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Is A Bridging Loan Right For You?

Like all financial products, bridging loans are more suitable for some applicants than others. For the most part, people tend to associate bridging loans with financing to ‘bridge’ the gap between property sales and purchases. In reality, a bridging loan can be used for pretty much any legal purpose whatsoever.

Bridging Loans: The Basics

One of the best ways of getting to grips with the basics of a bridging loan is to check out an online bridging loan calculator. Enter a few simple details, hit the button and learn how bridging finance works. See how rates vary in accordance with several key variables and determine your capacity to meet your repayment obligations, should you decide to go ahead.

Understandably, bridging loans are available exclusively for applicants aged 18 years or over. Open to private and business borrowers alike, bridging loans are almost always secured against the applicant’s property, which can be a commercial or residential building. Multiple properties may also be combined to cover the cost of a bridging loan, while some lenders will consider other valuable assets on a case-by-case basis.

Bridging loans can be particularly useful for borrowers with an adverse credit history, along with those who are unable to provide comprehensive proof of income. Just as long as sufficient collateral can be provided to cover the cost of the loan, the funds required can be made available in as little as five days. After which, it’s a case of repaying the loan in one lump-sum payment, anything from a few days to around 18 months later.

Bridging Loan Suitability Examples

Producing a definitive list of bridging loan suitability examples is difficult, given the enormous flexibility of bridging finance. Nevertheless, there are certain common examples and applications for bridging loans that make full use of their unique properties.

Examples of which include the following:

  • You intend to buy a property at auction and do not have sufficient funds on-hand to cover the costs. In such instances, applying for a traditional mortgage in the conventional way is simply out of the question.
  • A homeowner or developer wishes to finance extensive renovation, extension or home improvement works, in order to increase the market value of a property which will subsequently be sold.
  • The prevention of repossession, using a bridging loan to pay off an outstanding mortgage balance, prior to selling the property for its full market value, repaying the loan and retaining any additional profits made accordingly.
  • A business owner faces an unexpected financial shortfall, which calls for an immediate yet short-term cash injection. Bridging loans can typically be secured against a variety of business assets and commercial properties.
  • When a homeowner looking to relocate finds their dream property at an unbeatable price, but the sale on their current property hasn’t been finalised. They purchase the home of their dreams with a bridging loan and repay the balance in full when their former home is sold.
  • An investor or everyday buyer wishes to purchase a property a traditional mortgage provider refuses to finance. Examples of which could be partially-built properties or properties with major structural issues, which can be purchased quickly and affordably with a bridging loan.

These are just a few examples of some of the most common applications of bridging loans in private and professional circles alike. Across the board, bridging finance specialists are able to tailor their loans and associated terms to meet the exact requirements of each borrower individually. All with monthly interest rates as low as 0.5% — sometimes even lower!

Eligibility for a bridging loan is typically determined exclusively on the provision of acceptable collateral. Most of the usual measures like credit checks, proof of income and general financial history simply do not apply.

If you think a bridging loan is right for you, speak to an independent broker and organise a whole-of-market comparison, before submitting your application.

Source: Shout Out UK

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Plan to convert Worcester B&B into 13-bed HMO looks set to be approved

A PLAN to convert a city bed and breakfast into a 13-bed house of multiple occupation (HMO) looks set to be approved.

The application would see Wyatt Guest House in Barbourne Road transformed into the apartments with a number of shared facilities.

The guest house, which sits in the Shrubbery Avenue conservation area and is designated as being within an archaeologically sensitive area, is split over four floors all of which are proposed to be converted.

Permission to demolish a conservatory at the back of the eight bedroom B&B to make way for two studio apartments, three flats and a town house was approved in March 2018.

The demolition and extension would work still go ahead if Worcester City Council’s planning committee goes along with its planning department and approves the plan at a meeting on Thursday (May 23).

The building has been up for sale since April 2015. The B&B owners wanted to sell the building to a developer to carry out the work but it gathered little interest resulting in the request to convert the building into a HMO.

