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New Black Country housing estate could be built on derelict industrial land

The 13-acre site off Darkhouse Lane, near Rosewood Primary School, will be turned into a new housing estate.

Around 142 properties would be built comprising of 30 one bed flats, six two bed flats, 51 two bed houses, 45 three bed houses and 10 four bed houses.

Plans are set to be approved subject to a Section 106 agreement at a Dudley Council meeting next week.

Affordable housing

Planning documents state: “The site is predominantly brownfield, being occupied by vacant, derelict and dilapidated industrial buildings.

“The development would also include open space and ancillary works to provide a buffer to adjacent industrial/railway uses.

“The application is made on behalf of Accord housing association and it is proposed that the entire scheme would be for affordable housing.”

Dudley Council leader Patrick Harley said if the scheme went ahead it would be ‘a boost’ to the local area.

“I welcome any investment in the borough as the council has been through hard times in recent years. We need to create our own new revenue streams and we can do that by building more houses and collecting more business rates.

“If there is an opportunity for commercial properties that would be great, and homes are good as well. I think this will provide a boost to the local economy in Coseley.”

Anti-social behaviour

A design and planning statement submitted as part of the application states: “Despite the site being allocated as employment land it must be noted the site has remained vacant for some time now and is subject to anti-social behaviour problems during the evenings.

“It is understood Dudley Council have expressed a willingness to consider the site’s potential for residential development.

“The design of any proposed residential development must be orientated to address the site constraints highlighted.

“The railway line to the west and coal manufacturing plant to the north have been identified as major potential noise sources.

“And early noise assessments suggest a minimum 60-metre offset of built form from these boundaries.

“This will achieve a substantial amount of public open space that will benefit any residential development and also provides sufficient space for the incorporation of a sympathetic noise mitigation feature.”

A previous application in 2013, from Darkhouse Properties (Jersey) Ltd, for 108 properties, was approved, but no development took place.

Source: Express and Star

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Sorry, homeowners: London is now officially a “buyer’s market”

London’s housing market is at a critical point, new figures have revealed, with heavy discounting by homeowners desperate to sell their properties tipping the capital into a buyer’s market.

The average home in London is now sold at four per cent below its original asking price, up from just 0.5 per cent in 2014, the closely-watched Hometrack Cities Index showed. In some parts of the capital, discounting has risen as high as 10 per cent.

The figures suggested a widening gap between house price growth in London, which reached just 1.8 per cent between December 2016 and December 2017, and the rest of the UK, where growth was 4.4 per cent.

And while growth in the UK’s 20 largest cities hit 5.4 per cent during the same period, three areas experienced slower house price growth than the capital. In Oxford, Cambridge and Aberdeen, prices fell 0.9 per cent, 1.4 per cent and 9.9 per cent respectively.

By contrast, discounting by sellers in the UK’s largest regional cities is declining: in Birmingham and Manchester, the average price reduction has fallen from six per cent in 2013 to 2.7 per cent last year.

“These results confirm our view that the housing market is following the pattern registered in previous housing cycles with high rates of growth in London over the first half of the cycle being followed by low growth and an acceleration in regional housing markets as prices recover off a low base,” said Richard Donnell, insight director at Hometrack.

“We appear to be at this transition period once again.”

Five more years

Lucian Cook, head of residential research at Savills, said subdued growth in the capital is likely to continue until 2022 thanks to tighter rules on mortgage lending and a hike to stamp duty on high-end homes.

“We’re forecasting that prices in London only increase by a net figure of seven per cent over the next five years, whereas in the UK we think it’s going to be twice that figure, at 14.2 per cent,” he told City A.M.

Political factors

Tom Bill, head of residential research at Knight Frank, added that political factors may also be taking their toll on the market.

“We’ve had two stamp duty increases but we’ve also had two general elections and an EU referendum,” he said.

“The political uncertainty does have an impact. Vendors are still, in some areas, realising where the market is and understanding the need to drop asking prices.”

Earlier this month figures from the Land Registry showed asking prices in the capital had taken a dive, falling 2.3 per cent in the year to November.

Source: City A.M.

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Former psychiatric hospital to be site of 891 new homes

ITS approach to care was then revolutionary, and an entire village complex was supported by a working farm, church, shop and bakery before the rural idyll for vulnerable people was left to became a crumbling folly.

