gradual” interest rate increases, Broadbent said this wouldn’t necessarily come in the form of one rate hike a year.

A smooth transition to life outside the EU may mean that the Bank tightens monetary policy over the next three years to cut inflation to a two per cent target.

“We will do whatever we think we have to do to meet the remit,” Broadbent said. “The point of that box was to say that unfortunately either having a deal or not having a deal is not definitive in terms of the behaviour of interest rates.”

Source: City A.M.

rental yields
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The North West and Scotland have the best rental yields

The North West is the top hotspot for rental yields with an average yield of 5.4%, followed by Scotland with 5.3% and Yorkshire and the Humber with 4.9%, Shawbrook Bank has found.

Lower property prices mean it is easier to achieve better rental yields and the city is attracting students and employees from all around the country. The average UK house price is currently £228,000, which is 43% higher than the average house price in the North West – £159,000.

Emma Cox, ‎sales director for commercial mortgages, said: “Landlords have had a rough ride over the past few years with multiple tax changes, but our research shows that it’s not all doom and gloom for potential investors in 2018.

“Lower rental yields in London and affordability constraints for investors has driven interest North, where borrowers are chasing the yield and heading to locations with lower average house prices.

“There are still interesting times ahead for savvy investors and good investment opportunities remain.

“However, when landlords invest far away from their home turf, they can run the risk of falling foul to local knowledge.

“Smarter local investors may be seeing an opportunity to divest themselves of their less desirable housing stock, so it’s important for buyers to do their research to make sure they understand the local supply and demand before investing.”

The ‘UK Buy to Let’ report, produced by Shawbrook Bank and compiled by the Centre for Economics and Business Research (CEBR) has predicted annual property price inflation to be more subdued in the five years up to 2023 than over the last few years.

The report forecasts average annual house price predictions for the years 2017 to 2023 to be at 4.5%, compared to an average of 7.0% for the high-growth years of 2014 to 2016.

Stretched affordability ratios, years of weak wage growth and the prospect of further interest rate rises all weigh in on the outlook for house prices in the UK for the next few years.

House price growth has slowed in the capital particularly, with Brexit and the resulting uncertainty regarding the future of the financial services sector in the City of London looming over activity in the prime end of the market as have higher stamp duty land tax rates.

The report expected price growth in London to continue to trail behind the rest of the country for the next two years.

Furthermore figures from estate agent Aston Chase already show the percentage of high-end purchases from overseas in London’s most expensive postcodes dropping from 44% in 2016 to 35% last year.

Source: Mortgage Introducer

Buy-to-let mortgage
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Andrew Turner: Buy-to-let mortgage rate rises expected

Buy-to-let mortgage rates are expected to rise so landlords should take advantage of the current low rate deals while they are still available, Andrew Turner, chief executive, at specialist buy-to let broker Commercial Trust, has argued.

He said at the moment there are some historically low rates for both tracker and fixed rate buy-to-let mortgage products.

Turner said: “This has been the case for some time and is reflective of a hugely competitive market place, where lenders are trying to outdo one another with enticing mortgage deals, encompassing low rates, low fees, or incentives such as cash-back or free valuations.

“With over 2,000 products in the buy-to-let marketplace it is clear that there is a myriad of choice for investors. This volume of choice brings with it complexity, where the lowest rate does not necessarily equate to the cheapest overall deal.”

The Bank of England’s Monetary Policy Committee (MPC) has implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

Turner added: “In my view this will have to change. The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

UK Finance buy-to-let data shows strength in remortgaging, whilst the changes in buy-to-let have tempered purchases somewhat.

In November, its statistics indicated that buy-to let remortgaging activity in 2018 would exceed its forecasts by approximately £3bn, while a similar figure would represent a shortfall in its forecasts for buy-to-let purchase business in the year.

Turner said: “It can be no coincidence that there has been a surge in landlord activity around buy-to-let remortgages, with such uncertainty affecting their businesses.

