Tag Archives: Mortgage Express

Mortgage Express stopped lending and were taken over by a Government quango called UKAR. This forum shares tales of woe and advice from affected borrowers.

Tax Efficient Investment Latest Articles

Own Shares in the Property118 Rental Property for-sale PortalWhat is a tax efficient investment for landlords to consider if they don’t like the idea of pension schemes and want to invest into something else other than property? Tax Efficient Investment

The answer is a business which benefits from the Seed Enterprise Initiative Scheme, AKA SEIS.

Clearly they would want to invest into something they understand, i.e. property related.

The good news is that investment into Property118 Portal Ltd fits this criteria.

More details about the tax incentives below but first  ……

What is Property118 Portal Ltd?

Property118 Portal Ltd. is a new venture (a completely new business) hosted on the Property118.com website. It is an advertising portal to help landlords and agents to sell properties with tenants in situ. Adverts are free but there are premium upgrade options too.

Buyers search by postcode or town and simultaneously set up email alerts so they are notified each time a property matching their purchasing criteria is listed.

Shares in Property118 Portal Ltd are being sold to raise funds for a national TV advertising campaign.

How is the business structured?

To explain the structure in laymans terms I have used an analogy of retailers and shopping malls.

The value and profitability of a retailer generally improves if its shops are located in a busy shopping mall. Most retailers do not own the mall, they rent the space for their shops.

In our case the developer and the owner of the mall is Innovative Landlord Solutions LLP. The name and location of the mall itself is the Property118.com website – it is very busy.

The retailer seeking crowd funding in this instance is Property118 Portal Ltd. It is an anchor tenant for the mall, hence it has prime location – the home page of Property118.com.

All major retailers and shopping mall owners recognise that anchor tenants attract more footfall into shopping malls. All of the retailers benefit from the footfall created by shoppers visiting other retailers. This is a proven and very successful business model. As an online business we do not have footfall but we do have user traffic, hence the use of this analogy.

This is legally documented in a Business Cooperation Agreement.

How will Property118 Portal Ltd make money?

There are four sources of income as follows:

1) Premium upgrades to advertisements cost of £11.80 per week per advert. The benefit of upgrading is that adverts rank above free listings in search results.

2) Reveals – In order to minimise the occurrence of nuisance calls to advertisers we charge £1.18 to display contact details of vendors, developers and agents to prospective buyers.

3) Auction House Referral commission – We cross promote the online conditional auction model (operated by Auction House UK franchisees) to vendors and receive income from Auction House UK for successful referrals.

4) Newsletter Sponsorship – The Newsletter will be sent to the database of enquirers who have previously expressed an interest in a property advertised on the portal.

How big is the market?

According to Paragon Mortgages Plc. there are five million UK properties owned by private landlords. Portals dominating the online advertising of property with vacant possession (e.g. Rightmove and Zoopla) and the estate agents supporting them naturally assume the traditional vacant possession sales model.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is continuing to grow, at least in part due to over 55’s seeking better returns from their pension funds, which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

We have estimated that over 60,000 UK families are forced to consider the sale of BTL properties every year.

The following data was published by HMRC on 21st April 2015.

Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320.

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that approximately 216,777 sales fall into the target market for the Property118 portal every year.

What are the projected returns?

Business plans and projections are available on request, email: mark@property118.com

The following is a snapshot of our 5 year financial forecasts

Property118 Portal Ltd Projections Summary

How do I invest?

Before you are able to invest you will need to certify yourself as a high net worth investor or complete a short test to make sure you understand the risks associated with investing into start up companies.

Click here to invest

Anything else I should know?

Yes absolutely, especially if you would like to reduce your tax bill.

Would you consider swapping the majority of your tax bill for shares in Property118 Portal Ltd if it was possible to do so?

Good news – this is entirely feasible!

Here’s how it works …

Due to completion of our crowd funding being SEIS conditional, you would get 50% tax relief on your investment (regardless of what tax band you fall into). For example; if you invest £10,000 your tax bill would reduce by £5,000.

If you have made a capital gain on the disposal of an asset and use the amount of the gain in making a SEIS investment into Property118 Portal Ltd you will not pay capital gains tax on 50% of the amount you invest either – in other words, you get an extra benefit.

Example; if a taxable capital gain has already been made of £10,000 (after deducting in the annual CGT exemption) a CGT liability of either £1,800 (18% basic rate tax) or £2,800 (28% higher rate tax) will arise.   In this scenario, the £10,000 invested results in 50% of the capital gains tax being saved as well, i.e. £900 or £1,400.

The maximum tax relief that can be obtained if an SEIS startup succeeds is 50% income tax credit PLUS 14% (50% of 28%) capital gains tax relief = 64% tax relief.

After three years, no capital gains tax is payable on the future sale of the shares.

If the business were to fail then CGT loss relief could be claimed to reduce future CGT.  This has the effect of increasing the tax relief by a further 18% or 28%.

If you decide to invest into Property118 Portal Ltd the outcomes are:-

1) we achieve our investment target

2) you swap the bulk of your tax bill for shares in Property118 Portal Ltd

Win/Win = happy days 😀

How do I invest?

Shares are available to purchase via the Seedrs crowd funding platform – LINK HERE

What is SEIS?

SEIS is a Government tax incentive scheme to encourage investment into start up companies, the full name of the scheme is Seed Enterprise Initiative Scheme. You can obtain a full explanation and examples by visiting the .Gov website via THIS LINK

Related articles

Tax Efficient Investment – LINK

Buy or Sell Tenanted Property – Improved Search Functionality – LINK

Own Shares in Property118 Portal LimitedOwn Shares in Property118 Portal Limited


Agents chasing for payment but I have moved out? Latest Articles

I rented a house which had 12 months minimum term. This was unknowingly signed by me and my wife because we discussed 6 months. We had intention of staying in the house for 6 months because we were already looking for mortgage to secure our own house.moved

Luckily after staying for 7 months (March 2015) we sent an email to agent that we have intention of leaving the house in April ending because we have secured a house. This email suppose to give the agents 2 months notice i.e. March and April. The agent replied that they have got a tenant who will be ready to move in by 1st of May which seemed okay for us.

At a point in time there was a bottleneck in the mortgage coming forth quickly, I sent an apology email to agent that we will not be able to move by April ending but unfailingly we should be able to move by May ending. The agent expressed disappointment and said the tenant is not ready for May ending but they have to look for another one.

Shortly they told us that they have been able to get a tenant which is ready to move in by May ending. By middle of May, we have started moving out and by 25th we have moved all our stuff to our new house. About the time we have moved all our things out of the house the agent called us saying the search for the new tenant is not running through and they would not give the house to him and that I will be responsible for paying the rent until they get new tenant.

I have move out since May 25th but now received a mail from the agent that I have to pay for June and if not the will submit submit a claim against me, which will affect my credit history and have a CCJ on my records.

Please could you advise me on what to do.

I have argued that I gave them 2 months notice before I left and it was not my fault that the credit check of the proposed tenant not running through, but they are insisting that I will have to pay until they have a new tenant. They have gone to my previous energy provider to send me bill of June which is not my responsibility.

Please how do I argue this out. I am paying my mortgage and how do I pay someone else s mortgage at same time.

Thanks for your time.

Akin


Restricting finance cost relief for individual landlords – PETITION Budget 2015 Campaign, Latest Articles

Restricting finance cost relief for individual landlords

This is the petition that intends to STOP the Government making the biggest mistake in recent history.

“Restricting finance cost relief for individual landlords”

Restricting finance cost relief for individual landlords

The petition isn’t branded by any particular organisation because this issue is far too important to us all than to allow rivalries to influence campaigning.

All you need to know about the Government’s plans to restrict finance cost relief for individual landlords

What is the proposal and when was it announced?

The proposal was announced in the Chancellor’s Summer Budget on 8 July 2015 and it will restrict relief for finance costs on residential properties owned by individual landlords to the basic rate of income tax. Finance costs include mortgage interest and interest on loans. Property Companies and Institutions who hold residential properties are not affected by the proposal.

In plain English, what does this mean?

Landlords are currently able to offset all their finance interest against their rental income, before calculating their rent profits and therefore their tax bill. This is quite normal in business as the general taxation principle is that tax is applied on profit.

The Government proposes to break this normal taxation practice and require landlords to pay tax on part of their costs. By the year 2021, it will still be possible to get a deduction for finance interest, but the amount will be capped at 20%. This is a big change because in most cases, finance costs will be the landlord’s largest cost. No other business is taxed in this way. No other business is taxed on interest on loans taken out to buy assets that generate taxable income. We believe that individual landlords who provide valuable housing across the UK are being unfairly discriminated against by the Government.

What is the Government’s policy objective?

In its latest Financial Stability report the Bank of England commented that the buy to let market could pose a risk to financial stability, especially if interest rates go up. The theory is that this could cause landlords to fall into negative cashflow, where their rental payments no longer cover the cost of mortgage payments. This could force them to sell in a hurry, potentially destabilising the housing market. It was following these comments that George Osborne decided he needed to exert some control over buy to let.

The Government say that their policy objective is to make the tax system fairer. The Chancellor has said that landlords are taxed more favourably than home owners. Both the Institute for Fiscal Studies and the Conservative’s favourite think tank, Policy Exchange, have warned that this is not correct. Unlike home owners, landlords are taxed on rental income and capital gains.
We believe that the Government’s proposal to tax landlord’s debt goes too far and will destabilise the housing market, which is what the Bank of England wants to avoid.

