Where more than two people occupy a property but don’t form a single household, usually because they are not related, the property will now be classified by the government as an HMO.
In England and Wales with effect from “late autumn” (the exact date is still to be decided), private landlords with HMOs of three or more stories AND with five or more tenants will have to get a license. These impose tough standards on fire and electrical safety, the number of people in occupation and even the kind of person who can be a landlord.
Local authorities can also “selectively extend” licensing in part of their area to ALL properties (not just HMOs) if they think there is a need, say, if a local problem with antisocial behaviour exists or they think the standard of housing justifies it.
Each local authority will set its own license fee. Landlords who don’t register can be fined up to £20,000 plus having to repay rent received whilst not registered.
However, there is likely to be a 3 month grace period when the scheme starts. With this aditional organisation and 'policing' will this dent the buy to let market? Is there a hidden agenda by the government? i.e. think of the amount of poll tax lost by local authorities within the UK, the power of policing will be shifted towards the local authority!!!
Wednesday, November 9, 2005
Thursday, June 30, 2005
Local authority right to buy
From the 18th January 2005, changes to the law will affect Council Tenants' Right to Buy. The changes have been introduced to prevent abuses of the Right to Buy scheme and to try to tackle the shortage of low cost housing in both rural and urban areas. Changes include qualifying period, repayment of discount, the local authorities right of refusal and a time limit to purchase.
The Right to Buy scheme has helped almost 1.6 million council tenants in England buy their own homes. In many cases, it has encouraged more affluent tenants to remain in the neighbourhoods they have lived in for many years, helping create stable, mixed income communities.
The scheme enables local authority secure tenants with at least two years tenancy to buy their homes at a discount price. It is targeted at well-established public tenants, with the discount increasing in rough proportion to the years they have been paying rent.
If eligible you can buy your home by paying the full purchase price at once with a maximum discount ranging from £16,000 to £38,000 for both flats and houses, depending on where you live.
The Right to Buy scheme is open to virtually any secure tenant who can afford to buy, with the exception of homes occupied in connection with their employment and housing specially provided for older people and (in certain cases) disabled people.
The Right to Buy scheme has helped almost 1.6 million council tenants in England buy their own homes. In many cases, it has encouraged more affluent tenants to remain in the neighbourhoods they have lived in for many years, helping create stable, mixed income communities.
The scheme enables local authority secure tenants with at least two years tenancy to buy their homes at a discount price. It is targeted at well-established public tenants, with the discount increasing in rough proportion to the years they have been paying rent.
If eligible you can buy your home by paying the full purchase price at once with a maximum discount ranging from £16,000 to £38,000 for both flats and houses, depending on where you live.
The Right to Buy scheme is open to virtually any secure tenant who can afford to buy, with the exception of homes occupied in connection with their employment and housing specially provided for older people and (in certain cases) disabled people.
Friday, June 3, 2005
Are repayment mortgages fair
For many years now consumers within the UK have had the option of Interest only and capital & Interest repayment mortgages (Repayment). The mis-selling of endowments and the subsequent furore and compensation claims have ensured that endowment linked interest only mortgages are no more. Some of the facts about endowment mortgages.
The number of endowment policies in force has declined to 8 million and will continue to fall, there are around 5.5 million people with mortgage endowment policies.
Over 20% of policies are no longer being used to support the repayment of a mortgage.
Each policyholder has, on average, 1.5 mortgage endowment policies.
The average projected shortfall is around £5,500. The FSA estimates that the total shortfall in the UK is £30bn. Discounted for the effects of inflation, this amounts to around £20bn, spread over 15 years.
Sales of endowment mortgages reached their peak in 1988, when they accounted for more than 80% of all new mortgages. Te total number of endowment mortgage policies in force in December 2004 was 8 million. This fall (from nearly 11 million in 2001) reflects the reduction in endowment sales in recent years and the number of policies that are now reaching maturity or being surrendered In 1999, the FSA revised their official projection rates downwards to the current levels of 4%, 6% and 8%.
