All things considered, it’s hardly a surprise that mortgage affordability is becoming a growing concern. Some of the factors behind it are largely outside the control of private individuals. Even so, there are still plenty of steps individuals can take to ensure that they get and manage the mortgage they need. Here are some points to consider. Choose your location carefully It’s impossible to overstate the importance of location when buying property. If you want to make the most of your budget, then it makes sense to look for affordable areas on an upward trend. Keep in mind that politicians of all persuasions do seem to be committed to regenerating the UK’s more neglected areas. It could therefore be worth investigating areas you might previously have considered undesirable to see how they are now. You could also look at areas that are benefitting or due to benefit from changes. For example, look for areas that are set to receive infrastructure boosts such as better transport and/or internet. On the flip side, if you believe that you could work remotely or at least hybrid-work over the long term, you could look at areas with limited transport links. Look for a property with the potential to expand Property with obvious potential for expansion does tend to be more expensive than a property without it. On the other hand, it also tends to be more affordable than a property that has already been expanded. This means that it can be a good compromise option for people who want to buy a lower-cost property now but still keep their future options open. Be prepared to think creatively about the options for expansion. For example, if your local area has lots of pubs and cafes, you might be able to use one of them as a remote office. That would have an ongoing cost but could allow you to buy a smaller property at a lower upfront cost. Consider buying property in need of improvement You need to be careful about biting off more than you can chew. Major renovations are generally best left to the professionals. If, however, a house just needs a bit of work done, and the price reflects this, it could well be worth a look. Manage your finances actively At a minimum, keep a reasonably close watch on your credit record. Brutal as this may sound this can be an early indicator that you have been the victim of identity theft. On a less unpleasant note, genuine mistakes can happen. When they do, you want them corrected as soon as possible. Aim to minimise your expenses. In particular, think carefully about where it pays to commit and where you want to maximise flexibility. As a rule of thumb, if you’re sure you’re going to need a product or service over the long term, then it often pays to commit to a long-term contract. If you’re not, then it’s generally better to go for flexibility, even if it is a bit more expensive. With mobile phones specifically, remember that handsets can be bought separately from contracts. This is often the way to get the best deal on both. On the flip side, also do whatever you can to increase your net worth, particularly your income. Even free resources can help you to develop your skills and make you more attractive to employers. Many of these are available on the public internet. You could also try your local library. Get the right mortgage deal If you just go by the adverts you see, you might be left with the impression that the UK only has about a dozen or so mortgage lenders. You might also be left with the impression that all of their products were pretty much the same. In reality, the UK has an extensive mortgage market with a huge number of different products to choose from. This extensive range means that it’s very likely there is at least one product out there that is the right match for your needs (and even wants). You may, however, struggle to find it by yourself. That’s why it makes sense to use a mortgage broker. It’s worth noting of course, that mortgage brokers may be limited to working with lenders approved by their financial services network. For help and advice, please get in touch. We have access to a comprehensive range of first charge regulated mortgage contracts from over 65 lenders across the market.p

Up until fairly recently, it was more or less taken for granted that homeowners would have their mortgages paid off by the time they retired. Over more recent years, however, it has become increasingly common for people to reach retirement age with mortgages still active. This means they need a strategy for dealing with it. Here are some options. Keep working Retirement age is increasingly becoming just a number. There are definitely still people who happily down tools and head out into the retirement sunset as quickly as they can. There are, however, now also increasing numbers of people who essentially see retirement age as being just a number. They are therefore quite happy to keep working to some extent for some time (possibly not indefinitely). If you’re one of those people, then you might find it useful to lay the relevant groundwork well in advance of your retirement. If you’re currently employed and wish to remain so, make sure that your employer is happy for you to go on working