Now the former Bangour Village psychiatric hospital site in West Lothian –the size of 100 football pitches and including 15 listed buildings – is set to be taken over by a housing developer after lying empty for 14 years.

NHS Lothian, has a planning application going through the system for 891 homes, 800 new build and 91 conversions, and a primary school.

It is the second attempt to lay foundations for new homes there after an earlier effort fell victim to the economic downturn.

Allanwater Homes, based in Bridge of Allan, would not comment on its plans for the site but confirmed it has lodged a bid with owner NHS Lothian and that dialogue was ongoing.

It comes after renewed efforts were made to sell the site last year.

NHS Lothian, advised by the Scottish Futures Trust, appointed property advisers CBRe and Justin Lamb Associates to revive interest ahead of a planning decision through West Lothian Council.

Justin Lamb said Bangour is “probably the best opportunity in Scotland to deliver a new village in a mature landscape.”

Source: Herald Scotland

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Buy To Let Mortgage Guide For Expats

Buy to let mortgage rules have tightened up for new landlords as well as seasoned investors.

If you are an expat looking to buy or refinance in the UK, then you need to know how the new rules will impact your business.

Deposits – the more an investor ploughs into their investment, the lower the financial risk for the lender, so mortgage interest rates decrease.

Expect to put down at least 20% of the property value – and 40% if you want the very best interest rates.

Fees and other costs – lenders will charge an arrangement fee on completion and possibly a booking fee for a fixed rate deal. The costs vary between lenders, so make sure you ask when working out the buy to let purchase cost

Stamp duty – landlords pay enhanced stamp duty, which is the rate someone who buys a home to live in pays plus 3%. This online stamp duty calculator will work out how much you should pay

Interest only – many buy to let mortgages are borrowed as interest-only deals. Since April 2017, HM Revenue & Customs has started to phase in restricted mortgage interest relief for higher rate taxpayers.

By 2020, instead of offsetting all mortgage interest against tax, landlords will only be allowed a 20% allowance regardless of the rate they pay income tax

Income assessment – this depends on if you are an amateur or portfolio landlord.

An amateur landlord typically has one or two buy to lets or rents out a home they once lived in. lenders will consider affordability against total income rather than on rent generated by a letting property.

Portfolio landlords have four or more buy to let properties and will have the rent and costs of each property assessed, but the final decision will be based on the projected rental income of the property to be mortgaged.

Rent cover – this is a calculation based on the interest paid on the mortgage and the likely rent a tenant will pay. Typically, rent cover is 140% of the annual interest charge at the lender’s standard variable rate, but the cover rate can vary between lenders.

If the rent cover figure is below the cost of the mortgage, the lender will probably make a reduced offer, leaving the landlord to find a bigger deposit.

Source: Money International

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UK house prices show surprise pick up in January – Nationwide

British house prices grew more strongly than expected in January but there is little sign of a sustained pick-up as households continue to feel the pinch from the Brexit hit to their finances, mortgage lender Nationwide said on Thursday.

Prices rose by an annual 3.2 percent, up from 2.6 percent in December and stronger than a median forecast of 2.5 percent in a Reuters poll of economists.

The increase was the biggest since March 2017 although it remained below growth of about 5 percent in Nationwide’s index at the time of the June 2016 referendum decision to leave the European Union.

In monthly terms, prices rose by 0.6 percent in January, the same pace as in December and stronger than the Reuters poll forecast of 0.2 percent.

Britain’s housing market has weakened since the Brexit vote caused a sharp fall in the value of the pound, pushing up inflation and leading to a squeeze on spending power as wages grew only slowly.

Data published this week showed that lenders approved the fewest mortgages in nearly three years following the Bank of England’s first interest rate hike in over a decade in November.

The BoE is expected to raise interest rates again this year.

“The acceleration in annual house price growth is a little surprising, given signs of softening in the household sector in recent months,” Robert Gardner, a Nationwide economist, said.

Data around the turn of the year can often be volatile, he said, adding: “There are few signs of an imminent pickup, as surveyors report that new buyer enquiries have remained soft in recent months.”