When will the measure be introduced?

The measure will be introduced gradually from 6 April 2017 and is ‘tapered’ over 4 years. By 2021, the full impact of the change will bite. Although the implementation of the proposal is to be phased, it is already causing uncertainty for landlords and tenants.
Who is likely to be affected?

The Government say that individuals that receive rental income on residential property in the UK and elsewhere and incur finance costs will be affected. We believe that the proposal will not only affect landlords as there will be many unintended social and economic consequences of this ill thought out proposal.

How might landlords be affected?

Landlords will fall into 1 of 3 categories, in terms of how the tax change affects them:

1) Landlords remains basic tax payer = no change
2) Change pushes basic rate tax payer into Higher Rate Band = more tax paid
3) Existing Higher Rate Tax payer = more tax paid

Many thousands of landlords will pay more tax as a result of the proposal. For some, the additional tax will not impact on the viability of their businesses. However, for thousands of landlords who have borrowed substantially to invest in their property business, the consequences will be serious. Some landlords will even lose their personal tax allowance because of the unfair way that the Government will calculate taxable income; in many cases, landlords will pay more in tax in connection with their property business than they make in net profit; in many cases, landlords who make a loss from their property business will still be faced with huge tax bills. We cannot understand how the Chancellor considers his changes will result in a fairer tax system.

The implications for some landlords are such that they will need to sell properties to reduce the tax they pay on their finance costs. There is concern that many landlords will be declared bankrupt as their tax bills will exceed their taxable income and they will be left with property businesses that are no longer sustainable. The situation will get worse when interest rates increase. The Governor of the Bank of England has publicly stated that he expects interest rates to increase before the end of 2015.

Can you show some examples of the impact on landlords?

The Government’s proposal is quite complicated and we can’t go into too much detail here. We can however give 3 simple examples to illustrate the issue.

Example 1: Joe is an architect and earns £ 45,000. He is what has become known as an ‘accidental landlord’. He has only one buy to let property. This used to be his home but he let it out when he moved in with his partner Monica. Joe is a 40% taxpayer. His rental income is £7,200 per annum; his mortgage costs are £2,500; and his repairs and other tax deductible costs are £1,000. Under the current tax system, Joe would pay £1,480 tax on his property income. Under the proposed tax system, Joe would pay £1,980 tax on his property, an increase of £500. For Joe, the new tax system still results in him making a ‘real profit’ but his effective rate of tax on ‘real profit’ increases from 40% to 53.5%.

Example 2: Dave and Margaret are a married couple. They consider themselves to be entrepreneurs and operate a sizeable buy to let business. They have invested in property to provide a livelihood for themselves and to provide a pension when they retire. They have tenants who are professional people in employment but most of their tenants are in receipt of housing benefit. Their only source of income is from their rental business. Their property rental assets are jointly owned and they split the rental income 50/50. Properties have been acquired over a period of nearly three decades. They have recently fixed their interest rate at 4.99% for 10 years to protect their business from risks associated with rises in interest rates. That seemed to be the sensible thing to do at the time. Their rental income is £600,000; their mortgage costs are £350,000; and their repair and other tax deductible costs are £200,000. Their net rental profit is £50,000. They are currently basic rate taxpayers. Their taxable income, after deduction of their personal allowance, is £28,000. Under the current tax system, Dave and Margaret each pay £5,600 tax. Their effective tax rate over personal allowance is currently 20%.
Under the proposed tax system, because Dave and Margaret will not be able to offset any of their mortgage costs against their rental income, they will become higher rate tax payers and their individual taxable income will increase to a staggering £400,000, the same as their rental profit because they lose their personal allowance at £121,000 each. The actual tax they would each pay would be £38,900, making £77,800 in total. This is £27,800 more than they actually make in profit from their rental business.

Their effective tax rate on their real profit is now 155.6% as the amount of tax paid exceeds their income. Dave and Margaret are now higher rate tax payers. For Dave and Margaret, the Government’s proposal is catastrophic as their business is no longer sustainable as the tax they pay exceeds their ‘real profit’. Dave and Margaret are now very worried and feel trapped. Their once profitable business is no longer viable. If they were to look at selling their properties they would incur early repayment charges, incur selling costs, be required to pay a significant sum in Capital Gains Tax and repay their outstanding mortgage balances in full, the sum total of which would be greater that the proceeds of sale. They are responsible landlords and are concerned about what will happen to their 187 tenants if their properties are repossessed, especially those tenants in receipt of benefits. The are scared to share their concerns with their tenants as they fear that their tenants may give notice to quit and look for a tenancy that is more secure.

Example 3: Emily is a civil servant and has non-property income of £40,000. She started to invest in property to create an additional income stream to fund her children through university. Her rental profit is £25,000 and she pays £35,000 in mortgage interest on her rental properties giving her a total income of £65,000. Her total tax bill under the current tax system would be £15,200, of which £9,400 arises from her rental income. This would increase to £22,200 under the new tax regime of which £16,400 would arise from her rental income. Emily’s effective tax rate on her real profit of £25,000 would increase from 37.6% to 65.6%. Emily is now concerned that her tax bill has increased by £7,000 and that her profit from her property rental business has been substantially eroded. She is becoming increasingly concerned about risk, especially knowing that if interest rates go up, her margins will be further eroded. This was not what she had in mind when she used all her savings to invest in property to fund her children’s further education. She assumed that the long established principle of income – expenses = profit would remain and that tax payable would be based on profit made. The Government’s proposal fundamentally changes that formula.

Download this spreadsheet to calculate the impact of this policy on your personal finances.

How many landlords will be affected?

The Government has stated that 1 in 5 landlords will be affected. Such figures completely miss the point, since what matters is not the number of landlords affected, but the number of properties. Properties are mortgaged, not landlords. The Government has to date been unable to confirm how many properties will be affected. Many property businesses will own more than one property so the proportion of the private rented supply affected is likely to be quite high.

How will the proposal affect the private rented sector?

For decades, the private rented sector has been providing much needed homes to meet a growing demand for flexible accommodation. A healthy supply of rental properties keeps rents down and tax relief on mortgage interest payments is a key way for the Government to incentivise investment.

At the end of 2014, the Council of Mortgage Lenders reported that there were around 1.6m buy to let mortgages in the UK, with an aggregate balance of £188bn. This money is used by landlords to invest in their property businesses. For many people, the private rented sector is their tenure of choice and currently 21% of all households in the UK rent privately. 18% of new home loans are buy to let. The sector has grown in recent years to meet demand.

As a result of the Chancellor’s Summer Budget, many landlords would cease to make a profit and would decide to sell. Landlords with several properties will want to sell to reduce their mortgage debt to ensure that they are not faced with unsustainable tax bills. There is a risk that some landlords will be declared bankrupt as their tax bills will exceed their profit. In cases of bankruptcy, rental properties will be repossessed by lenders and this will further reduce supply.

Future purchases would require a higher yield to make business sense. This could result in the provision of more Houses of Multiple Occupation ( HMOs). Less family housing would be provided in the private rented sector. Investment in the private rented sector is likely to decline and the supply of rental properties will not meet the growing demand.

Once individual landlords begin to withdraw from the private rented sector, it will become increasingly dominated by large private companies and City Institutions.

We desperately need more rental property and the reduced supply of available homes for rent in the private sector would be devastating for the UK housing situation.

How might tenants be affected?

A fall in the supply of private rental properties will result in rents increasing. An interim survey of 1,146 landlords by the Residential Landlords Association (RLA) has revealed that 65% of landlords are already considering rent increases to mitigate the impact of the Government’s rental property tax levy.

If landlords decide to sell to avoid unaffordable tax bills, they will want to sell with vacant possession and tenants will be forced to move as a result of the Government’s tax policy. Some tenants may find themselves homeless if lenders repossess landlords’ properties. We are concerned that the supply of rental properties available to those on benefits will fall and that this will result in people having to move into temporary, unsuitable bed and breakfast accommodation at considerable expense to the public purse. The demand for social housing will increase at a time when there are already very large waiting lists for social housing.

Has the Government considered the impact on tenants?

It would appear not. The Government’s impact assessment is silent on how tenants may be affected. We have asked the Government to consider the impact on tenants.

Will the proposal have any impact on home owners?

There is a risk that the housing market will be flooded with houses for sale as landlords try to withdraw from the market or as a result of lenders repossessing houses from landlords. This could lead to a collapse in house prices, resulting in owners being in negative equity and having difficulty selling if they wish or need to move. The Bank of England has acknowledged in its July 2015 Financial Stability Report that ‘investors selling buy to let properties in an illiquid market could amplify falls in house prices’.
Falling house prices is likely to result in a decline in new house building, thus reducing housing choice. This is what happened during the credit crunch and it could happen again. A decline in house building generally will adversely impact on the delivery of much needed affordable housing as much of this type of housing is provided as part of private housing developments to meet the requirements of local planning authorities.

Will the proposal reduce demand for housing?

The Government say that the proposal could marginally reduce the demand for housing. We cannot see how this will be the case and the Government has not provided any evidence to back up its claim. Demand is influenced by demographic factors and household formation rates and all the available evidence points to population and household growth in the UK.
Will the proposal affect businesses and the economy?