The new plan shows 13 bedrooms each with an en-suite with a shared kitchen and a shared communal area.

Three bedrooms spread across the extension would share another kitchen and communal area.

According to council planners, approving the application would push the percentage of homes within a 100 metre radius up to 9.5 per cent.

The council’s planning policy on HMOs allows for no more than ten per cent of homes within a 100 metre radius to be classed as HMOs.

Council planners were also satisfied the other HMO policies – which ensures no more than two adjacent properties are HMOs and supports applications for HMOs unless it has a negative effect on parking, results in insufficient space for waste and recycling or is out-of-keeping with the character of the area – were not broken.

Neighbours were incorrectly told by the council the new HMO would be breaking the ten per cent threshold because of a miscalculation.

Neighbours were told of the mistake through a letter.

Council planners said the building being used as a more permanent residence rather than a temporary B&B would increase activity in the area.

The size of the HMO would usually require at least four parking spaces but planners have accepted the lack of parking due to its close location to the city centre.

By Christian Barnett

Source: Hereford Times

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Inflation takes off on higher air fares and energy prices

UK inflation was higher in April, as the Easter getaway rush boosted air fares and the higher energy price cap was introduced.

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) was 2.1% last month compared with 1.9% in March.

Economists had been expecting inflation to rise to 2.2%.

It is the first time in 2019 that the rate has risen above the Bank of England’s 2% inflation target.

Household bills were one of the main contributing factors to the higher rates, after increases to Ofgem’s energy price cap came into effect.

Electricity and gas prices rose 10.9% and 9.3% respectively between March and April.

Transport costs were also higher, especially for flights, due to the timing of Easter. Coming at the end of the month, the holiday helped to push air fares up by 26.4%.

But travellers also paid more for other forms of transport, with international rail, coach and sea fares all rising.

However the timing also contributed to a downward effect from hotels, where the cost of overnight stays rose by less than a year ago.

Meanwhile, drivers faced higher costs at the pumps as motor fuel prices rose.

ECONOMY Inflation
(PA Graphics)

Petrol prices rose by 3.8p on the month to 124.1p per litre. This was a bigger rise than the same time last year, when prices were up 1.5p.

Diesel was also pricier, climbing 2.3p to 133p per litre.

The largest downward contribution came from recreation and culture, especially in the volatile computer games category. Prices for games are calculated based on the bestseller charts, meaning they can vary depending on the number and popularity of new releases.

Prices in the games, toys and hobbies category were down 5.8% on the month, compared with a smaller decline of 1.6% last year.

(PA Graphics)
(PA Graphics)

Cigarettes and beer, especially cans of lager, also had lower prices. The wider alcohol and tobacco category was down 0.4%, despite a 2.1% uplift in the price of spirits.

The CPI, including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 2% in April, up from 1.8% in March.

The Retail Prices Index (RPI) was 3%, up from 2.4% in February.

Higher inflation would usually bring pressure on the central bank to raise interest rates – but these are far from normal times

Ben Brettell, Hargreaves Lansdown

Ben Brettell, senior economist at Hargreaves Lansdown, said the inflation rate had received a muted reaction from the markets, and may have little weight in the Bank of England’s decision on whether to raise interest rates.

“Higher inflation would usually bring pressure on the central bank to raise interest rates – but these are far from normal times,” he said.

“The MPC is rightly reluctant to tweak policy while Brexit hangs over the economy like the Sword of Damocles.”


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Buying in to build-to-rent

Corporate landlords are tapping into healthy demand for rented property in the UK.

Professional landlord Tipi is urging people to “join the rental rebellion”. Its Soviet-style advert shows a clenched fist holding a key, and the tagline boasts that it is “throwing the rental rule-book out of the window and making renting better for everyone”. Its competitors have similarly utopian slogans. Get Living offers people “a new way of renting”, while Fizzy promises that it is “reinventing renting” with “zero faff”.