past retirement age. Even if they are, it’s advisable to think carefully about what you would do if you were made redundant. This is sensible at any age but has particular relevance to mortgage-holders working past retirement age. Make sure to keep your skills sharp and relevant and consider starting a side-hustle as well. Use your pension If you are sure you have enough in your pension to pay off your mortgage, then you’re on firm ground for retirement. It is, however, important that your calculations are accurate. You might, therefore, want to get them double-checked by a financial advisor. Downsize As with working post-retirement, downsizing is seized upon with joy by some retirees but vehemently disliked by others. This is because it’s at least as much a lifestyle decision as it is a practical one. If you’re not sure whether or not downsizing is for you, then you might want to assess your current home’s suitability for ageing in place. If it’s not suitable, or not ideal, then it’s advisable to look into the practicalities and costs of making it suitable. If you discover that adapting it is not practical, then you know that you are going to have to move at some point in any case. You could therefore look at how to manage this move so it fits with all your goals (financial and lifestyle). If your home is suitable for ageing in place, then you need to assess both the financial and practical pros and cons of staying in your own home. You can then compare them with your situation if you downsized. Monetise your home You could try turning your home into a source of income. The obvious way to do this is to rent out a room but there are others. Use equity release Using equity release can square the circle between reduced income and a mortgage. It is, however, a massive decision. It should therefore only be taken with proper, unbiased financial advice. Combine different options All the signs are that reaching traditional retirement age with a mortgage outstanding is likely to become the new normal. People are buying homes later in life meaning that 25+ year mortgage terms are more likely to go past their 60th and even 70th birthdays. Some people may even opt for longer terms to spread the cost of home ownership. None of this has to be a problem but it does have to be carefully managed. It’s therefore advisable to get regular advice from an unbiased financial professional. It’s also advisable to enlist the help of a mortgage broker whenever you take out a mortgage (including remortgaging). Both steps will help to ensure that you get a suitable deal for your money. For help and advice, please get in touch For pensions and equity release products, we act as introducers only

The early days of COVID19 were a time of saving, at least for some. The early days of post-COVID19, by contrast, are increasingly a time of borrowing. With that in mind, here are some tips on how to borrow astutely. Keep on top of your credit record If you need to borrow then you need your credit record to be in as good shape as it can possibly be. At a minimum, check it once a year for errors. It’s better to check every six months or even once a quarter. Keep your credit record in mind every time you make a financial decision. The biggest single factor that influences your rating is your track record of making at least the minimum payments on your debts in full and on time every time. Showing consistency of payment in other ways can help too. For example, if you’re renting, see if your landlord reports your rent payments to the credit agencies. If they don’t, consider registering to self-report. The other key factors that influence your credit score are: Whether there are any negative markers on your file How much credit you already have and how it is structured Whether or not your credit file has full and consistent details Here are some specific tips that reflect these factors. Understand hard vs soft searches In brief, hard searches are what happen when you make a formal application for credit. Soft searches are what happen when you make a general inquiry about your standing. Hard searches are recorded on your credit record. If you make a lot of them, it can look like you are making numerous applications for credit. This is a warning sign for lenders. This means that one of the key rules for astute borrowing is to be confident that you’ll be accepted for a product before you formally apply for it. These days, you’ll almost certainly find the lender’s criteria for any product on their website. Many lenders also have eligibility checkers. These do soft searches and let you know if a formal application is worthwhile. Resist maxing out your credit As a rule of thumb, you want to stay under 75% of your credit limit both overall and per product. Ideally, 80% should be your absolute maximum (and even then only temporarily). If you go over this, then you risk triggering red flags with potential lenders. Educate yourself on payment options Currently, in the UK, there are three main ways of getting credit. These are credit/store cards, loans (of various types) and buy-now-pay-later/instalment schemes. Both credit/store cards and loans definitely will show up on