Archive: Feb 2016

Mortgage Intelligence update: Government expands shared ownership

Stephanie Charman takes a look at the upcoming changes on shared ownership, which means good news for first time buyers.

To further bolster the dreams of home ownership in the UK, the government has revealed plans to loosen the rules around shared ownership. As of April 2016, the changes will open the previously limited scheme to 175,000 more households in the UK, with a deposit as small as £1,400 enough to start owning a home.

The restrictions imposed by councils on who is eligible to apply for the shared ownership scheme will be relaxed, opening up the way for many more people. Up to now, only those in certain public sector professions, such as key workers, were able to apply for the shared ownership scheme. But after the changes, the only restriction in place will be a maximum household income of £80,000 (£90,000 in London).

All part of Mr Cameron’s promise to build a “nation of homeowners”, the relaxed shared ownership rules will mean more people will be able to part-rent, part-buy a home. Currently, the rates of home ownership have fallen steadily over more than a decade, from 71% in 2003 to only 63% in 2013-14. Some experts believe that this move may see many social landlords actively developing their tenure, based on the knowledge that demand will increase.

These changes were originally planned to be part of the Help to Buy: Shared Ownership Scheme in 2018, but in the face of increasing house prices Cameron has pushed it forward to encompass existing homes as well as those built under other governmental programmes. In an effort to create a more stable and promising environment in which developers can build, the government continues to spur demand across the housing sector in 2016.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Mortgage Intelligence Update: Armed Forces Personnel

Head of Sales and Marketing Sharon Mawby takes a look at some recent industry announcements regarding army personnel

What is changing?

After recent announcements, our Broker Support Desk has received several enquiries concerning army personnel purchasing a new home. Research has shown that 55% of personnel have been underpaid on their Married Quarters following the new CAAS (Combined Accommodation Assessment System). Instead of being based on proximity to local amenities e.g. post box or phone box, it will now be based on other criteria such as internet access and energy efficiency. This assessment change has resulted in many personnel being advised their accommodation costs have increased.

This has also led to military personnel enquiring into the availability of the Forces Help to Buy. This is a scheme where they are able to apply for an equity loan equivalent of 50% of the personnel’s annual salary, up to £25k. The loan is interest free and repayable over 10 years and must be input as a financial commitment. The funds can be used toward a deposit as well as assisting in the costs involved with the purchase.

What if they are purchasing and get orders to be posted overseas?

Until recently, if the service personnel was being posted overseas for more than six months without family residing in the property, they could only purchase as a buy-to-let. But many lenders have now changed their stance on this following an agreement with the British Bankers Association (BBA) and the Armed Forces Covenant Financial Services. Concerns were raised about the increase in costs of having to have the property as a buy-to-let, despite the intention to live in the property. Barclays Mortgages believe this results in £100 a month of additional costs.

Now the position among many of the big lenders, with more joining all the time, is that the property can be purchased on a residential mortgage and then given consent-to-let. This removes the need for the additional costs on a property the personnel are going to live in once their orders have come to an end.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.

Mortgage Intelligence Update: Government launches online ‘right to rent’ tool

Stephanie Charman highlights some useful ways to help landlords check their tenants’ ‘right to rent’.

From 1 February 2016 (December 1st 2014 in the West Midlands), landlords that let private rented accommodation must ensure they have completed a ‘right to rent check’ for all new tenants that began their tenancy on or after 1 February 2016. This is to ensure that the landlord’s tenants have the right to live in the UK before letting the property to them.

The government has designed the scheme with the help of a panel of industry experts, which included trade bodies, charities and local authorities. The government wants to update the landlord code of practice to include changes to the acceptable document list tenants can provide, whilst also making it as user friendly as possible. This is all part of the wider, stronger but fairer reform on immigration that the government wish to make.

Who is responsible?

Currently, any landlord that is found letting property to someone who isn’t a relevant national or in the country lawfully, could receive a penalty of up to £3,000 per tenant. For those using agents to rent out their property, they must ensure that the letting agents carry out the checks if they’re acting on a landlord’s behalf and have agreed to do them. These checks also apply when renting out a part or all of their home when taking in a lodger or subletting.

Someone who isn’t a relevant national but has permission to enter or remain in the UK also has a right to rent, but follow-up checks must be made by the landlord or agent. A relevant national can be either a British citizen, EEA national or a Swiss national. All of these can rent accommodation, but evidence that they are a relevant national must still be provided.

What is the right to rent tool?

When talking to your clients about their buy to let property, it is good for them to know that there is currently an online tool which can help them. The tool guides landlords through the process of checking if their tenants have the right to rent residential property in the UK, which will be mandatory procedure from 1 February. If they find that a tenant can no longer legally rent the property, they are asked to contact the Home Office, or face a fine for non-disclosure.

The government have released an online tool and a checklist . Both these tools will help landlords prepare for any checks imposed and ensure they have all the necessary documents and have asked all the questions of their tenants. There is also a full list of acceptable documents for proving relevant nationality available.

If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.