British house prices grew last year at their slowest pace since 2012 and in London they fell for the first time in a full year since 2009, Nationwide has reported previously.

It has said growth in British house prices will slow to just 1 percent in 2018. The market would be even weaker were it not for a shortage of homes for sale, economists say.

Source: UK Reuters

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The next interest rate hike could be as soon as May

The Bank of England could raise interest rates as soon as May if a transition deal is struck in Brexit negotiations, new analysis has suggested.

UBS analyst John Wraith suggested stronger than expected GDP growth in the fourth quarter of last year and an improved momentum in the first month of 2018 could lead members of the Bank’s monetary policy committee (MPC) to raise rates by 25 basis points by the middle of the year.

Such a hike would put the base rate at 0.75 per cent, its highest in almost nine years.

However, Wraith added that the scenario is “explicitly conditional” on a transitional deal being agreed by March at the latest.

The Bank last hiked interest rates at its November meeting, raising them from their historic low of 0.25 per cent to 0.5 per cent. But weak consumer confidence and low wage growth has caused economists to suggest the Bank should keep rates on hold for the foreseeable future. Last month, City A.M.’s shadow MPC unanimously voted to hold rates where they are.

But in his note today, Wraith gave a 50 per cent probability to a rate hike by May. However, he added:

We are sceptical that the smooth path effectively priced in thereafter will materialise, and believe any optimism from an early transitional deal could soon run into fresh doubt as the challenges relating to more permanent arrangements resurface.

Source: City A.M.

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High yields still await savvy landlords

Landlords who let out property on a room-by-room basis last year enjoyed yields of 8.9 per cent on average, research from specialist buy-to-let mortgage broker Mortgages for Business shows .

This compares to a much lower, though still healthy, 5.6 per cent yield on ‘vanilla’ buy-to-lets where the whole property is let on one tenancy agreement.

Profit margins in the buy-to-let sector remain significant, and the firm attributes this  to landlords buying lower cost properties and renting them out for more.

The research found that the average value of a buy-to-let property in 2017 was £305,283 – a 19 per cent decrease on the average in 2016 when it was £375,409.

Jeni Browne, of Mortgages for Business, said: “These results suggest that landlords are seeking lower value properties and, anecdotally, we hear that they have been looking further north for their acquisitions where prices are cheaper.

“The benefits of this strategy include less stamp duty, future capital growth, and scope for rental increases which thus allow for slightly higher yields.”

The findings tally with separate research out last week revealing Nottingham and Liverpool as the best cities in the UK in which to be a landlord.

The Mortgages for Business research also showed the rising popularity of purchasing buy-to-lets through a limited company.

According to the firm, limited companies accounted for 49 per cent of all buy-to-let mortgage completions in the final three months of last year, compared to 31 per cent in Q4 2016.

Houses in multiple occupation – or HMOs – have become an increasingly popular option for landlords on the hunt for better returns after tax changes began to push up their costs.

Ms Browne said: “The attractiveness of HMOs as a buy-to-let investment has increased in recent years not only because of the higher yields on offer but because serious investors are keener to diversify their portfolios.

“With more landlords vying for these properties, prices have been pushed up more quickly than the rents which, I would suggest, is one of the main reasons we are seeing their yields drop.

“Although, I suspect that the granting of fewer new HMO licences is also having an impact.

“Savvy landlords like to have a good mix of properties. They like the consistency of vanilla buy-to-lets and the higher returns of more complex property types.

“Although lower than previously, 8.9 per cent is still an excellent return for HMOs, not only when compared to vanilla buy-to-lets but also other, non-property assets.”

Source: Simple Landlords Insurance

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Liverpool and Nottingham top league table of buy-to-let hotspots

Liverpool and Nottingham are the UK’s best performing locations for landlords with average net rental yields of 6.2 per cent, the latest analysis of buy-to-let hotspots by Private Finance shows.

Overall rental yields in the top 10 locations in the country have increased by an average of 0.9 per cent since May 2017 with the biggest increase of 2.2 per cent recorded in Southampton where rents are rising faster than house prices.

Nottingham is now joint top after moving up from second position due to a £121 increase in average monthly rents.

Cardiff, with a net rental yield of 6 per cent, comes third, followed by Southampton and Greater Manchester both at 5.9 per cent.