The Government has said there will be no impact on business. We disagree. Landlords provide support for local economies by employing solicitors, letting agents, accountants, mortgage brokers, plumbers, joiners, electricians, builders, painters, cleaners etc so any reduction in investment in housing by landlords will impact on these types of businesses. The UK needs more houses in all tenures to cater for the expected demand for housing.

The Financial Secretary to the Treasury, David Gauke, has previously admitted that rented housing provides an important boost to the economy ‘ through improved labour market flexibility’. This flexibility will be greatly reduced if there is a reduction in the supply of privately rented accommodation.

Landlords will, with immediate effect, be less inclined to buy the new-builds which the Government is hoping to facilitate by making planning approval automatic in England. Historically they bought 57% of new-builds, but are unlikely to volunteer to increase their potential liability from this proposed new tax treatment.

What has been said in the media about the proposal?

We are actively campaigning to raise awareness of the issue and in particular the unintended social and economic consequences. We would welcome your support to raise awareness. Here are some of the comments that have already been made by organisations who share our concerns:

The Residential Landlords Association has said ‘ The reality is that the Chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct. Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.’

The Scottish Association of Landlords has said ‘this is a shocking decision by the Chancellor of the Exchequer which unfairly discriminates against landlords. As a result of this increased cost and risk to landlords, you may see some within the sector feeling they are forced to increase their rent levels which would obviously have a huge negative impact on tenants.’

The Institute of Fiscal Studies (IFS) has pointed out ‘the Budget red book states that the current tax system supports landlords over and above ordinary homeowners and that this puts investing in a rental property at an advantage.’ In response to this claim the IFS has said ‘This line of argument is plain wrong. Rental property is taxed more heavily than owner occupied property’.

Price Waterhouse Coopers (PwC) has said ‘if interest rates increase over the coming years, and rental yields don’t keep pace, investors could be paying tax on a loss’.

The National Association of Landlords (NAL) has said ‘private lettings’ profitability is less than 5%, which leaves little room to squeeze margins. Landlords would be left with no other option than to recoup their increased costs through higher rents. The last thing the UK economy needs right now is to put greater pressure on the cost of housing’.

What do you want the Government to do?

We want the Government to withdraw its proposal to restrict finance cost relief for individual landlords. We want the Government to take stock, to listen to all relevant stakeholders and to bring forward revised proposals for consultation that are aimed at meeting sensible policy objectives and help address the country’s housing needs.

We want the Government to support small businesses. We want the Government to think about the housing market more holistically and to recognise that the private rented sector is an important tenure. We want the Government to have more balanced approach towards landlord taxation.

We think the big housing issue in the UK is one of supply. We want to see more land freed up for house building so that the demand for housing is met.

If I am concerned about the proposal, what can I do?

We are writing to the Chancellor and our local MPs to express our concerns. We suggest you do the same. We have set up an e-petition to try to get the issue debated in Parliament.

You can sign the e-petition by clicking on the linked image below.

Restricting finance cost relief for individual landlords

Related articles – LINK

http://www.property118.com/category/budget-2015-campaign/

Recruiting more helpers and getting more signatures

Take action each day to scrap the mortgage relief levy before tenants are forced out and rents up.

Lets Follow One Course Until Successful (FOCUS).

Join The Landlord Tax Levy Campaign Group

YOUR Money, YOUR future, YOUR choice.

 


Council want document signed stating intention to let to tenant for 5 years? Latest Articles

Th council want to remove old bath and fit level access shower facilities for one of my aging tenants to make it easier for him.sig

They want me to sign a document stating that my “intention” will be to allow the disabled tenant to live at the property for a period of 5 years once the work is completed.

My mortgage is with the dreaded Mortgage Express.

I would like to do it for the tenant but I don’t want ME using this against me if I have somehow breached their T’s & C’s.

Do you think it’s a good idea to allow this?

Many thanks

Fiona


Emails to George Osborne – Chancellor of the Exchequer Latest Articles

The following are just a selection of the emails that Property118 members have sent to George Osborne since his budget announcements affecting landlords last week. 

Please feel to post yours in the comments section below ….

Dear Mr Osborne

I am writing to you to express my dismay and consternation at the proposed changes to the allowances on taxation for small landlord businesses like my own.

I have tried to provide an income for my retirement to avoid relying solely on the state pension and a meagre pension from my employer and have chosen to do without luxuries in order to build up a small portfolio of properties to provide that income and the proposed changes will destroy those plans.

As with any other small business, finance and loan interest costs are a direct running cost and the treatment of any other business in the same way as that proposed is inconceivable (a plumber not having an allowance for purchase of van etc).

If these measures are adopted a landlord having a long void due to a maintenance problem eg a fire or a non paying tenant, would still have his mortgage interest to pay but would have no income to set it against. Not only may he have no income due to the above circumstances but he would still receive a tax bill for interest he has paid on his mortgage.

Large property owning corporations and wealthy investors who have no borrowings will not be affected by these changes, it will hit hardest landlords, including basic tax payers incidentally, who have invested as individuals and who have planned their businesses from day one around the current allowances.

It is vital that a business letting property is seen as just that – A BUSINESS. Running this type of business is as complicated and time consuming as any running any other. It takes long term planning, it has overheads, it is affected by late paying and non paying customers as is any other – it cannot be right or fair that there are totally discriminatory rules for only this kind of business.

The assertion given by the chancellor that landlords paying the basic rate of tax will be unaffected by the changes has now been shown in calculations to be patently untrue, including by HMRC themselves.

Along with the extreme financial hardship caused to hard working business people – most of whom helped to put the Conservatives in office, ultimately this will inevitably also cause a reduction in the supply of privately rented housing and an associated escalation of rents for the tenants, as landlords decide the diminishing margins make letting property no longer a viable proposition.

I sincerely hope that you are able to look again at these proposals and hopefully ditch them altogether or if not then make them apply only to new investments thus not affecting businesses built on a certain previous business model.

Yours sincerely

 

And another ….

Dear Mr Osborne

I am most concerned about the proposals, for the following reasons:

Landlords who bought in their own names will pay tax on their interest expense, rather than on real income. Interest is a legitimate cost of our business, just as it is for any other form of enterprise in the country which borrows money to buy assets that generate taxable income.

Rental property is not a hands-off investment like buying gold bars. Being a landlord requires work. They can be called upon any day, at any hour, to deal with problems. For some of them it is a full-time job maintaining their properties and dealing with tenants and agents and the administrative and accounting work that is entailed.

If this proposal is applied to existing mortgages you will be changing the rules for people who bought 20 years ago or more. You will undermine the concept of certainty which businesses of all types of rely on.

The illustrative example from Megan Shaw, Product Owner – Property Income & REITs at HMRC, of the effect of the proposed change shows a man with a salary of £40,000 and a real rental income from one property of £1,200 after deducting interest of £10,800. Currently he is a basic rate payer.

When the interest is disallowed, he becomes a higher rate payer. His tax goes up by £1,800. So after spending his time and money looking after this property for a year he has to hand over the real profit of £1,200 to the government, plus 50%. out of his net salary. If he had a second property with the same figures, he would hand over 175% of the real profit.

This is not taxation, it is confiscation of assets by the State. The communist party would be delighted.

Even if the landlord makes a loss he will have to pay tax on the interest, out of his other resources.

If landlords have no other source of income then HMRC, a branch of the government, will make them bankrupt. The result will be divorces, suicides (single and double), and an increased burden on the state.

Lenders will lose money in the bankruptcies.

Landlords who bought in their own names will exit the sector on masse, causing a house price crash. Lenders will lose money in the crash.

Affected landlords will not start companies to buy the new-builds, so fewer homes will be built, fewer sites will be developed, so less affordable housing will be built as well. This announcement may already have had the effect of deterring purchasers.

For both reasons the amount of rented accommodation will fall, reducing the mobility of labour both within the country and from outside, and rents in the remaining properties will rise.

The IFS says the measure is wrong.

You are attacking your party’s natural supporters.

Please do not apply this confiscatory measure to existing mortgages.

Yours sincerely

 

and another …..

Dear Mr Osborne

Following your proposed reduction in interest relief for private landlords (whilst exempting those who have a Ltd company structure) the unfortunate full implication of this is that many buy-to-let landlords will end up paying more tax than they are actually making in profit, even paying tax after having experienced a loss!!

The other effect will be that many highly geared landlords (i.e. those with over 75% gearing on their portfolios) will face bankruptcy due to this measure and the double tax whammy of CGT hitting them as well, as they sell out.

Please also bear in mind the mass of distressed sales which will result, not to mention the thousands of rental homes which will become unavailable as a direct result of this measure, just at the time when government is seeking to provide more homes, not less.

I would like you to please reconsider this measure which is grossly unfair and discriminatory to these small business owners, (Buy to Let is without doubt a business , (and a very labour intensive one at that) and not a passive investment.

Some Positive Ideas to improve things going forwards:

1. Full U-turn on the measure
2. if not a U Turn, then an amnesty on SDLT/CGT charging for a one-off move to Ltd structure for landlords who register with a scheme within a set time frame.
3. Apply the measures only to purchases subsequent to 2017

I have spoken to Ann Milton , MP for Guildford this morning at a Conservative party breakfast, and she agrees that many ramifications of proposed new laws are often not thought through fully, and open forums like this morning are very important in deciding how to proceed and also advised me to write to you, and to Mr Howarth, hence the email

I do hope you will decide to help

Yours sincerely

NOW IT’S YOUR TURN!