These companies are part of the fast-growing build-to-rent sector in the UK, where corporate landlords, often institutional investors, rent out flats in purpose-built towers. These flats are a cut above your typical grotty flatshare: they often come with access to posh gyms, cinemas and additional security. The build-to-rent model is already very popular in the US, but until recently it had been slow to take off in the UK.

The build-to-rent trend crosses the Atlantic

At the end of March there were more than 30,000 completed build-to-rent properties in the UK, according to estate agent Savills. This is an increase of 34% on the same time last year. When you include properties under construction or in planning, the total number of build-to-rent homes increases to 140,000, with the average scheme in planning comprising more than 320 flats.

There are several reasons why build-to-rent is becoming more popular in the UK. Clearly there is a shortage of affordable housing, whether for people to buy or rent, with housebuilding not keeping up with demand. In an effort to level the playing field between landlords and private buyers, the government cracked down on the buy-to-let sector, making it increasingly difficult for landlords to make money from it. As a result, landlords have left the sector in droves, further reducing the supply of rental properties (the number of landlords has fallen by 120,000 in the past three years, according to estate agent Hamptons International).

Yet, over the past ten years the number of rental households has increased by 74% to 4.7 million. So American-style corporate landlords are entering a market with healthy demand – either from people who might have accepted they’re not in a position to buy property, or who don’t want the commitment of home ownership but will pay for a slick rental flat in a fancy block. And it is a lucrative business. On average, the rent on build-to-rent flats is 11% higher than surrounding rented homes, according to an analysis of 25 rental schemes by real-estate services firm JLL. And investment in this sector is going mainstream. For example, investment bank Goldman Sachs recently made its first foray into build-to-rent, putting £184m into what is set to be Birmingham’s largest residential tower. By 2025, investors will have allocated £75bn to the professionally managed private-rented sector, says estate agent Knight Frank.

One way to invest in the build-to-rent trend is through Grainger (LSE: GRI). Grainger is the UK’s largest private landlord with 8,237 units in cities such as Manchester, Birmingham and London. In April it signed a deal with Transport for London to build 3,000 properties above and around Underground stations. Between 2017 and 2018, the group’s earnings grew by 26% to £94m, partly driven by like-for-like rental growth of 4%. Grainger’s shares currently trade at a discount of around 20% to net asset value.

By: Sarah Moore

Source: Money Week

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London house prices suffer UK’s steepest annual fall ahead of original Brexit deadline

House prices in London plunged 1.9 per cent in the year to March, the largest annual fall in the country, ahead of the UK’s original Brexit date.

UK-wide house prices jumped 1.4 per cent over the twelve months, but in London the average property price fell almost two per cent to £463,000, according to HM Land Registry figures.

Homes in the capital also fell 0.4 per cent month-on-month in March as the drop continued in the run up to the anticipated Brexit date of 29 March.

Despite the fall, the figures show an improvement on the 2.7 per cent annual drop to February.

Former RICS residential chairman and north London estate agent Jeremy Leaf said: “Once again, we are seeing London acting as a drag on the rest of the UK housing market as despite improvements in affordability, almost record low mortgage rates and unemployment, combined with a shortage of stock.

“With prices down one month, up the next – no real pattern has emerged.”

Chief executive of online estate agent Housesimple, Sam Mitchell, said the data provided a “distorted picture” as they were based on sales completed during peak Brexit chaos.

He said: “January and February, when offers would have been made for March completions, was approaching the eye of the Brexit storm.

“That uncertainty, and the political squabbling in Parliament, fed through to buyer and seller confidence, particularly in London and surrounding areas.”

He added: “The market has now settled down, and with the EU leave date extended to the end of October, we are expecting more buyers and sellers to take advantage of this Brexit limbo, and relatively calm market conditions, to proceed with sales and purchases.”

By Callum Keown

Source: City AM

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Property transactions dip in April

The number of residential property transactions in April fell on a monthly basis but were up from the same month a year ago, data shows.