your credit file. BNPL/instalment schemes may or may not appear on your credit score. Credit/store cards are convenient and widely accepted. They also have reliable chargeback schemes as well as added protection for purchases over £100. They tend to have high interest rates but you have a certain level of flexibility over how much you pay. You must pay at least the minimum payment. You may choose to pay more. Loans generally need to be applied for upfront. The length of time it takes to process the application typically depends on what type of loan you need and how much you are borrowing. Loans often have lower interest rates than credit cards. They can, however, end up costing at least as much if you choose to pay them back over a longer period. BNPL/instalment payments may or may not charge interest depending on the scheme. Even when they do, they can be very economical. The monthly repayments can, however, be much higher than the minimum payments on credit cards. What’s more, if you default, your credit score can suffer. Make sure that you’re on the electoral roll Even if you don’t want to vote, being on the electoral roll does boost your credit score. Ensuring that you have a clear credit history is one way to improve your chances when applying for a mortgage For more information, please contact me. Your property may be repossessed if you do not keep up repayments on your mortgage

The concept of ground rent has been around since at least Roman times. It has always been a somewhat contentious topic. All that’s really varied is the level of contention. Scotland effectively put an end to it in 2004. In England and Wales, by contrast, its use (and abuse) has continued to grow. Now, however, it may finally be coming to an end. Understanding ground rent Ground rent is a product of the leasehold system. The leasehold system was essentially created as a way for the wealthy to have their cake and eat it. Landowners maintained ownership of their land and derived an income from it without any real effort or risk. Unlike regular tenants, leaseholders had the responsibility of maintaining the land they rented and any structures on it. Over time, the leasehold system developed into a way of managing buildings containing multiple households, particularly blocks of flats. On the one hand, there was a certain level of justification for this. These types of buildings generally have communal areas that belong to everybody and nobody. Having a third party manage them is often very practical. The problems with ground rent Unfortunately, this ground-rent system is also open to abuse. In some cases, this is because management companies have little to no incentive to work efficiently. In others, however, it’s simply management companies leveraging their stranglehold over leaseholders. To make matters worse, over recent years, the leasehold system has begun to be applied to single-family properties. Again, in some cases, there may be some justification for having a third party manage communal areas such as car parks. Often, however, the charges are far in excess of what would be expected for the work done. What’s more, it’s not particularly unusual for leases to have restrictions on what owners can do with their homes. Once again, to a certain extent, this can be reasonable. In some cases, however, leases can be extremely restrictive without any reasonable explanation. They force leaseholders to get approval for minor changes and charge them for doing so. The new rules As of 30th June, ground rent charges will be banned on the majority of residential leases. It will be extended to retirement homes but not until at least 1st April 2023. Leaseholders will also get the right to extend their leases to 990 years at zero ground rent. While this news will be welcome, it does not, in itself, help existing leaseholders. The Westminster government does not currently appear to intend to apply the ban retrospectively. It does, however, appear to want to clamp down on its abuse. To that end, it has had the Competition Market Authority (CMA) investigate the UK’s main homebuilders. The CMA is known to have struck deals with at least four of the UK’s biggest homebuilders. In particular, Aviva, Persimmon, Countryside Properties and Taylor Wimpey have all agreed to revert ground rents to the price they were when the homes were sold. The investigation into other homebuilders is still ongoing. The way forward It seems likely that the government hopes showing its teeth will convince the homebuilding industry to self-regulate. It may be right but, as always, changes tend to have unexpected consequences. The simple truth is that homebuilders need to keep their cash flow moving just like any other business. Generally, they are required to build a percentage of affordable homes per development. By definition, there is a limit to the profit they can make on these. If they are also restricted on ground rent, then some proposed developments may become financially unviable. Any developments that do go ahead may become more expensive as developers increase upfront costs to compensate for the reduction in short-term income. For mortgage advice, please get in touch.