50% tax relief on shares in the new Property118 portal Latest Articles

Updated 7th July 2015 – First published on 30th April 2015

 

Property118 Portal Limited is a new start up business hosted on the established Property118.com website. It seeks to attract investment of £150,000 in return for 10% of the shares in the new company.

The Property118.com website now serves two separate businesses owned by two separate companies. The nature of the relationship between these businesses and companies is documented in a contract which is available on request.

The Property118.com website provides an online community platform with a mission to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents. It was established in 2011 and is an official Google News feed as well as being a leading forum in the UK Private Rented Sector.

The new company now seeking crowd funding (Property118 Portal Limited) is focussed exclusively on advertising tenanted property for sale. The portal pages became operational on the home page of the Property118.com website in mid April 2015.

Buyers search by postcode or Town and simultaneously set up email alerts so they are notified when a property matching their purchasing criteria is listed.

Consider how much money buyers and sellers of tenanted property could save in terms of rental voids and agents fees as a result of buying and selling with reliable tenants in situ.

Have you ever come across a tenant who is happy to be served notice because their landlord wanted to sell? What if they don’t have to leave?

Basic advertisements are FREE for both landlords and agents to create.

Premium listings feature at the top of search results.

Sponsorship of a featured property Newsletter is available to agents and developers on an ex-gratia, meritocratic basis, i.e. sponsors who make the largest payment per enquiry receive preferential placement of advertisements.

Tax Advantages
Own Shares in the Property118 Rental Property for-sale Portal

When shares in Property118 Portal Ltd become available to purchase via our nominated crowd funding platform investors will attract a 50% tax credit on all shares acquired, e.g. buying £10,000 of shares would reduce your tax bill by £5,000 regardless of what rate of tax you pay. Furthermore, if/when those shares are sold there will be no CGT payable either, regardless of the amount of the gain. This is because the company will qualify for SEIS (the Seed Enterprise Initiative Scheme) which also means that investors are able to roll capital gains into the scheme to offset the other 50% of their investment against CGT, this includes rolling over gains realised from the sale of BTL property. In other words, the shares could end up being acquired at a net cost of zero, or to put it another way, the tax relief you get back on the investment could be as much as the investment itself!

The idea for the new property portal, which came from Svetlana Alexander CIMA MA (wife to Property118 founder Mark Alexander), is a completely ring fenced business in its own right.

Marketing is planned to extend well beyond the existing Property118 reader base and will reach out to both buyers and sellers of rental properties, and of course their agents.

Initial funding of the brand awareness campaign (£25,000 pcm over TV and other forms of media) will be raised by selling 10% of the shares in the new company via an FCA authorised crowd funding platform.

Within seven days of launching a similar campaign (promoted via Property118) LettingSupermarket.com reached its £250,000 fund raising target. Demand for shares in the Property118 Portal are anticipated to be even higher, hence we are giving Property118 members the heads up to register their interest now.

The Market

According to research conducted by Paragon Mortgages Plc. there are five million UK properties owned by private landlords.

“An army of two million private landlords now own and rent out five million properties, according to the report by mortgage lender Paragon. This means 18pc of households now rent from private landlords. And the proportion is growing, as investors continue to see property as a source of future income and profit.” Source The Telegraph 22nd October 2014

The Private Rented Sector has been growing rapidly since the phase “buy-to-let” was first coined by the Association of Residential Letting Agents in 1996. The sector is projected to continue to grow, at least in part due to over 55’s seeking better returns from their pension funds which can now be liberated and used to fund alternative asset classes such as rental property to provide income in retirement.

It is estimated that upwards of 200,000 rental properties change hands in the UK every year. When tenants learn that their home is on the market via conventional estate agents, and advertised on portals such as Rightmove and Zoopla, they are immediately spooked into looking for somewhere else to live. In many cases the owners suffer rental voids due to the expectation of properties to be sold with vacant possession. Purchasers then suffer rental voids until the property is re-let. With the new portal it does not have to work this way. Once tenants realise that their property is being sold tenanted to new landlords they can rest assured that they do not need to start looking for a new home because it is being sold to another landlord.

In most cases landlords do not buy enough life insurance to repay their mortgages, which means their families need to sell some or all of their properties when they die in order to repay mortgage lenders. Even if every landlord sold none of their buy-to-let properties prior to death, and if we assume that death will probably occur within 60 years of becoming a landlord, that’s 33,333 landlord deaths a year and circa 83,333 property sale related dilemmas to be considered, i.e. whether to sell conventionally with vacant possession or tenanted. Not all landlords will hold onto their BTL properties until the day they die so it stands to reason that far more rental properties change hands every year.

These figures are supported by the following data from HMRC which was published on 21st April 2015.

“Number of residential property transaction completions with value £40,000 or above for the tax year 2014-2015 = 1,204,320”

Based on 18% of all households being in the Private Rented Sector (according to data produced by Paragon Mortgages Plc) this suggests that 216,777 sales fall into the target market for the Property118 portal every year.

Other

The key point of difference between the Property118 Portal and the likes of Rightmove and Zoopla is that it advertises rental properties only. Furthermore, the portal is available to both agents and owners to use without the requirement of a premium membership.

Voting shares in the new advertising portal (Property118 Portal Limited) will be offered subject to a minimum £1,000 investment, whilst shares without voting rights will be subject to a minimum investment of just £10. The company will be seeking to raise £150,000 in return for 10% of its shares in order to finance initial costs of brand awareness marketing until such time as cashflow is projected to turn positive. Shareholders will be invited to invest on the basis of receiving dividend income during their lifetime and as a legacy for their heirs. This is not to say that a trade sale or flotation could not be considered in due course by voting shareholders. 

For legal, compliance and commercial reasons we are unable to share too many details of the business plan at this stage. However, to ensure you don’t miss out on the opportunity to snap up shares as soon as they are released please register your interest in investing into this new business venture by completing the form below. We will then notify you as soon as the option to obtain a copy of the business plan and to buy into the business is launched on the Crowd Cube funding platform.

Oops! We could not locate your form.

 


LPA receivers causing late payments and ruining my credit rating Latest Articles

My partner and I had a portfolio of 15 mortgages with Mortgage Express and due to my partner (only) going into an IVA on his personal loans (not the mortgages – these had never been in arrears at all), an LPA receiver was appointed on all of the properties. LPA receivers causing late payments and ruining my credit

There was one line in the Terms & Conditions booklet which stated that an LPA receiver could be appointed if the mortgagor went into an IVA.

I offered to have all the mortgages transferred into my name but they would only agree to transfer one of them.

There are only a few properties left as most have been sold but when the LPA receiver pays the rental income to Mortgage Express it is after the due payment date and classed as arrears. A late payment charge is then added to the account and our credit files are affected.

I have done nothing wrong and yet my credit rating is so poor due to the actions of the LPA receiver that I cannot get any credit whatsoever.

Can I take action against the LPA receiver for paying the rents after the due payment date into the Mortgage Express account?

Thanks

Louise Star


Mortgage Express / UKAR calling in instant remortgages Advice, Cautionary Tales, Landlords Stories, Latest Articles, Legal, Property Investment News, Property News

I am aware of two Mortgage Express / UKAR borrowers who received a letter this weekend calling in their loans, an extract of the letters, which are both identical, can be found below. In both cases the properties had been purchased using instant remortgages, i.e. the property had been purchased for cash or with bridging finance and instantly remortgaged based on opem market value to Mortgage Express.Mark Alexander

Mortgage Express UKAR calling in instant remortgages

These are the first cases I have seen where Mortgage Express have called in performing loans on these grounds. However, I have acted as a professional witness on a number of occasions in Solicitors Disciplinary Tribunals and in cases where Mortgage Express have commenced litigation against solicitors, both scenarios relating to instant remortgages. In all cases I have been involved in so far the Solicitors Regulatory Authority have ruled the solicitors were acting in accordance with accepted protocols at the time and none of the litigation cases I have provided witness statements regarding instant remortgages have progressed to Court.

I will be working as a private consultant alongside Cotswold Barristers and https://www.litigationwarranty.co.uk/ in the role professional witness regarding Mortgage Express practices relating to instant remortages (AKA same day remortgages) where required.

If you have received a similar letter to the one above please get in touch using the enquiry form below.


Mortgage Express – Should I redeem? Latest Articles

With all the issues with Mortgage Express I have taken the decision to lie low and avoid meetings with them.

I have 3 properties which are in mine and my ex business partner’s name and one in my own name. Mortgage Express - Should I redeem

Problem: The one in my own name has equity and I’d like to sell. The others don’t have equity but I’m scared of selling the one with equity for 2 reasons:

1. They may ask me to use that equity to pay towards mortgages on the other properties. Is this the case even though it’s solely in my name and the other three are in both my name and my ex business partner’s?

2. I’m scared of waking a sleeping dog and getting another visit request

Please can someone advise?

Thanks

Fiona


Mortgage Express sells a part of its portfolio to Rose Mortgages Latest Articles

I received a letter from Mortgage express today explaining that they are selling part of their portfolio to Rose Mortgages ltd. and that the ‘day to day’ admin of the mortgage will be managed by Pepper UK LTD, trading as Engage credit. It also says that if I have other mortgages with them (I have 15) then I may get further letters confirming that they also have been transferred.