“For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Source: Mortgage Introducer

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Some rare good news for landlords

The trouble with the sheer volume of Budget coverage in the press is that it’s easy to overlook some of the less dramatic announcements. Here are two property-related changes you might have missed, along with a rare good-news story for landlords.

Help to Buy has its wings clipped

Last week’s Budget confirmed that the Help to Buy equity-loan scheme, which offers taxpayer-backed loans worth 20% of the purchase price of a new-build house, will be extended until 2023. But from April 2021 it will only be available to first-time buyers. Buyers will also only be able to purchase properties worth up to 1.5 times the “current forecasted average first-time buyer price” for the region, with a maximum of £600,000 for London. This will mean buyers in the north east will only be able to buy houses worth a maximum of £186,100, while those in the north west will be able to spend up to £224,400.

The current iteration of the equity-loan scheme has been widely criticised for pushing up the price of new builds, as it widened the pool of people who could suddenly afford new-build properties and fuelled demand. So it follows that a price cap might push prices down somewhat by tempering demand, perhaps to the point where the original Help to Buy borrowers could have afforded to buy without the scheme. Unfortunately, these people are already (or will soon be) stuck paying the interest on their government loans (which are interest-free for the first five years).

Crackdown on energy efficiency

Another measure from last week’s Budget that escaped many people’s attention will see more landlords required to improve the energy efficiency of their properties. Since April, landlords who own properties with an energy-performance certificate rating of F or G have had to upgrade them to at least band E or face being barred from arranging new tenancies. Yet landlords only had to carry out these improvements where financial support was available to cover the costs.

From 2019, however – a date is yet to be specified – landlords will have to pay for improvements that don’t exceed £3,500. The cost of bringing a house to the minimum energy-efficiency level is typically around £1,200. This new rule will affect 290,000 properties, estimates the government. Most landlords should not be affected by this rule change, assuming their properties already comply.

Buy-to-let borrowers in demand

Mortgage lenders are offering attractive deals to buy-to-let landlords, in a bid to win the business of those who haven’t left the increasingly unprofitable sector. The past few years haven’t been kind to landlords, as the government has brought in various taxation and regulatory changes in an attempt to slow the expansion of the buy-to-let market. In the first half of this year, landlords spent £12.1bn on new buy-to-let purchases, which is 30% lower than the amount spent in the first half of 2015.

So buy-to-let lenders are competing for fewer customers, and adjusting their offers accordingly. Last month the average five-year fixed buy-to-let rate had fallen to 3.4%, the lowest level since data provider Moneyfacts began collecting these figures in November 2011. Leeds Building Society currently offers an “easy start” mortgage, which gives landlords an initial three months of interest-free payments before reverting to a fixed rate of 2.72% for the rest of the five-year period. The Mortgage Works, part of Nationwide Building Society, offers a five-year fix at 1.99% (plus a £1,995 fee), while Sainsbury’s offers a two-year fix at 1.4%.

Source: Money Week

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One in ten rental properties listed on Zoopla specify ‘no benefits tenants’

One in ten rental properties being advertised on Zoopla explicitly exclude anyone who is claiming benefits, research claims.

Analysis by the National Housing Federation (NHF) of 85,912 properties listed for rent across England on Zoopla this year found 8,710 that openly said “No DSS” or similar.

Separately, Shelter has conducted a mystery shopping exercise on Gumtree and SpareRoom.co.uk, finding that applicants who mentioned that they were claiming benefits were more than twice as likely to get negative responses as those who did not.

While it is not unlawful to refuse to let to people on benefits, Shelter has earlier argued that excluding benefit claimants is discriminatory and has been rumoured to be considering a legal case under the Equality Act.

The issue has prompted much debate on EYE, with agents stating it is landlords who want this exclusion due to the perceived higher risks of rental arrears, while groups such as the Residential Landlords Association have blamed the terms and conditions set by mortgage lenders.