Year-on-year, the seasonally adjusted number of property sales rose by 0.8% from 98,620 in April 2018.

Non-residential property transactions

The number of non-residential property sales in April was up on both a monthly and yearly basis.

Year-on-year, transactions rose by 7.1% last year to 11,300 from 10,550 in April 2018.

On a monthly basis, these sales saw a rise of 9.5% from March 2019 where they stood at 10,320.

Investors’ confidence brings transactions up

Joshua Elash, director of property lender MT Finance, said that it comes as no surprise to see transactional volumes in the residential space falling month-on-month.

“We expect this trend to continue while uncertainty over Brexit specifically impacts the end-user market and overly aggressive tax treatment continues to dampen investor activity and appetite.

“However, it’s a tale of two cities as investors turn instead toward commercial property where yields remain attractive and less oppressive tax policies support and encourage investment. Whatever the Brexit debate, investors are buying into commercial property and it is great to see confidence in this sector translating into transactional growth.”

Adrian Moloney, sales director at OneSavings Bank, said: “With house price growth stalling and in some areas falling, and take home pay packets increasing, there are tentative signs that some prospective buyers are taking the opportunity to purchase their first home.

“Nonetheless, caution has not been entirely cast aside as we are unlikely to see any significant activity without more housing stock and some closure to the political and economic uncertainty which is still in the back of many buyers’ minds.”

Written by: Antonia Di Lorenzo

Source: Your Money

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UK inflation rises in April by less than Bank of England expected

UK inflation rose last month by less than the Bank of England and investors had expected, but still hit its highest level this year, pushed up by a rise in energy bills.

Consumer prices rose at an annual rate of 2.1% in April after a 1.9% increase in March, the Office for National Statistics said on Wednesday. A Reuters poll of economists had pointed to a rate of 2.2%, the same as the BoE’s forecast.

Sterling and government bonds were little changed by the data as core inflation, which excludes energy and food prices, held steady at 1.8% for the third month in a row.

“In principle, this is another reason to think the Bank of England will keep rates on hold for the foreseeable future,” ING economist James Smith said.

But he added that a strong labour market meant an interest rate hike in November could not be ruled out.

A recent weakening of inflation, combined with the lowest unemployment rate in 44 years and rising wages, has taken the edge off the uncertainty about Brexit for many households whose spending drives Britain’s economy.

But Britain’s energy regulator raised a price cap on energy providers by 10% with effect from April, and all big six suppliers raised their standard prices by the same amount, which the BoE said would push inflation above target briefly.

Electricity and gas prices were the biggest driver of inflation last month, the ONS said. Computer game and package holiday prices helped to offset the impact of the higher bills.

The ONS figures also suggested less short-term pressure in the pipeline for consumer prices than expected.

Manufacturers’ costs for raw materials – many of them imported – were 3.8% higher than in April 2018, much less than the 4.5% rise predicted by the Reuters poll.

The ONS said house prices in March rose by an annual 1.4% across the United Kingdom as a whole compared with 1.0% in February, marking the first increase in house price inflation since September. Prices in London alone fell by 1.9 percent, a smaller drop than in February.

The ONS also revised down its estimate for Britain’s budget deficit in the last 2018/19 financial year that ended in March.

The headline measure of public sector net borrowing amounted to 23.5 billion pounds that year or 1.1% of gross domestic product, compared with the previous estimate of 24.7 billion pounds or 1.2% of GDP.

In April, the first year of the 2019/20 financial year, the deficit stood at 5.8 billion pounds, as expected by economists.

Reporting by Andy Bruce; Editing by Alison Williams

Source: UK Reuters

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April property transactions remain stagnant

Residential property transactions remained stagnant in April but increased slightly on last year’s figures, latest official data has shown.

In its UK property transactions statistics report released today (May 21), HM Revenue & Customs estimated 99,420 residential and 11,300 non-residential transactions were made in April.