There’s obviously a reason as to why some of the mortgages have been transferred. Have Rose taken the worst or the best? Obviously a case of ‘cherry picking’…Possibly with the intent of increasing the variable rate as BOI have done.

Anyone else had a letter?

Hughrose


Mortgage Express – UKAR – Catch 22 Latest Articles

I am a landlord with 3 Buy 2 Let properties and my own private mortgage with Mortgage Express ( 4 properties in all ).

I got into trouble by not paying the monthly mortgage on 2 Buy 2 Let properties then a managing agent was appointed to collect rental income and forward amounts monthly ( net of commissions ) to Mortgage Express. Mortgage Express - UKAR - Catch 22

At the end of March 2015 the tenant vacated a property and the managing agent secured as empty. The other two properties remain occupied and with the original tenants.

Cashflow was effected negatively by £2,000 pcm, in that :

  1. the empty property is no longer rented ( £950 pcm )
  2. I became liable to pay the Council Tax on the empty property ( £125 pcm ) and
  3. surplus rental on other properties is retained by the managing agent / Mortgage Express ( £925 pcm )

The loss of net rental income to my account prejudices ability to pay my Mortgage Express private mortgage ( £625 pcm ).

Is it possible to take the above to Court to consider the total economic impact when today the buy to let mortgage accounts are up to date and the managing agent acting / lingers on behalf of Mortgage Express thereby adding to loss of rental income.

( Ref : there has been a detriment to customer in the above , as compared with NRAM plc v. McAdam & Hartley 10 / 12 / 14 )

Thanks

Michael


Mortgage Express – UKAR – end of term on buy to let mortgage Latest Articles

My mum has come to the end of the term of her mortgage with Mortgage Express.

The loan is £100,000 and realistically the property would only sell for about £75,000 max.

The term ended in March 2015. Mortgage Express - UKAR - end of term on buy to let mortgage

Has anyone any experience with a buy to let mortgage coming to the end of the term with Mortgage Express or those that manage in now UKAR?

She hasn’t got the money to pay the shortfall.

Is there any other option other than them repossess the property?

Any advice appreciated.

Thanks

Emma


Splitting title from Freehold house to two leasehold flats while MX hold the mortgage? Latest Articles

Hi my husband and I have owned a mid Victorian terrace since about 2000, when we first purchased it had a separate flat on the ground floor, and first floor was two sort of bed sits.

We converted with planning permission and building control into two flats.
A one bedroomed flat on the ground floor and a two bedroomed two bathroomed flat on the first and second floor.

We have a mortgage with mortgage express, but originally purchased with cash, we now need to split the title so that the house is officially two flats and land registry need to have the mortgage companies consent to do this.

I don’t know how the mortgage company would view this, its been remortgaged with them on a few occasions so I am sure they must have the property down as two flats but all paperwork just have one address.

Doing this exercise as the tenant in ground floor flat has been accepted for a new boiler under the affordable warmth scheme and company help link following guide lines.

Any one else had a similar situation, don’t want to rock the boat with mortgage express.

Many thanks

Paulinerisk


Landlords Revenge – Prosecuting Rogues Latest Articles, Legal

If you are angry about being ‘ripped off’ and being left out of pocket then you probably don’t relish the thought of spending money on solicitors or grovelling to disinterested authorities either!

There is another option though, which has been in existence longer than the police and the CPS, and which can be cost neutral regardless of whether you win or lose your case. Best of all, as well as the prospect of recovering what’s owed to you, you may also get the satisfaction of knowing that the person who ripped you off could serve a sentence behind bars, because a prison sentence could also be applied as a result of your actions.

Don’t get mad, get even!

LINK to http://privateprosecutions.org/

Do not be fobbed off by the authorities! Private Prosecutions

I got fed up of hearing stories about letting agents going out of business having plundered their client accounts and leaving both landlords and tenants out of pocket.

The police regularly tell victims that scenarios of this nature are “civil matters” and to seek advice from a solicitor. If you think about it, is it really that surprising that the police try to fob off financial crimes, which they don’t really understand, when they haven’t even got enough resources to prosecute known paedophiles who download illegal images of children or run child prostitution rackets?

Most financial crimes lead to nothing because solicitors charge a fortune, and that’s not particularly helpful to people who are already suffering financially! I rarely hear stories of money being recovered via civil litigation in these circumstances anyway, probably because the businesses owing the money tend to go into liquidation leaving the unscrupulous owners of those businesses to enjoy the protection of limited liability.

However, my frustration turned to inspiration in 2010 when I learned of the crime “Fraud By Abuse of Position”, a new law created in 2007.

Also, did you know that if a judge considers a private criminal prosecution to be justifiable that Counsels fees and investigation costs (i.e. the barristers fees and disbursements) are paid for by the state, regardless of whether the accused is found to be innocent or guilty at a trial by Jury? To protect both his client and his own reputation the barrister must, of course, be confident that there is a case to be answered. There is no requirement for Police or CPS involvement in a Private Prosecution. In fact, Private Prosecutions are as old as law itself and pre-date both the CPS and the Police.

I bided my time until I came across somebody I knew well who had a good enough case to package up and refer to a criminal barrister. Within days of him issuing a summons the wayward letting agent paid the landlord back all the money he had taken, as well as costs including the legal fees of the barrister, on the understanding that charges would be dropped. This was agreed in the best interests of public funds.

The problem was that I couldn’t publicise this great news, because that was the basis upon which the deal that was made, but I knew I was onto something very useful, not just for landlords and tenants but for any business which has been a victim of financial crime.

Other example cases might include:-

  • Rogue letting agents who have stolen clients money
  • Builders taking money for materials but vanishing without trace before doing the job.
  • Copyright theft on behalf of record producers.
  • Assisting Insolvency Practitioners.
  • Financial Services Network collapses, e.g. Directors misappropriating funds received from mortgage lenders and insurers leaving brokers out of pocket.
  • Call Centres hacked and telephone lines diverted to premium rate numbers running up massive bills.

Important note: if you drop charges made after a barrister has been appointed to initiate a private prosecution, then Counsels fees and costs incurred to that point will become payable by you. Therefore, it is imperative that you consider this if you are offered a settlement deal.

Private Prosecutions - Expression of Interest

  • If you are interested as a client please tell me a bit about your case. If you are interested as a marketing partner, please tell me how you think you can help me to build this business, and in particular to increase awareness post launch.

Should I redeem my Mortgage Express mortgage? Latest Articles

Hi guys

I currently have a mortgage on a London flat which I purchased 9 years. The flat is now worth about £160K – £170K and my outstanding mortgage is just below £100,000. Should I redeem my Mortgage Express mortgage?

My lender is Mortgage Express and although I would like to re-mortgage with them to pull out equity from the property I cant because they no longer lend.

I’m currently on 2.5% variable which is low compared to what’s obtainable out there these days.

I have been looking around for a lender to re-mortgage with but none seem to be able to offer a rate as good as Mortgage Express….. plus I’m looking for a lender who’ll consider the fact that I work as an IT contractor.

I feel trapped with Mortgage Express and I don’t intend to sell the property 🙁

Any advice?

Regards

Lammy


85% LTV is now possible with at least 13 buy to let lenders! Latest Articles

If your mortgage is with any of the following lenders you may be in a position to increase your gearing to 85% LTV ……….. and best of all, WITHOUT refinancing! 85 percent LTV is now available with 13 buy to let lenders

  • The Mortgage Works
  • BM Solutions
  • Leeds Building Society
  • Godiva
  • Platform
  • Mortgage Trust
  • Kent Reliance
  • Keystone
  • Virgin Money
  • Shawbrook Bank
  • Woolwich
  • Nat West
  • Kensington

There may be a few more lenders I’ve missed. Sadly Mortgage Express are definitely on the list and the following need a lot of convincing 🙁

  • Aldermore
  • HSBC
  • Investec
  • Paragon
  • Precise
  • Principality
  • Skipton (Amber Homeloans)
  • West Bromwich Mortgage Company

The reason 85% lending is possible with first list of lenders above is because they will ALL consider allowing second charges, which enables landlords to consider taking on Equity Finance to release cash to fund deposits on additional purchases.

Equity Finance providers are very happy to lend on a second charge basis – this is known as joint venture funding. In other words, their finance sits above your first mortgage and their security also ranks second to that of your existing mortgage lender. Therefore, you could look at Equity Finance as a second mortgage on your property, the first mortgage remains in place. This is particularly good news if you have a good tracker rate mortgage with any of these lenders, which you don’t want to disturb.

Unlike traditional mortgage lending, Equity Finance doesn’t attract monthly payments of interest or capital. Instead, the lender takes a share of capital appreciation after 10 years, or when the property is sold or refinanced (whichever is sooner). The equity finance provider does not take any share of rental profits, you keep 100% of any profits or losses you make.

The minimum amount of equity finance is £10,000 per property and the combined LTV across the mortgage and the equity finance must not exceed 85% of the current value of the property.

Returns for the Equity Finance Provider

Given that the Equity Finance provider isn’t taking any monthly payments there has to be a way for them to profit from the deal. This is quite simple, their return is a minimum of 2.5% of the amount borrowed for each year the loan remains outstanding, or a percentage of the capital appreciation on the property after making their loan (whichever is greater). If you borrow 10% of the value of the property, their return is 20% of the capital appreciation. If you borrow 15% they take 30% of the capital appreciation and so on.