Shaun Church, director of Private Finance, said: “Finding the right buy-to-let location is a careful balancing act.

“Too large an initial investment makes it difficult to achieve a healthy yield, but landlords must also be confident that property values will appreciate at a higher rate than mortgage borrowing to achieve a long-term profit.

“Strong rental demand is also key to prevent lengthy void periods that can damage affordability.

“While there has been some movement in the top 10 buy-to-let hotspots, larger cities and university towns tend to offer the greatest opportunity for investors as they offer the highest rental demand.

“Although the buy to let sector is facing many challenges, one area where landlords have benefited is falling mortgage rates.

“However, seeking independent advice is becoming increasingly important for landlords to find and be accepted for the best deals.

“With house prices on the rise, too large a loan can negate any savings made from low rates, so landlords need to consider all aspects of their mortgage.”

There was a slight increase in average mortgage rates towards the end of 2017 as November brought the first interest rate rise in 10 years, up to 0.5 per cent.

However, Bank of England data shows the average two year 75 per cent loan to value buy-to-let fixed rate is at its lowest point at 2.47 per cent since tracking began in January 2012 and has fallen by 2.62 per cent since May 2017.

As a result, many landlords across the UK will have seen their annual mortgage costs fall.

Within the top 10 hotspots, Brighton and Hove has seen the biggest reduction in mortgage costs. Despite a 2.1 per cent increase in house prices in the area in the past eight months, meaning the size of a 75 per cent loan has increased, as a result of falling mortgage rates a landlord would now pay £6,681 in interest annually compared to £6,993 last May, a saving of £312.

Source: Simple Landlords Insurance

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Changes to Mandatory HMO Licensing Expected October 2018

In December 2017 the government announced that it would proceed with extending mandatory property licensing of houses in multiple occupations (HMOs). On 23 January 2018, Housing Minister, Dominic Raab, responded to a written question from Wera Hobhouse MP stating that, subject to Parliamentary approval, the necessary regulations would be brought into force in October 2018.

What is mandatory licensing?

Since the Housing Act 2004 came into force it has been a requirement that large HMOs are licensed under mandatory licensing. Currently mandatory licensing applies nationwide to HMOs that:

  1. Comprise 3 or more storeys;
  2. Are occupied by 5 or more people living in two or more single households; and
  3. The occupiers share basic amenities such as washing and cooking facilities.

As these large HMOs are deemed high risk they are all required to be licensed regardless of where the HMO is located. Recent years have seen local authorities implement additional licensing schemes to cover smaller HMOs in an attempt to tackle poor housing conditions in the private rented sector. For example, in some areas, HMOs comprising one or two storeys need to be licensed.

What are the proposed changes?

The Housing Act 2004 allows the Secretary of State to prescribe the type of HMO that falls within the definition of mandatory licensing. The prescribed description has not been updated since 2006 when licensing under the Housing Act 2004 came into force.

The government has now decided to extend the scope of mandatory licensing to bring smaller HMOs within the scheme. Mandatory licensing will include:

  • All HMOs with 5 or more occupiers living in 2 or more households regardless of the number of storeys. Effectively this means the storey requirement will be removed from the current definition.
  • Purpose built flats where there are up to two flats in the block and one or both of the flats are occupied by 5 or more persons in 2 or more separate households. This will apply regardless of whether the block is above or below commercial premises. This will bring certain flats above shops on high streets within mandatory licensing as well as small blocks of flats which are not connected to commercial premises.

As is the case now, it is the individual HMO that is required to be licensed and not the building within which the HMO is situated. This means that where a building has two flats and each is occupied by 5 persons living in 2 or more households, each flat will require a separate HMO licence.

What are the proposals for implementing the changes?

The government proposes to implement the extension of mandatory licensing in two phases.

Phase one will last for 6 months. During this time local authorities will publicise the new licensing regime, process applications and issue licences. Landlords that did not require a HMO licence before the change in the rules will not be prosecuted during phase one for failure to license a licensable HMO and will not be exposed to rent repayment orders (RROs).

However, landlords will be expected to apply for a licence during the 6 month grace period and they are encouraged to do so because they will not be able to serve valid section 21 notices seeking possession until an application for a licence has been duly made (unless the landlord has instead applied for a temporary exemption in order to remove their property from licensing).