Buying an investment property is very different from buying your own home. Your own home is a place for you to live. An investment property is a business that should make you money. It is, however, down to you to run that business properly. Here are some points to consider before you decide whether or not you’re up to the job. How much investment capital do you have? One of the major differences between buying an investment property and buying shares is that buying an investment property tends to require a lot more capital. If you don’t have enough cash to buy an investment property then you may be able to get financing. This will, however, come at a cost and your returns will need to cover it. What is your investment timeframe? Buying property generally comes with a lot of upfront costs. These will be amortised over the course of your ownership. As a rough guideline, you should allow at least three years for this to happen. Five would be better. The transaction costs in the stock market tend to be lower and hence can be amortised quicker. How much liquidity do you need? The government is working on ways to speed up property transactions. For now, however, they are still actively slow by modern standards. Even if you find a buyer the day you list your property, you can expect conveyancing to take at least a couple of months. If there are complications, it could take several months. In the stock market, by contrast, you can sell your shares, literally with a few clicks. How good are you at estimating and forecasting? When you invest in the property market, you need to be able to predict and estimate costs and income at least reasonably accurately. In fact, the more accurately you can predict and estimate cost and income, the better your results are likely to be. This is particularly important in the residential property market. Here, rents tend to be set for fairly long periods. Once they are set, you generally cannot bill unexpected charges to tenants. The situation is a bit different in the commercial-property sector. In most cases, commercial property will be managed by a third-party company. The main exception is holiday lets (although even here many investors will use a third-party company). In this area, however, it can be easier to change the rent to reflect higher-than-expected costs. How thorough are you about record-keeping? If you own investment property, then you will need to be very careful when you file your tax returns. Any mistakes could see you paying too much or too little. In the latter case, you can expect HMRC to come knocking at some point. They do tend to understand that mistakes happen but they will still expect you to put them right. It’s therefore highly advisable to have a proper accountant take care of your taxes. It’s vital that you keep full and accurate records. How much can you do yourself? At this point, most private individuals should probably delegate all work to other people. There are a number of reasons for this. Most of them, however, reflect the fact that the property market is very highly regulated. The commercial property market currently has lighter regulation than the residential property market. With that said, the law is still very definitely a factor you need to consider. You also need to consider the possibility that regulation will be increased in future. Delegating work to reputable professionals is usually the best way to ensure that you stay on the right side of the law. It also means that you know to bake these charges into your rent. If you start off trying to run your property yourself and then have to change, your finances may suffer for it. In the stock market, none of this is an issue. For more information, please contact me. Your property may be repossessed if you do not keep up repayments on your mortgage For investments, we act as introducers only

Green mortgages are mortgages that are only made available to people buying homes that meet certain sustainability criteria. These mortgages generally offer more attractive rates than comparable regular mortgages. Here is a quick guide to what you need to know about them. Qualifying for a green mortgage Each lender sets its own criteria. As a rule of thumb, however, the property would need to have high energy efficiency to qualify. You should expect to have to reach a minimum of a B (81). Some lenders may require a top-end B (86-91) if not an A (92+). The property also needs to meet all the standard criteria for a mortgage as does the applicant. Why lenders are offering green mortgages The UK has committed to going carbon-neutral by 2050. This initiative is supported by politicians of all parties and from all parts of the UK. It’s therefore highly unlikely to change if there is a change of government. Making the UK’s homes more energy efficient is key to achieving this target. The government is therefore looking at ways to make this happen. It has already directly targeted residential landlords by introducing minimum energy efficiency standards on properties let to residential tenants. The costs of buying suitable property and/or upgrading existing property will, ultimately, be passed on to tenants. They will, however, be passed on incrementally. The landlord will pay the upfront costs. Improving the energy efficiency of owner-occupied property will, however, require a different approach. Essentially it is likely to require carrots rather than sticks. The government is working on this itself. It’s also sending out strong signals to the mortgage industry that it would like to see them on board with this. For example, the Department for Business, Energy and Industrial Strategy has already proposed creating and publishing “lenders’ league tables” showing who has the most sustainable portfolios. As yet, it’s unclear if this will be adopted but it does highlight what the government could do. It, therefore, makes sense for lenders to preempt it themselves. What does this mean for buyers? It means that green mortgages are likely to move into the mainstream. As a part of this, they will change from being largely targeted at the investment property market and start to target the residential property market. In fact, over time, the residential property market is likely to become the bigger market by far due to sheer weight of numbers. This could have very interesting implications for buyers regardless of whether they are moving or remortgaging. Firstly, the availability of green mortgages could start to influence house prices. Buyers could be prepared to pay a premium for energy-efficient homes knowing that they will save on their mortgages as well as their energy bills. The flip side of this is that homes with lower energy efficiency may fetch lower prices unless they have something else to recommend them. In other words, homes that are simply outdated may become challenging to sell. Homes with genuine period charm, by contrast, are still likely to attract buyers. With that said, improving their energy efficiency can make them even more appealing. For those who are already settled, improving a home’s energy efficiency could lead to more attractive deals when remortgaging. This could tip the scales in favour of home improvements that otherwise might not be quite justified by the savings in energy costs. A word of warning on green mortgages At present, the criteria for green mortgages tend to be based on a property’s Energy Performance Certificate. You should therefore make sure that any home improvements you make will boost that. Do your research carefully and, if necessary, consult with a professional before you commit. For more information, please contact me.