As an example, let’s assume you currently own a property worth £100,000 and that you currently have a mortgage of £65,000 secured against it. The equity finance provider will lend up to a further £20,000 which is 20% of the current value (85% LTV in total).

Now let’s assume you sell or refinance that property after 5 years and it is worth £140,000 at that point. The capital appreciation would be £40,000 so the equity finance provider (based on the example above) would get 40% of that, which amounts to £16,000, plus of course the £20,000 they loaned to you in the first place. During that 5 years you would have made no payment to the equity finance provider whatsoever. The extra £20,000 released could have been used as a deposit to purchase another property which could also have produced rental profits and capital appreciation  – Oh HAPPY DAYS 😀

Just to clear up one further point, if the property falls in value (or stagnates) the equity financier charges only 2.5% per annum for their loan. That’s only paid when the property is sold or refinanced. Now that’s very cheap money compared to traditional mortgage funding!

You may be wondering why I underlined the word consider at the beginning on this article. This is because it is not a given that your mortgage lender will allow a second charge. For example, The Mortgage Works will need to be convinced that your existing LTV is below 65%. If this is the case due to your property having appreciated in value, then TMW will want to see a new valuation report to confirm that. Other lenders may want to be clear that you understand the transaction that you are entering into. This might be due to you having say 15 years on your mortgage with them, but the equity financier wanting their return in 10 years time, either from the sale or refinance of your property. Your existing lender might not want relish the idea of you refinancing in 10 years time as that will impact on their profits. Accordingly they may make you jump through a few hoops to convince them to agree to a second charge. They cannot withhold consent unreasonably though, unless of course they are now entirely Government controlled, as per Mortgage Express. For this reason we have created a spreadsheet which makes it very easy for you to justify any decisions regarding equity finance to yourself, and to your existing lender if necessary.

Consider the benefits

If you are currently at 65% LTV, using Equity Finance could enable you to double up the number of properties you own and make profits from. If you do that you would retain 60% of any capital growth, which multiplied over twice as many deals provides 20% more than just one deal. On top on that you can also double up any rental profits, and you keep ALL of that profit 😀

If you would like to learn more about joint venture finance, and to obtain our spreadsheet so that you can analyse the viability of equity finance for yourself, please complete the form below. A fee of £200 is payable which covers an introduction to and initial advice from our recommended brokers, and also a copy the spreadsheet referred to above.

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Property118’s own Buy to Let Mortgage sourcing system and calculator Buy to Let News, Latest Articles

I regularly update the products on our own in house Buy to Let Mortgage sourcing system and calculator. This takes quite a bit of time, but it is definitely worth it is worth reminding readers what it can do as it is our own in house design specifically based around the needs of property investors.

round click hereIt will not only find products for the amount you have requested, but also show you how much you could borrow as a maximum so you can request figures based on either.

The first Key inputs are the Value of the property or Purchase Price, the amount you want to borrow and the Rental income pcm

  • This will then work out if the rental income is enough for every lender and product on the system to agree a Buy to Let mortgage. This is called Stress Testing and is commonly worked out (but not always) by the rent covering the interest only mortgage payment by 125%.
  • It will also consider the amount you want to borrow against the value of the property as a percentage. This is called Loan to Value and some products or Lenders will vary from 50% LTV to 65%, 75%, some up to 80% and even one still at 85%
  • Another factor from these figures are the Lenders’ maximum and minimum loan amounts (most lenders will not lend below £25,000) and also minimum property values ( most lenders will not lend on a property below £40,000 and some higher).

Other key inputs are:

Income – many lenders have a minimum income level for applicants although this does not affect the loan amount as it is based on rent.

Preferred rate type Fixed or Variable – Do you want it to search for products where the interest rate will remain the same for the term of the product or are you happy to take the risk of a rate that may change up or down. The system will then only show results for the type you choose (although you can easily change your mind).

You will then get a list of results (see example below) which will show:

  • A list of the available products based on your criteria
  • Interest Rate
  • Product term
  • reversion rates
  • Fees
  • Early redemption penalties
  • How the Stress testing is worked out ie the amount you can borrow for every £1 of rent pcm
  • If you could borrow more how much you can borrow as a maximum and get a quote based on that figure

Buy to Let mortgage search results

Then just click on the Get quote Link for the loan requested or the maximum possible loan.

You will then get an full illustration of the product you selected along with a financial summary showing:

  • The interest only Buy to Let mortgage costs per month
  • A table showing the Capital and Interest Buy to Let mortgage costs per month
  • The minimum amount the rental income would need to be for the loan requested
  • Yield (i.e. annual rental income expressed as a percentage of property value)
  • Rental Return on Equity Invested (net of mortgage costs)
  • The LTV (i.e. the loan expressed as a percentage of valuation) is

And much more see below:

Buy to Let mortgage Illustration

You can find The Buy to Let Mortgage sourcing system and calculator under our Finance tab see below or CLICK HERE to start your search

Buy to Let mortgage tab

If you would like our help applying for a Buy to Let mortgage and finding the best deal for you just complete the form below and we will get back to you asap 🙂

Form to Contact Property118

  • Please give us a few details so we can investigate and call you back

FCA think it might be OK for lenders to ignore contractual terms Latest Articles

This week our favourite journalist at The Telegraph (Nicole Blackmore) wrote an article entitled “Should mortgage lenders be allowed to change mortgage terms” FCA think it might be OK for lenders to ignore contractual terms

What an outrageous question you might think. However, it’s not Nicole’s question, it is a question posed by the FCA!

Mark Smith from Cotswold Barristers commented …

“This is the line that worries me most “The FCA stated: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly.”

He then went on to add ….

“This is utter rubbish. 

A contract cannot be ‘changed’ by one side without agreement of the other side. A term can be varied only if the contract permits it. This is the whole nub of the argument we are having with West Bromwich Mortgage Company.”

David Lawrenson, a consultant at Letting Focus and an expert on the residential property market responded by writing the following letter to the FCA …..

“Dear Sirs, 

I see at the FCA you are asking for the public’s views on whether mortgage lenders should be allowed to alter mortgage terms and conditions mid term.

Funny that, but I thought a contract was a contract, was a contract – and was for life. I must have missed that in the small print.

Perhaps I should now write to all the lenders I have mortgages with and tell them that due to changes in “the funding environment” (i.e. I fancy a yacht and a racehorse) I will now be paying off their buy to let mortgage loans at rate of 0.1 per cent per annum. How would they like that, I wonder?

How on earth can you, at the FCA, even have the gall to be not upbraiding these lenders, never mind seeking advice from Joe Public on whether they can cheat in this way.

The landlords affected by the West Bromwich and Bank Of Ireland’s decision to cheat in this way was appalling – and you let them get away with it, so now the landlords affected have to go to court to enforce their rights. You really should be ashamed of yourselves and are now seen as something of a laughing stock and stooge for the financial services amongst the landlord community.

These landlords made a bet with the lenders on tracker mortgages – and they won. They often paid high application fee and high initial interest rates to get the benefit of a long term “rest of life” tracker rate later on in the term of the mortgage.

Now the tide has turned and the lenders are losing money, do not like it and would like to wriggle out of the contract.

Tough! They would not let their borrowers wriggle out, so why should they be allowed to.

And you should stand up against lenders – because this is simply cheating. You should not be wasting time asking for consultation on whether or not this is cheating.”

You can read my response in the comments section below the article The Telegraph – LINK HERE

If you would like to express your disgust directly to the FCA their email address is mortgage.dp@fca.org.uk

If you are into Twitter, please re-tweet the following

 


Best practice guide to letting your property Latest Articles, Letting, Lettings & Management

All landlords want three basic things:-

1) Tenants who pay their rent on time
2) Tenants who will respect their property
3) Tenants who respect their neighbours

This is a relatively comprehensive guide, hence it is quite long. It may well put you off self-management but please invest your time into reading it fully to gain a better understanding of how to protect yourself, even if you do decide to use an agent.

Forward

Despite having granted over 1,000 tenancies on properties belonging to our family portfolio we have only had to go to Court twice to seek possession and have never had a tenancy deposit dispute referred to arbitration or the small claims courts. Perhaps we have just been lucky? However, we like to think our experiences are more likely to have something to do with the way we apply common sense to our letting and tenant referencing processes.

Tenant Referencing Using Common Sense

In this guide I am going to explain how you can use same processes we do in order to achieve similar results to find your own tenants as opposed to paying the extortionate fees often associated with high street letting agents.

I will explain what you can do begin the process of finding your next perfect tenant from the day an existing tenant lets you know that they want to move out through to the check in of your next perfect tenant. I have also included several bonus tips to help you to minimise your risks and increase efficiency.

Help from existing tenants

As soon as a tenant serves notice it pays to arrange to meet them. More often than not these days, tenants think they can serve notice with just a phone call, email, facebook or text message.

It is important at this stage to get tenants to serve proper written notice. Therefore, prepare a letter for them to sign at your meeting stating the date they wish to end their tenancy. Produce two copies, one for them and one for you and leave some space so that you can also sign to accept their notice.