The government’s response is clear that the 6 month grace period does not mean that applying for a licence is optional. It just means that the criminal sanctions for not having a licence will be put on hold. Once the 6 month period is over and phase two begins any landlord without a licence will be subject to the full range of penalties for failing to comply.

It is also important to point out that landlords who currently require a licence under a local authority additional or selective licensing scheme and who are not licensed will not be able to benefit from the 6 month grace period just because their property has fallen within the new mandatory licensing category. These landlords could face enforcement action at any time.

What happens if I already have a licence under the local authority’s additional or selective licensing schemes?

The response paper confirms that properties already licensed under local authority additional licensing schemes will be passported into the mandatory licensing scheme without any cost to the landlord or alterations to the licence conditions for the remaining period of the licence. The distinction between mandatory HMO licences and additional HMO licences is largely artificial as both licences are granted pursuant to Part 2 of the Housing Act 2004. Passporting these existing licences into mandatory licensing should not be too problematic because they both fall within the HMO licensing scheme.

Some local authorities also have selective licensing schemes requiring all privately rented properties to be licensed whether they are HMOs or not. Selective licensing is governed by Part 3 of the Housing Act 2004. Some HMOs are only caught by selective licensing schemes, for example, where they do not fall within the current definition of mandatory licensing or the local authority has no additional licensing designation. In these circumstances, the government proposes to issue converted licences at no additional charge to the landlord. Converting Part 3 licences to Part 2 licences will require more consideration as there are differences between the two licensing schemes. Part 2 of the Housing Act, for example, requires the local authority to be satisfied that the property is suitable for multiple occupation and this includes assessing whether the property meets prescribed HMO standards.

What happens if I don’t get a licence?

There are serious consequences for landlords and letting agents who do not obtain licences for licensable properties. The local authority can bring a prosecution against the landlord in the magistrates’ court and fines for Housing Act 2004 offences have been unlimited since March 2015. Local authorities are also able to issue landlords with civil penalty notices of up to £30,000 per offence as an alternative to prosecution. Tenants and local authorities have additional remedies in the form of RROs where rent or housing benefit can be claimed back from the landlord by order of the First-Tier Tribunal.

Repeat offenders may also be subject to a banning order prohibiting them from letting property once these are brought into force. This is expected to happen in April 2018.

The new rules extending mandatory licensing are expected to come into force in October 2018. Landlords should start reviewing their properties now in preparation for the changes.

Source: Lexology

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Mortgage Approvals Drop to Five Year Low

According to the figures there were 36,115 mortgage approvals in December which is the lowest since April 2013. During the month, banks approved £7.02bn in mortgages which the lowest amount in terms of cash value since September 2016.

The number of approvals dropped from 39,007 in November and is 19% lower than it was during December of the previous year. The slump in approvals happened despite the government’s decision to reduce stamp duty for first-time home buyers, although many industry analysts agree it happened too recently to have an impact.

One factor could be the Bank of England’s (BoE) decision to increase base rates to 0.5% in November which led to a rise in variable rate mortgages in December.

Figures from UK finance did show an increase in first time buyers during December which may have been assisted by various ongoing government schemes. This increase was not felt across the board however, with a recent study undertaken by the Royal Institution of Chartered Surveyors showing that 86% of surveyors had not seen an increase in enquires from buyers since the stamp duty cut.

“December’s marked drop in mortgage approvals suggests that already pressurised housing market activity took a further hit from the Bank of England raising interest rates in early November,” said Dr Howard Archer, chief economic adviser to the EY Item Club.

“Housing market activity has been under pressure from squeezed consumer finances and fragile confidence.”

This news has coincided with the English Housing Survey releasing its annual report on the housing market. These figures showed that the amount of people renting properties had also hit an all-time high of 30% which was up from 28.1% for the previous year.

Lucian Cook, an analyst at Savills, said: “These figures demonstrate how London is at the sharp end of the housing crisis, with severely restricted access to home ownership putting increasing pressure on the private rented sector.”

The number of homes that are privately rented has risen a staggering 74% in the past decade and each household typically spends 41% on rent. Mortgaged households on the other hand are spending much less on housing costs and average at around 19%.

Source: Money Expert