Tuesday 25 November 2008

Time for Action?



In our last email and Blog we called for the Government and Banks to act to help Private Landlords. The response we received was huge as landlords emailed and rang NetRent.co.uk to support our call for the Government and Banks to act now.

Yesterday the Chancellor presented his Pre-Budget speech which he hopes will stimulate the economy and help the UK avoid a long and painful recession. There was a somewhat vague promise to present plans to boost residential mortgages in the April 2009 Budget but there was no direct assistance for the Private Rented Sector.

The banks who just 12 months ago were fighting to secure as much Buy-to-Let business as they could no longer wish to lend. The chairman of the now state owned Bradford & Bingley told the Treasury Committee last week that Buy-to-Let in the UK was now dead. The Skipton pulled out of Buy-to-Let lending completely last week. The number of Buy-to-Let mortgages continues to drop and still there is no action from the Government.

It seems clear that the banks have effectively washed their hands of the Private Rented Sector. It also seems clear that the Government is not going to help either.

Landlords cannot allow the Government and Banks to do this. There would be no benefit to the UK economy in allowing large numbers of landlords to default on their mortgages. This would just make all Buy-to-Let lending increasingly difficult.

It is up to the Private Rented Sector to make the Government and Banks listen and act. NetRent.co.uk is talking to landlords all over the country to determine what positive action can be taken to make the Government and Banks listen and act.

We would welcome your views. If you have any suggestions about how we can together make the Government and Banks listen and act please email us at enquiries@netrent.co.uk or telephone us on 01352 759988.


Tuesday 11 November 2008

It's about time the Banks and Government helped Private Landlords



The on-going debate over interest rates continues to dominate the Private Rented Sector. Landlords all over the UK are gradually having to become experts in the previously little known LIBOR rate.

LIBOR is the rate at which banks lend money to each other and it has become clear that this rate rather than the Bank of England rate will determine the medium term future of Buy-to-Let in the UK.

Last week’s huge cut in the bank base rate did have an effect an LIBOR but UK banks hardly rushed to pass on the interest rate cut. The negative publicity they received on Friday pushed many of them into a grudging response but several including Barclays and HSBC virtually ignored the furore. It’s interesting to note that both Barclays and HSBC have not asked the Government for funds over the past few months.

This leaves landlords all over the country in a quandary. According to the Royal Institution of Chartered Surveyors (RICS) house sales are now at the lowest since records began. Many landlords see this as an opportunity to buy more property. At the same time many landlords are seeing their business pushed into the red because they cannot remortgage.

The problem is twofold. First, LIBOR rates are much higher than bank base rates. Bank base rates are 3%, LIBOR is 4.2%. Second, there are very few lenders willing to lend to landlords.

We spoke to one major broker yesterday and this is the criteria they are now demanding:
Maximum loan to value 70%
Interest cover 125%
No HMOs
No freehold houses converted into flats
No new build, especially flats
Minimum income £25,000
Deposits must be proved

And yet there are more tenants than ever, more demand for rented property than ever. Rents, on average, are rising.

It seems that the banks and the Government are prepared to watch a huge proportion of the Private Rented Sector slip into debt and repossession without lifting a finger to help.

At the same time landlords who have run excellent businesses cannot expand those businesses because they cannot raise the finance to buy more properties.

The Government now effectively controls the largest proportion of the Buy-to-Let lenders and yet they show absolutely no sign of helping this vital sector of the UK housing market. The banks they have supported with our money are now effectively washing their hands of an industry that just 12 months ago they were desperate to lend to.

There are over 800,000 landlords in the UK. It is about time that landlords started to make their concerns known to Government and the banks. It is time for landlords to demand action to support an industry that owns around 1 in every 9 homes in the UK.

If you have any comments you would like to make or any suggestions please email us at enquiries@netrent.co.uk or phone us on 01352 759988.

If you would like help with a mortgage or remortgage please click here Mortgages Through NetRent.co.uk

Monday 10 November 2008

Win an £8million Property Portfolio


Here's a chance to win £8million worth of property - and support the Great Ormond Street Hospital charity at the same time.

MIA Developments Ltd are running a competition for one lucky person to win a portfolio of property worth £8million and at the same time they aim to generate £600,000 for Great Ormond Street Hospital.

With 'Win a London Pad' you simply buy an MP4 player from 'Win a London Pad', £3.00 will be donated to Great Ormond Street Hospital with the aim of raising up to £600,000 to fund a new purpose-built 4 bed ward in the new Cardiac Daycare Centre - and at the same time you will be entered into a draw to win an £8million property portfolio.

For more information click here Win a London Pad

Thursday 6 November 2008

Bank Base Rates Cut by 1.5%


Will today’s 1.5% cut in the Bank Base Rate affect the Private Rented Sector? There’s no doubt that any cut in Bank Base Rates is good news but is a 1.5% cut enough to help landlords?

Before the announcement by the Bank of England John Cridland, deputy director general of the CBI, said “The recession into 2009 will be both longer and deeper than expected” as he called for a big cut in interest rates.

The Halifax also announced today that house prices fell a further 2.2% in October pushing the annual fall to 13.7%.

The problem for the Private Rented Sector is that most Buy-to-Let mortgages are linked to LIBOR not the Bank Base Rate. LIBOR is the rate at which banks lend to each other and this has stayed consistently high during the Credit Crunch and still stands around 6%. As long as LIBOR remains high cuts in bank base rates will have little or no effect on the cost of borrowing money for landlords and other businesses.

Yesterday in Parliament the Prime Minister said “We want the banks and building societies to pass on the interest rate cuts to their mortgage holders”. Given that the Government now has substantial share holdings in so many major banks the question has to be why isn’t the Government telling the banks to lower their rates?

We believe that even if this rate reduction was passed on to borrowers it will have little or no effect on landlords. Will the Government really encourage lenders to support the Buy-to-Let market in preference to first time buyers and businesses? We don’t think that they will.

Lenders are under no pressure to support Buy-to-Let and with so many major Buy-to-Let lenders disappearing from the market the remaining lenders are taking the opportunity to significantly raise their costs and interest rates. We do not see this changing in the short or medium term.

Landlords have found that the cost of borrowing money has risen sharply over the past few months. Today’s cut in Bank Base Rate is very unlikely to reduce this cost. We believe that this situation will last throughout 2009 and well into 2010.

Our advice to landlords remains the same – concentrate on cash flow. Don’t expect Buy-to-Let interest rates to fall in the near future. Lenders will continue to charge high arrangement fees. The only viable offers are at 75% loan to value and below.

For more information on Buy-to-Let mortgages click here Mortgages through NetRent.co.uk.