Next, find out why they are moving and let them know that you will do your best to help them as much as possible. For example, assure them that you will deal with meter readings on the day they check out and that you will produce letters to inform the utility providers of their contract termination and new address.

Discuss references which you are bound to receive from their new landlord or mortgage lender. Let them know what they need to do to get a good reference and a full refund of their deposit. This meeting is also the perfect opportunity for them to show you around the property and to point out any little jobs which might need to be dealt with.

Discussing references and the potential for a full refund of their deposit is a big incentive for tenants to be as helpful as possible. Explain to your tenants that it is your aim to provide an excellent reference and refund the entire deposit. We use this as an opportunity to tell them what they can do to help that to happen. For example, replacing light bulbs, carpet cleaning and professional cleaning are a classic examples of things your tenants can do prior to checkout to ensure a full deposit refund and a good reference.

By explaining that your aim is to get your new tenants moving in within a few days of your your current tenants moving out will help your tenants to understand the importance of leaving the property in tip top condition. The more helpful you can be in terms of advising tenants what they need to do to get a good reference, a full refund of their deposit and what you will do to help them, the better your chances will be for them agreeing to help you.

At this point you are in a good position to ask your tenants to allow you to show prospective tenants around before they move out. We recommend arranging block viewings. Give your tenants tips on what they can do to help, for example; if they are a bit untidy or the grass needs cutting etc. very subtly point that out. The discussion about references, a full refund of their deposit and what you will be doing to help them on moving day are all very powerful motivators.

Always remember allow yourself at least a day or two to redecorate between tenancies.

Creating and increasing demand

If you only have one tenant enquiry and a vacant property there is a strong temptation just to get it rented to the first person who comes along. That person may well be a model tenant but if you don’t do all of the necessary checks you could be swapping a short term void in your cashflow for a ‘tenant from hell’ who could end up costing you £ thousands. To avoid putting this pressure on yourself you need to make sure your properties are advertised at the right price and well before they are vacant whenever possible.

Remember, when tenants begin their search for a new home their initial decisions are based on price, location and pictures.

There is not a lot you can do about the location of your property if you have already purchased it but you can be realistic on price and give prospective tenants a lot of pictures to look at, but not too many.

We recommend adding up to 10 pictures to your adverts. Remember, tenants live inside the property, not outside, so make sure you have more internal pictures in your advertisements. Adding good pictures to your advertisements can also reduce wasting time on viewings.

Given that tenants buy on price, why not make your property slightly cheaper than others currently being advertised in the area? Also consider that tenants search Rightmove based on rent bands in multiples of £100. Advertising a property for £825 could result in you receiving far less enquiries than advertising it for £800. This is because people searching up to £900 may be expecting something better. If they are searching for properties up to £800 they may not find yours if it is priced at £825 but they will if it’s £800. Don’t make the classic mistake of advertising at £799 though, otherwise all those listed for £800 will show above yours on Rightmove! Make sure people see yours advert first.

Remember that we are a Nation of pet lovers. Would you really object to your tenants owning a goldfish? Think about the message you are sending out when you advertise your property. Most landlords includes the words “no pets” in their advertising and that potentially rules out enquiries from over half of the population. The easiest way to double the number of your enquiries from a property advert is to use the words “pets considered – guarantors may be required”.

Where to advertise

The most popular place for tenants to begin their search for a new home is the internet. The UK’s largest property portal is Rightmove, Zoopla are also a huge group which included Prime Location and several “partnerships” with Newspaper groups. You will need to use an agent to advertise on these portals but you don’t have to sign up to a management contract if you don’t want to. Also BEWARE some companies “Let-Only” contract. They charge you for doing nothing if the tenant stays on! Details of the company we use can be found below.

Zoopla

New tenant enquiries

The following is a list of initial questions to ask before arranging a viewing. These are in addition to standard questions such as name, contact details and income:-

  1. Where are you living now?
  2. Why are you looking to move? If, for example, they say they want something bigger ask in what way, i.e. more bedrooms or just more space? The more you talk the more you will learn. When tenants first call they just expect to make an appointment for a viewing. However, when you show a genuine interest most tenants appreciate it. You probably don’t want to rent to people you can’t get on with so why would you want to show such people around your property if it’s clear from a quick conversation you are not going to get on? If their time scales don’t match your requirements tell them that. Sometimes people can be flexible and may even pay rent on your property whilst they are serving notice on another. Point out the benefits of not having to move out of one property and into yours all on one day.
  3. How long are you planning to stay in your next property? Most landlords are looking for long term tenants as changeovers are time consuming and usually require some redecoration between tenancies, all of which can impact heavily on profits.
  4. Do you have any children? If so, engage in conversation about age, schools etc. to build rapport. People with children of school age generally don’t like to move home very often as this can be disruptive to their children’s education. If you are planning not to sell your property for several years make sure you point this out.
  5. What pets do you have and who looks after them whilst you are at work and on holiday? If a person has pets chat about that to build rapport, i.e. type, breed, colour, how long have you had him/her etc.

A typical conversation will last 10 to 20 minutes. If you don’t like what you have heard don’t arrange a viewing. Of course you need to be polite at all times but there are several excuses you can use to put people off. A classic is:-

  • I’ve got three viewings tomorrow morning which I’ve managed to squeeze in and unfortunately I won’t have any more time. Can I get back to you tomorrow evening and let you know how I get on with those as I wouldn’t want to commit to a viewing and waste your time if it’s already gone.

Often it is just better to be completely honest, e.g. I’m really sorry but I don’t think it would be fair on your two Rottweilers to leave them in a 2 bed flat all day whilst you are out at work!

Viewings

It’s best to do viewings in pairs for security and other practical reasons.

Try to arrange block viewings wherever possible to save yourself multiple trips to the property.

We suggest you stagger appointments every 15 minutes and always text people an hour before to confirm. Very rarely do people ever turn up on time but that’s fine if there are two of you. This is because one of you of you can keep the next set of viewers chatting whilst the other is showing others around. This also demonstrates that demand for your property is high.

During a viewing we always explain the referencing fees we charge, but only when we feel confident that we will be offering a tenancy subject to satisfactory referencing. If you like what you see and hear and your prospective tenants appear to feel the same way then explain that you would like to meet them at their home to complete some paperwork. Explain that you will need them to provide photocopies of their passport/driving license and two utility bills at that time and that you will also need to see the originals.

If they agree to everything above they’ve pretty much made up their minds that they want to take your property.

If they don’t agree you may wish to apply this little motto “some will, some won’t, so what, who’s next”.

Some people will want to look at other properties and that’s fine, they can always get back to you and you can pick up where you left off if your property is still available. If you don’t like the look of them simply tell them to have a think about it, go and look at some more properties, and that you have several more viewings to do. Leave it with them to get in touch again if they want to proceed. Usually by the time they get back to you your property will be let if you have followed our advertising tips.

Meeting prospective tenants at their current home

Dress smart casual as that’s generally what makes tenants feel comfortable. They know why you are there and in most cases they will have their documents ready for you to take a look at. As well as looking through these make sure you get chatting and reconfirm the reasons they first told you they were looking to move. Ask to meet their pets if they have any. During this time you should be looking for little tell tale signs of whether they are likely to respect your property. Look out for washing drying on radiators (as this is a common cause of condensation on windows which leads to mould problems), mould on walls, condensation on windows (as this is often a sign of a property being poorly ventilated by tenants) scratches on the backs of doors, poor cleanliness of carpets and gardens, messy kitchens and unpleasant odours of pets or cooking.

It’s also a good idea to mention that you would like to review their last 6 months bank statements. Some people ask why. Explain that you are not particularly fussed about how much money they’ve got. You just want to see their income going into the bank and that their regular commitments are honoured without exceeding any agreed credit limits as this information can help you to make an informed decision if for any reason the formal referencing process is delayed.

Tenant Referencing

For the very best results you should use a combination of “soft referencing” and “formal referencing”.

Soft referencing includes:-

1) Meeting the tenants in their own home to see how they live and to meet their pets

2) Reviewing bank statements

3) Taking copies of passport(s) and proof of current address and viewing originals

Formal tenant referencing includes:-

1) Credit history check (which will highlight any CCJ’s & bankruptcies)

2) Confirmation of showing on the Voters roll

3) Locate information (which may reveal undisclosed addresses which can then be searched)

4) FCC Paragon are one of the UK’s largest tenant referencing agencies and providers of rental warranties. As a result they have a huge database of tenants which they know have previously caused problems to former landlords. A cross check against this database is incredibly valuable.

5) Managing agents/landlords reference(s) (both current and previous if applicable)

6) Income reference(s) regardless of whether employed, self-employed or retired. If your prospective tenant is a foreign national you must view original Visa / Work Permit. Check that the expiry date has not passed or will come about mid-tenancy.

Note that if a tenant fails formal referencing we a good referencing company will usually advise the level of rent they think the tenants are good for. You should also consider requesting a guarantor who should also complete formal referencing.

Explaining your processes to prospective tenants

It is important that processes are followed properly so forewarned is forearmed, particularly for the benefit of your tenants.

Whilst you are with your prospective tenants, ideally when meeting them in their own home as part of your soft referencing process, and before either of you have formally committed to anything, we recommend you to explain what the processes will be from that point in time right through to move in day. That way, your tenants will know exactly what to expect and what needs to be done.