The NHF said that the “blatant discrimination” against people on benefits must stop.

It has issued a series of recommendations.

It calls for agents and their professional bodies to ensure all renters are treated equally, and that such exclusions are refused on listings sites.

It also wants landlords to stop using letting agents who advise against letting to tenants on housing benefit. The NHF said landlords should instead assess each tenant based on the property and whether they can afford it, rather than where the money comes from.

The NHF said: “We are calling on everyone involved in the lettings industry to take action to stop the unfair treatment of people who claim housing benefit.

“This change requires agents, landlords, mortgage lenders, insurance providers and the Government to commit to ensuring that all renters are treated equally, regardless of whether they claim housing benefit.”

Separately, Universal Credit has been blamed for a spike in buy-to-let mortgages that are in significant arrears.

Data from UK Finance shows that the number of buy-to-let loans with more significant arrears of 10% or more was up 3% annually to 1,150.

Mark Pilling, managing director at Spicerhaart Corporate Sales, which deals with arrears and repossessions on behalf of lenders, said these figures suggest issues with Universal Credit are starting to impact landlords.

He said: “Last month, the Residential Landlords Association revealed that 61% of landlords with tenants receiving Universal Credit have had problems with non-payment and arrears, and on average, these tenants owe 49% more than they did a year ago.

“Universal Credit has been plagued by problems since it was introduced, and while the Government announced in the Budget that more money will be dedicated to the new welfare system, it is clear that much of the damage has already been done.

“Many claimants experienced huge delays in receiving their money, forcing them into arrears, and many are receiving far less than they did with the old system, which means in many cases they simply do not have enough money to pay their rent on their reduced incomes.

“From a lender’s point of view, it is important that they keep a close eye on their buy-to-let customers who have tenants who are on or are soon to be moved on to Universal Credit so they are able to work out the best solution for those who are struggling so that repossession is a last resort.”

Source: Property Industry Eye

UK rents
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UK rents outpacing house price growth but are below the cost of living

UK rents are now rising above the rate of house price growth but are just below the UK inflation rate.

Figures from tenant referencing service HomeLet found that new average rents were up 2.1% annually in October to £928 a month.

In comparison, data from the latest Halifax House Price Index showed average growth was at just 1.5%.

Rental growth is, however, still below the inflation rate of 2.4%, suggesting prices are below the cost of living but still higher than the growth in property values.

The biggest increase in rents during October was in Northern Ireland, up 4.5% to £653 per month, while London still has the highest rents, at £1,619 – up 4% annually.

When London is excluded, the average UK rental value was £768 in October, up 1.7% on last year.

Martin Totty, chief executive at HomeLet, said: “Average UK-wide rents continue to increase year-on-year broadly in line with the current rate of inflation and the growth in average wages, meaning affordability in most parts of the country is little changed.

“The exception is London and the south-east, where average rents have increased above both inflation and average wage growth. In contrast to house price trends in this region of the country, activity levels in the private rented sector remain resilient.

“Landlords committed to the sector here seem able to command higher rents, potentially providing some offset to the negative headwinds of taxation changes some will have experienced.”

Commenting on the figures, Adam Male, director of lettings at online agent Urban.co.uk, said: “While many are resigned to the rental sector due to the inflated cost of home ownership, the continued escalation of rental costs is, in fact, a second facet of the UK housing crisis.

“An increase in rental prices across 11 out of 12 regions highlights the plight of tenants across the UK and the uphill struggle they face just to put a roof over their head.

“Rather than work with the nation’s buy-to-let landlords, who act as the backbone of the UK rentals sector, the Government has introduced numerous legislations to ‘level the playing field’ between landlord and tenant.

“The reality of this excessive and consistent campaign against the buy-to-let sector has been a reduction in rental properties, an uplift in rogue landlords and unsuitable living conditions and a spike in costs for UK tenants.”

Source: Property Industry Eye