Currently, the only hard-and-fast rule on the size of mortgages is that your mortgage has to be affordable to you. It’s down to each lender to determine how they interpret that. Specific policies can and do vary. There are, however, some general points that tend to remain consistently valid. Here is a quick guide to what you need to know. Multiples of income are still a valid baseline The Mortgage Market Review stopped lenders from basing lending decisions purely on multiples of income. It did not stop them from using multiples of income as a convenient baseline for making decisions. At present, you should expect lenders to have a default cap of around 4.5 times income. This cap is, however, likely to be at least somewhat flexible. Remember, however, that this works both ways. In other words, lenders can lower the cap for riskier borrowers. They may also increase it for safer ones albeit possibly not by much. Job security matters In principle, anyone can find themselves out of a job, even if only temporarily. In practice, some people are much more at risk of unemployment than others. The two key factors determining your vulnerability to unemployment are your job/skills and your employment status. From a lender’s perspective, the safest mortgage candidates by far are employees with in-demand skills. They do not have to be professionals. Tradespeople also tend to be highly regarded. They do, however, need to have some marketable skills. The riskiest candidates are people who are self-employed in areas where supply outranks demand (e.g. the creative industries). If you are employed, your employer and length of service with them may also play a role. As with individual jobs, some employers are seen as being safer, overall, than others. Their industry sector will usually play a role in this as will the length of time they’ve been established. Similarly, the longer you’ve been with an employer, the safer you may appear. Deposits are reassuring The bigger a deposit you have the less at risk your lender is. This means that a lender may be prepared to lend you a higher multiple of your income. Keep in mind, however, that the lender will still need to be happy that you can genuinely afford your repayments over the long term. They will also have to factor in the (strong) possibility of interest-rate rises. With that said, if you’ve been able to save a hefty deposit, you probably have your finances in pretty good order. This will work in your favour. Gifted deposits can be more of a grey area. Some lenders will either not allow them at all or will restrict them. Even where they are allowed, they will not be seen as favourably as a deposit you have saved yourself. Your financial history will be key to success Your credit record will give your lender a baseline idea of your ability to manage your finances. This is, however, only a starting point. Lenders will typically ask for 6 months worth of bank statements. These genuinely will be analysed in detail. This means that (at least) six months before you (re)apply for a mortgage, you should be thinking carefully before you put anything non-essential on your debit card. In particular, be careful before making any purchases that could raise a red flag with your lender (e.g. gambling). Some properties are easier to mortgage than others In simple terms, the easier a property is to sell, the easier it is to mortgage. To measure this, think about a property’s features. Then ask yourself, how various demographic groups would be likely to feel about them. The bigger the group of people who might be interested in the property, the easier it is likely to be to mortgage. For advice about mortgages, please do get in touch.