April’s seasonally adjusted residential figure saw a slight drop on the previous month — 0.3 per cent — but increased by 0.8 per cent on the same month the previous year.

The findings reflect last week’s (May 16) figures from UK Finance, which showed the number of consumers borrowing to buy a new property in March was down across first-time buyers, home-movers and buy-to-let purchases when compared with last year.

According to today’s report, non-residential transactions were up on March’s figure by 9.5 per cent and increased by 7.1 per cent compared to last year.

Kevin Roberts, director at Legal & General Mortgage Club, said the figures showed that despite government schemes and greater innovation in the mortgage market, property transactions continued to stagnate.

He said: “To really see a boost, we need to fix our country’s imbalance between supply and demand by building more homes. Not only for first-time buyers, but across all housing tenures – young and old, renters and homeowners.

“As an industry, we are working to provide the solutions needed but we also need to ensure the government is increasing supply and making the UK housing market accessible for all.”

But Joshua Elash, director of property lender MT Finance, said it came as no surprise to see transaction numbers dropping month-on-month in the residential space.

He said he expected this trend to continue while uncertainty over Brexit continued to impact the market for consumers and while “overly aggressive tax treatment” continued to dampen investor activity and appetite in the buy-to-let market.

Meanwhile head of lending at Mortgage Advice Bureau, Brian Murphy, said the figures demonstrated a level of consistency in the market.

Mr Murphy added: “While the number of sales last month doesn’t equate to a ‘spring surge’ by any means and is down slightly on the previous month, equally they potentially point to a degree of resilience in the face of ongoing political headwinds.

“[The figures] indicate that the market continues to turn over steadily, rather than any dramatic peaks and troughs, which many may suggest is no bad thing.”

By Imogen Tew

Source: FT Adviser

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Planning inspector overrules council on seven shared houses in Brighton

Neighbours objected and the council said no – but seven more Brighton properties can be used as shared houses after planning permission was granted on appeal.

All seven are in wards where Brighton and Hove City Council restricts the conversion of family homes into houses in multiple occupation (HMOs).

And all seven are in wards where thousands of students live and where there have been tensions between existing residents and younger temporary tenants.

The properties are in Ashurst Road, Brading Road, Coldean Lane, Hartington Road, Park Road, Richmond Street and Stanmer Villas.

The owners were refused planning permission by the council or served with enforcement notices and each appealed, with government-appointed planning inspectors upholding their appeals.

Neighbours sent 28 objections to the council when Co-Living Spaces, the owner of 57 Richmond Street, Brighton, proposed converting a family home into a shared house for six people.

The plans, which included changes to the roof space, prompted concerns about increased noise, strains on parking and the loss of another family home in Queen’s Park ward.

Planning inspector Janette Davis said that objections to the roof dormer were “not relevant”.

She said: “Some local residents have raised concern regarding potential noise and disturbance from both within and outside the building.

“Although the change of use to a HMO would be likely to intensify the occupancy and use of the building, with up to six occupiers this would not be of a level which would be over and above that expected within a residential area.”

More than a dozen neighbours objected to David Symons’s plans to turn a four-bedroom end-of-terrace house at 114 Stanmer Villas into a six-bedroom property.

The council said that the property, near Fiveways, did not have enough communal space but planning inspector Tim Crouch said: “I saw on my site visit that the open plan communal kitchen and living space is light and open, with internal access from the corner.

“There is sufficient space to circulate and for occupants to find some personal space.”

He said that he appreciated the concerns but there was no “substantive evidence” to cause him to come to a different conclusion.

Two other appeals in the same ward – Hollingdean and Stanmer – related to enforcement notices. One was for a house at 27 Coldean Lane where 11 neighbours had opposed an application to change it from a five-bedroom property to one with seven bedrooms.

Changes to the roof and the addition of a rear dormer prompted officials to issue an enforcement notice but it was quashed on appeal.