So what we had was a huge shift to capital and repayment based mortgages i.e. consumers wanted peace of mind that their mortgage would be repaid at the end of the term. The repayment mortgage also very much suited the risk profile of a large percentage of consumers, whereas this was never questioned when endowments were being sold and which proved to be an exceptionally high risk repayment vehicle.
Do we now feel more secure or have we been lulled into a false sense of security. What the consumer over the past few years has been blissfully unaware of is that repayment mortgages are loaded front end with interest i.e. you pay very minimal capital off within the first few years and the majority of your monthly payments is made up of an interest only element. It can therefore be argued that a repayment mortgage is an absurdly expensive interest only mortgage initially. Three points to consider here are:-
1)Prior to FSA regulations (1/11/2004) consumers who moved house every few years were probably given a 25 year term ad infinitum. These consumers have only been treading water when it comes to depleting the capital of their mortgages.
2)Should a repayment mortgage be structured more fairly? Equal amounts of capital and Interst repaid!! the graph should go diagonally from one axis to the other, but it doesn't.
3)Under new FSA regulations it is expected when a broker gives advice and recommendation that if the customers started their mortgage 2 years ago with a 25 year term, then the remortgage term should be 23 years, more ethical and appropriate isn't it.
FSA Regulations have brought mortgage brokers into a new age of accountability and has hopefully ensured that the majority of the bad apples have been squeezed from the bottom of the barrel. Recent estimates have suggested 35%-40% of brokers have left the industry, a cottage industry to boot.
The number of endowment policies in force has declined to 8 million and will continue to fall, there are around 5.5 million people with mortgage endowment policies.
Over 20% of policies are no longer being used to support the repayment of a mortgage.
Each policyholder has, on average, 1.5 mortgage endowment policies.
The average projected shortfall is around £5,500. The FSA estimates that the total shortfall in the UK is £30bn. Discounted for the effects of inflation, this amounts to around £20bn, spread over 15 years.
Sales of endowment mortgages reached their peak in 1988, when they accounted for more than 80% of all new mortgages. Te total number of endowment mortgage policies in force in December 2004 was 8 million. This fall (from nearly 11 million in 2001) reflects the reduction in endowment sales in recent years and the number of policies that are now reaching maturity or being surrendered In 1999, the FSA revised their official projection rates downwards to the current levels of 4%, 6% and 8%.
So what we had was a huge shift to capital and repayment based mortgages i.e. consumers wanted peace of mind that their mortgage would be repaid at the end of the term. The repayment mortgage also very much suited the risk profile of a large percentage of consumers, whereas this was never questioned when endowments were being sold and which proved to be an exceptionally high risk repayment vehicle.
Do we now feel more secure or have we been lulled into a false sense of security. What the consumer over the past few years has been blissfully unaware of is that repayment mortgages are loaded front end with interest i.e. you pay very minimal capital off within the first few years and the majority of your monthly payments is made up of an interest only element. It can therefore be argued that a repayment mortgage is an absurdly expensive interest only mortgage initially. Three points to consider here are:-
1)Prior to FSA regulations (1/11/2004) consumers who moved house every few years were probably given a 25 year term ad infinitum. These consumers have only been treading water when it comes to depleting the capital of their mortgages.
2)Should a repayment mortgage be structured more fairly? Equal amounts of capital and Interst repaid!! the graph should go diagonally from one axis to the other, but it doesn't.
3)Under new FSA regulations it is expected when a broker gives advice and recommendation that if the customers started their mortgage 2 years ago with a 25 year term, then the remortgage term should be 23 years, more ethical and appropriate isn't it.
FSA Regulations have brought mortgage brokers into a new age of accountability and has hopefully ensured that the majority of the bad apples have been squeezed from the bottom of the barrel. Recent estimates have suggested 35%-40% of brokers have left the industry, a cottage industry to boot.
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