Sometimes it can feel that there’s not enough time in the day to do whatever it is you absolutely need to do, let alone get started on what you want to do or what you feel you ought to do. It is, however, often very worthwhile to make the time to have a regular financial health check with a financial adviser. Here are 3 reasons why. It’s easy for change to creep up on you As the old joke goes, change is the only constant in life. Over time, small, incremental changes in your life, can add up to make a big difference and you may only realise just how much your life has changed when you sit down with a financial adviser and talk through your situation with them. Even supposing your situation and priorities are much the same as they were at your last meeting, it’s worth remembering that the financial market also changes. Some of these changes can make headline news (like the changes to mortgage tax relief for landlords), while others can be introduced with somewhat less fanfare (like the introduction of Innovative Finance ISAs). It’s, literally, a financial adviser’s job to stay on top of these changes and make it clear what they mean to you. You need to be constantly on the look out for ways to make your money work harder for you Even if your situation stays exactly the same from year to year, you may find that there are changes you can make so that your money works harder for you. This may mean exiting an underperforming investment to make the most of a better opportunity or moving to a new product with lower fees and charges or indeed something else entirely. The fact of the matter is that regardless of whether you are just starting out in life, with minimal assets at this point, or whether you’re in your senior years and looking at financing your dream retirement while leaving something behind for the ones you love, you need to make what you have work as hard as possible for you. Just as small changes to your life can wind up making a huge difference to your needs, wants and general priorities, so small changes to your finances can wind up making a huge difference to your overall situation – regardless of how young or old you are. You can confirm that you have the right protection in place (and at the right price) Insurance may seem a chore but having the right protection in place is important at any and every stage in life and even more so if you have financial dependents such as children. When it comes to insurance, there are three basic questions to ask. What type of cover do you need? What level of cover do you need? Where can you get the best value for the cover you need? You need to know the answer to the first two questions before you can make a realistic assessment of the third and this can be a more complex process than it may appear. For example, life insurance comes in two forms, term assurance (which covers the holder for a specific period of time) and whole-life insurance, which covers the holder, literally, until they die. Mortgage-holders and parents with young children might find it more appropriate to use the former so that their mortgage is paid in the event of their death and/or that their children are provided for until they reach adulthood. Older people, however, might find it more appropriate to use the latter so that their loved ones can receive payment shortly after their death, rather than having to wait for probate.

There are lots of ways to help your children get on the property ladder. Not all involve paying cash. Here are some ideas you could consider. Max out ISAs Under current rules, you can pay into a Junior ISA for your child up until their 18th birthday. You can also open a Cash ISA for your child from their 16th birthday. This means that they have two years with two ISA allowances. If you have the cash, this can be a great savings opportunity. Keep in mind, however, that the money in the Junior ISA will belong to your child from their 18th birthday. The money in the cash ISA will always belong to your child. This is part of the reason why it’s so important to teach them financial responsibility from an early age. When they turn 18, a Lifetime ISA might be a useful way for them to save for their first house. It is, however, important to note that Lifetime ISAs can only be used to save for a first property or for retirement. In other words, if they need to withdraw the money for any other purpose, they will pay a penalty for doing so. The penalty is currently set at 25% of the total amount withdrawn. This means that they will effectively be charged for withdrawing the money they put in as well as losing the bonus. Help your children learn practical skills The more your children can do for themselves, the less money they’ll need to spend getting other people to do things for them. For example, if your children know how to cook from scratch, their shopping will cost them a lot less than if they’re buying convenience foods. (They’ll probably eat better too). DIY skills can also come in useful. Properties in need of some work are often more affordable than properties that are already in a “live-in” state. With that said, if you’re planning on helping your children to learn DIY skills, it’s also important that they learn to know their limits. Botched DIY jobs can be expensive! Consider being a guarantor This option should be approached with great caution, if at all. With that said, the option is there for a reason and it can sometimes make sense to use it. There are two main ways of being a guarantor. Firstly, you can be formally listed as a guarantor on a mortgage. Secondly, you can formally loan the buyer your savings for a certain length of time. Guaranteeing a mortgage With the first option, your risk is usually much higher since you are guaranteeing the entirety of the mortgage. This means that it’s particularly important to have legal safeguards in place to protect yourself. For example, you could oblige the borrower to remortgage after a certain period (e.g. five years) so you can be released from your guarantee. There are, however, two important caveats to this. Firstly, you need to be prepared to enforce your legal safeguards if need be. When dealing with children, that may not be as straightforward as it sounds (especially if grandchildren are involved). Secondly, you may find that your children simply can’t fulfil their end of the deal. For example, they may not be able to get a new mortgage. You, therefore, need to have a clear plan in place for what to do in that situation. Loaning your savings Alternatively, you can formally loan some of your savings to your children to be counted towards their deposit. Once your children have built up enough equity in their home, your savings will be returned to you, with interest. This is less risky but not risk-free. You may therefore want to look at having safeguards in place. For further help or mortgage advice, please do get in touch. For savings and investments, we act as introducers only