And a similar notice was quashed for 31 Park Road, also in Coldean, where a roof dormer had been built and a family home was turned into a shared house.

In Hanover and Elm Grove ward an enforcement notice served on the owner of a seven-bedroom shared house at 84 Brading Road was quashed by planning inspector David Hainsworth.

The council had refused to grant planning permission for changes to the property, saying that it was cramped because of the subdivisions to existing rooms.

And, the council said, the changes “failed to support a mixed and balanced community” as there were already a significant number of HMOs in the area.

Neighbours sent 13 letters of objection to the planning application.

The owner Mark Shields appealed against the council’s decision. He said that the house had not been a family home for at least 20 years and the HMO had had a licence since April 2009 without planning permission.

The planning inspector said that the increase in activity would “not have a noticeable impact” on the community.

The council said that a single-storey rear extension and a dormer and windows in the roof of 55 Hartington Road were “facilitating” an unauthorised change of use from a three-bedroom to six-bedroom HMO to more than seven bedrooms.

The owner Andrew Marchant succeeded in his appeal against an enforcement notice.

Planning inspector Sandra Prail said: “I have considered the evidence before me as to the sequence of events.

“It shows that the use of the site as a large HMO has ceased. The works are therefore not currently facilitating (HMO use) and I am not satisfied that the works were part of parcel of the previous HMO use.”

Directors of another property owner, Rivers Birtwell, run by Oliver Dorman and George Birtwell, lodged two appeals in relation to a house at 20 Ashurst Road in Moulsecoomb.

The first appeal was against an enforcement notice which alleged that a family home had been turned into a nine-bedroom shared house without planning permission.

The council said that the unauthorised changes included building work in the roof to enable a loft conversion including a rear dormer.

The second appeal was against the council’s refusal to grant a certificate of lawfulness for the roof extension.

Planning permission was granted for a seven-bedroom shared house in 2013, shortly after the council tightened up the rules using a policy known as an “article four direction”.

The tougher regime restricts the number of shared houses in an area and can mean fewer rights to make small-scale changes without planning permission.

But planning inspector Victor Ammoun allowed the changes and said: “The change from seven to nine bedrooms is a significant proportionate increase but I consider that it has not altered the perceived character of the use.

“The physical changes to the roof complied with … size and form requirements and thus were within the range of changes potentially normal within the nearby similar houses.”

By: Sarah Booker-Lewis

Source: Brighton and Hove News

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The main growth areas are specialist resi and buy-to-let

The main growth areas in the mortgage market are specialist residential and buy-to-let, Louisa Sedgwick, director of sales for mortgages at Vida Homeloans, has argued.

Sedgwick said education is needed to help brokers understand specialist areas. Vida provides webinars, workshops and regional blogs by key account managers.

One area Vida has seen an uplift in is expat buy-to-let since the 2016 EU Referendum.

Sedgwick said: “Any growth in the market has to come from the specialist area and the more education there is, the greater the market will grow. We’re trying to find different ways of educating brokers.

“Before we voted to leave prices were more expensive and since the vote have dropped, making the property market more vulnerable.”

Payam Azadi, director of Niche advice, agreed and said he’d done more expat buy-to-let business this year than previous years.

He added: “As lenders start looking for more margin and diversifying their proposition, they’re going to be going into the more specialist sectors.

“We have seen a lot of lenders diversify firstly into specialist buy-to-let, for example, lending on houses in multiple occupation (HMOs) and expat buy-to-let, but there’s also other sectors lenders have moved into.

“There’s another batch of lenders looking to loosen criteria around adverse credit and others looking at affordability. There are a number of strategies from different lenders. It depends on how they’re funded and what the funders’ risk models are and what margin lenders have to give back to their funders.

“Within the specialist market margins are under pressure, so it’s great saying you’re going into this sector but it’s about how much money you can make there. You’ve seen lenders look at different areas to give edge over competition.”

By Michael Lloyd

Source: Mortgage Introducer