You need somewhere to live your entire life but you don’t need to own a home at all. You certainly don’t need to own any specific home either as your private residence or as an investment. With that in mind, here are some tips on how you can tell when it’s time to sell. They apply to both homeowners and landlords The property is poor financial value Life moves on for everyone.  Sometimes the result of this is that a home that was great value when you bought it just doesn’t work for you financially anymore.  For example, if you're a landlord, the change to remote-/hybrid working may have made some of your properties less appealing to renters. If you're a homeowner, then a change to a new life stage may mean that a property ceases to make financial sense for you.  Probably the most obvious example of this is empty-nesters who still have the family home.  Downsizing is a major decision and as such deserves major thought.  It can, however, make a lot of financial sense. Be careful of focusing on headline price As with all other markets, the housing market has its ups, plateaux and downs. It can be tempting to try to time the market so that you sell high and buy low. In reality, however, this is often a case of “easier said than done”. A more practical approach is to look at what you could reasonably expect to get if you sold your property and then see what you could get if you used that money elsewhere. For example, in the case of a homeowner, you might look at your options for downsizing and what you could do with any money this releases. Property investors would not only need to look at their other investment options but also the tax implications of selling an investment property. The house isn’t working for you practically If a house isn’t working for you practically, then your first step should usually be to see if the underlying issues can be addressed. This holds true for property investors as much as for homeowners. The key question is whether or not the location is still working for you. If it isn’t then ask yourself if the issue is the location itself or something related to it such as transport. If it’s the former then you may just want to go ahead and sell the property without asking any further questions. If, however, the issue is something related to the location, then you might want to see if it can be addressed. If the issue is related to the property itself, then it’s certainly worth seeing if it can be addressed. This can be a lot more cost-effective than selling it and starting again. It can also be less hassle (even for landlords) and potentially increase the value of the home. On the other hand, there is usually a limit to how much properties can be adapted at all, let alone in a cost-effective way. Sometimes, it is both financially and practically better just to sell up and move on. You want to exit the property market If you are a landlord, you may decide to exit, or at least reduce your exposure to, the property market. If you’re a homeowner, you may find that downsizing, or even renting, can enable you to reduce your estate’s future Inheritance Tax liability. In either case, it can make a lot of sense to dispose of your property in an orderly manner. If this is your main reason for selling then it’s advisable to take professional advice before making any final decisions.  This is particularly important for any homeowner thinking about using an equity release scheme. For further mortgage advice please do get in touch. For equity release products, we act as introducers only

Over recent years, the property-investment sector has become much more regulated. What’s more, it’s increasingly common for landlords to be required to prove that they have complied with rules rather than on enforcement agencies to prove that they haven’t. With that in mind, here is a quick guide to the current rules for buy-to-let landlords. The legal framework of being a landlord Landlords typically have three sets of laws to deal with. These are criminal laws, civil laws and local-authority bylaws. Realistically, for most landlords, the last two are likely to be the more relevant. It is, however, worth remembering that there are most certainly ways that landlords can get caught up in criminal laws. In particular, if a landlord ignores a tenant using their property for criminal activities, they could end up being viewed as an accessory to them. Criminal and civil laws can vary across the different countries in the UK. Bylaws vary by local authority and all laws can change over time. Lawmakers tend to give a lot of notice regarding legal changes. This is, however, only relevant if you’re paying attention to the industry news. For all of these reasons, it can be safest for “accidental landlords” and other small-scale investors to work through lettings agencies. These can make sure that landlords stay on the right side of all relevant laws. The law and buying property If you buy property using financing, then, by default, the contract with your lender will be governed by civil law. There is, however, a twist to this. Fraud is a criminal offence. This means that, potentially, buying a buy-to-let property with a residential mortgage could land you with criminal charges. Similarly, buying residential insurance cover for a buy-to-let property will put you in breach of contract with your insurer. If this is discovered when you make a claim, then your claim will be declined. If it is discovered after a claim has been paid, then, again, you could find yourself looking at fraud charges. The law and tenant selection Your tenant selection must be compliant with the Equality Act 2010. In other words, you are not permitted to discriminate on the basis of protected criteria. Discrimination comes in two main forms, direct and indirect. It is the latter that poses a greater risk for landlords. Indirect discrimination is when a policy that applies to everyone has a disproportionately adverse effect on people with certain characteristics that are considered protected criteria. One key point to note is that refusing to accept tenants on benefits has been ruled indirect discrimination as it disproportionately affects women and disabled people. Currently, landlords in England also have to perform “Right to Rent” checks. What’s more, they have to do so without breaching the Equality Act 2010. The law and tenant deposits Tenant deposits must now be held in a government-approved scheme. It has been suggested that the government make it possible for tenants to transfer deposits between landlords. You can find more details here about deposits https://www.gov.uk/tenancy-deposit-protection. The law and tenant rents Currently, there are very limited rent controls in the UK. This could, however, change in the near future. Landlords are banned from charging extra fees to tenants (except in very limited circumstances). The law and tenant evictions At present, Section 21 (“no faults) evictions are only banned in Scotland. They are, however, expected to be banned in England and Wales. The law and property standards There are multiple laws covering property standards. These include minimum energy efficiency standards and gas and electricity safety standards. Overall, landlords have a duty of care towards their tenants and this includes making sure that a property is healthy and safe. The law and Houses in Multiple Occupation By default, an HMO must be licensed if it includes 5 or more households. Local authorities can, however, impose more stringent requirements. If you would like further assistance on a buy to let mortgage, please do get in touch. The FCA does not regulate legal services and we act as introducers for it

The next few years look set to be interesting ones for the UK.  On the plus side, COVID19 does seem to be abating.  On the minus side, it’s leaving its financial (and social) toll behind.  Then there’s Brexit.  There’s also a general election in 2024.  Against that backdrop, a five-year fixed-rate mortgage can provide welcome stability.  That stability, however, comes at a price. Fixed-rate versus tracker mortgages Fixed-rate mortgages guarantee the borrower a certain interest rate for a certain time. Tracker mortgages, by contrast, track the base rate set by the Bank of England. In principle, fixed-rate mortgages carry a risk for both the borrower and the lender. If interest rates drop, borrowers will pay more than they would otherwise have done. If they increase, lenders lose out. In practice, however, for the moment at least, the risk is very much with the lender. Even though the Bank of England recently increased the base rate, it is still just 0.5%. This means that there’s a lot more scope for interest rates to go up than for them to go down. For the time being at least, there is a lot more reason for them to do so. The reason the Bank of England raised interest rates in the first place was to try to bring down inflation. They are tasked with keeping this at 2% (with a +/-1% margin of error). What happens next, therefore, depends on the direction of inflation. Realistically, this may ease during the warmer months. It is, however, likely to increase again during the colder ones. Mortgage lenders are perfectly well aware of all of this. They will therefore price that risk into the cost of their fixed-rate products to protect themselves. This means that, potentially, borrowers could end up paying a lot more for fixed-rate mortgages than for tracker ones. The price of security The longer a borrower fixes their rate for, the more at risk the lender is. This means that longer fixes have a higher “security premium” than shorter ones. With that said, by definition, they also provide security for longer. This means that buyers have to figure out for themselves, how much security they are willing to pay for. Borrowers who opt for shorter fixes (one or two years) can expect to get better rates than those who opt for longer fixes. They will, however, need to go through the hassle and cost of remortgaging after a relatively short time. They may also find that their repayments jump significantly at the end of their initial mortgage term. What’s more, if the housing market flatlines or has a downturn, borrowers may find that they have little to no equity. In fact, they may even find themselves in negative equity. This does not have to be a catastrophe. As long as borrowers can keep paying their mortgages, they can ride out downturns. It can, however, make it impossible to remortgage until the issue is resolved. This means that there is a strong argument in favour of somewhat longer fixes. Realistically, however, for the average person a three- or four-year fix may work out a lot more cost-effective than a five-year (or longer) fix. It gives the borrower a bit of extra breathing space to build up equity. At the same time, it limits the lender's risk, hence allowing for better rates. The golden rule of mortgages Regardless of whether you choose fixed-rate or tracker, short-term deal or long-term deal, you must ensure that you have a new deal ready and waiting when your old one comes to a close. If you don’t, you will end up on your lender’s “Standard Variable Rate” (SVR). This can be very expensive. If you have concerns about remortgaging, then a mortgage broker may be able to help.