Move in day can be incredibly stressful for tenants so it’s important that you set their expectations in regards to the time you will need to spend with them going through various paperwork. If tenants don’t know what to expect you might find yourself fighting for their attention whilst they are dealing with removals or getting impatient because the removal people want to get on with their jobs.

The processes and time required from “agreement in principle” to let through to handing over keys and completing paperwork, including serving legal information/notices, should first be explained and then completed in the following order:-

1) Formal referencing typically takes two working days if the tenants have primed those required to provide references. It is important that you remind prospective tenants of the importance and urgency relating to formal referencing. Advise them to let their employers, accountants, existing and previous landlords know to expect reference requests and to ask them to respond quickly.

2) Explain that the tenancy agreement will be drawn up as soon as referencing has been completed and assuming that all references are satisfactory of course .

3) Explain that once referencing is accepted you will ask for a holding deposit to be paid to hold the property. This will often be the same amount as you will be expecting your tenant to provide as a deposit towards possible damages when their tenancy officially begins. You will need to protect the deposit and have the Deposit Protection Certificate and Prescribed Information ready to serve within 30 days of signing the tenancy agreement. You are not required by law to protect a holding deposit until such time as a tenancy is granted. If referencing fails we recommend you to insist on a Guarantor. You are of course at liberty to ignore the results of formal referencing but that is not recommended. If a tenant withdraws from letting the property and decides not to sign your tenancy having paid the holding deposit you will usually be entitled to retain it in full.

4) If possible, give your tenants a copy of the tenancy agreement to look through prior to move in day. You should never sign the tenancy agreement prior to move in day unless you already have vacant possession of the property. This is just in case the existing tenant doesn’t move out. The same goes for new purchases by the way, they can fall through and the completion date can be delayed. If you are purchasing a new property you can still do everything explained in this guide. Just make sure that your purchase offers are conditional upon the vendor allowing you to show your prospective tenants around the property prior to completion.

5)Explain to your tenants that they should allow between one and two hours to go through all paperwork on move in day.

6) Explain that on move in day the first thing you will do together is meter readings. We also recommend you to have letters prepared for the tenants to sign to go to Utility companies and the local council for council tax purposes, these include meter readings and move in dates. The tenant signs these, you counter sign and you make sure they are posted. This ensures that bills don’t stay in your name.

7) Explain to tenants that you will do a snagging list inspection after the first month but they are to contact you immediately if there are any problems whatsoever. It might be coincidence that we have never had a cannabis farm in one of our properties but it’s more likely our due diligence has put the crooks off. Some apparently perfectly acceptable tenants show great interest and then for unexplainable reasons don’t proceed – perhaps these people are the rogues and criminals you are looking to avoid? – you will never know!

8) Explain that on move in day the first piece of paperwork you will present is the inventory. Use this as an opportunity to show tenants where everything is and how all appliances work, especially heating systems and the location of the stopcock for water. If you are not very experienced at producing these we strongly recommend you to use the services of a professional inventory clerk. Professional inventories generally cost in the region of £100 for an average buy to let property. If your inventory is not up to standard you will find it incredibly difficult to make a claim against the tenants for any damages at the end of the tenancy. To save time have the inventory prepared in advance of move in day and make any changes necessary on the day.

9) Explain that on move in day the next stage will be the signing of the tenancy agreements – one for them, one for you.

10) Explain that keys can not be handed over until the tenancy agreement has been signed and at that point you will also hand over the Landlords Gas Safety Certificate

11) You have up to 30 days after the commencement of the tenancy to protect your tenants deposit and to serve a Tenancy Deposit Protection Certificate and Prescribed Information. We recommend the sooner the better. Ideally, protect the deposit on move in day and have the papers ready to present at check in but only after the tenancy agreement has been signed. Always get tenants to sign your copy of these to confirm that they were served after the tenancy was granted.

It is very important that you follow each of these steps in the right order for legal reasons. Advising your prospective tenants about your processes at an early stage will minimise the risk of nasty surprises on move in day and thereafter.

Just remember, this is the start of what will hopefully be a long term relationship. It is important that you nurture the relationship over time. We are not suggesting you become best friends with your tenants, the law is that you give them peaceful enjoyment and that you should leave them alone as much as possible once they are settled. However, it is important to give their property related problems equal if not greater attention as you would your own if and when they arise.

Other things you may wish to consider

  • Possession. In the event of things going wrong, which is highly unlikely if you follow the guidance above, you will want to regain possession of your property at the earliest possible opportunity. Unless you can prove to a Court that a tenant is in breach of contract it is impossible to obtain possession inside six months. Court cases can take several months to arrange and for this reason many landlords prefer to seek possession on the grounds of no fault at the end of the fixed term tenancy. This is because tenants have no right to defend a claim for possession on this basis, providing you have followed the processes above. Rather than waiting until the end of a fixed tenancy period to serve notice you could serve a section 21 (1) b notice as soon as your tenants deposit has been protected and the Deposit Protection Certificate and Prescribed Information has been served. Landlord Accreditation trainers often advise landlords to serve a section 21 (1) b notice before the end of month 4 of a fixed term tenancy. This saves having to wait for two months after the end of the fixed term tenancy to seek possession, and possibly up to three depending on the date of service and the commencement date of the tenancy if notice is served after the fixed term tenancy period has expired. Also note that if you serve notice after the fixed term tenancy period has expired that the correct notice to serve is section 21 (4) a. It’s very easy to serve this notice incorrectly as the dates are crucial. That’s another reason for serving early. We recommend serving notice at the earliest possible opportunity and advising tenants before they even move in why this is necessary. To avoid worrying tenants about this it is important to explain that serving notice gives you the right to apply to the Courts for eviction after an initial six month period but it is only in extreme circumstances that you would ever exercise that right.
  • Deed of Assurance. If your tenants are looking to stay long term they may express concern if you only offer them a six month agreement and then go on to discuss serving notice, especially if they have previously been evicted through no fault of their own. No words of reassurance are going to convince some people. Your opportunity to put our money where our mouth is involves the offer of a Deed of Assurance as an alternative to a long term tenancy. In very simple terms, a Deed of Assurance is a contractual promise from the landlord to pay compensation to the tenant if possession is obtained by the landlord within a given time period (e.g five years) despite the tenants having kept to their side of the contract. This is much better for both parties than tying themselves into a long term contract in our opinion. You find out more about the Deed of Assurance and purchase a document template from the Property118 website by searching Google for “Deed of Assurance”.
  • Advertising Portals (Rightmove and Zoopla). We access these via Letting Supermarket – please see the contact form below.
  • Full management. A significant proportion of the work required to manage your property can be outsourced to a good agent. However, don’t be fooled into thinking that contracting with a property management firm will absolve you of you responsibilities – IT WON’T! If you letting agent is negligent YOU remain responsible and YOU pay any fines or compensation. You may be able to counter-sue your agent for negligence but that will not get you very far if they have no money and no insurance. For this reason you should make sure that your agent has Client Money Protection insurance AND Professional Indemnity insurance. The agent we use is a member of ARLA which means that these insurances are in place as a condition of membership. Our agents (Letting Supermarket) provide an incredibly comprehensive service for a fee of just 4% of rent (minimum £24.99 + VAT pcm per property)
  • RGI = Rent Guarantee Insurance. RGI is recommended for any landlord who is highly reliant on receiving rental income and insuring against the legal costs associated with evictions if things do go wrong. The cost is around £10 pcm per tenant and is generally offered by formal referencing companies.

Recommended Tenancy Term

You may well prefer to take on tenants who are looking to stay long term. However, we only recommend you to offer 6 month agreements. Only offering a short term tenancy when you want tenants to stay a long time might appear counter-intuitive. However, it is important to minimise your risks and to keep your options open so that you can apply to the Courts for a possession order on a no fault basis if you absolutely need to at the earliest possible opportunity. If you are letting to students you may wish to consider 12 month agreements if it would be difficult to re-let your property part way through an academic year. Always take guarantees from parents or rent in advance if you are letting to students because they may drop out mid term.

Letting Supermarket

The owners of Property118.com like this company so much that we acquired 26% of their shares!

Their “menu pricing” allows you to buy only the services YOU need and they will not tie you into long term contracts.

They are ARLA members which means that they are fully insured.

Details of their full management service can be found HERE.

Contact LettingSupermarket.com


Skipton Building Society Legal Action Advice, Buy to Let News, Cautionary Tales, Financial Advice, Latest Articles, Legal, Mortgage News, Property Investment News

In 2010 the Skipton Building Society broke a promise to over 60,000 mortgage account holders. 

The basis of that promise was that their mortgage rate would never exceed 3% over the Bank of England base rate – it did – CONSIDERABLY!Skipton Building Society Legal Action

The hike in monthly payments for a person with a £150,000 interest only mortgage has been around £181.25 per month!

Affected borrowers include both home-owners and buy to let landlords.

At the time a small group sought legal advice but insufficient funds were raised to challenge the matter in Court. Looking back at what happened I can only assume this was due to lack of marketing expertise within the campaign group which set out to challenge Skipton.

Given that the rate hike occurred over four years ago the Skipton probably think they have got away with this and are home and dry. Several borrowers have sold their properties or refinanced onto different deals but this makes no difference, they all have a potential claim for compensation.

Saqib Mahmood

Saqib Mahmood – affected borrower

Saqib Mahmood, a non-practising Barrister was affected by the rate hike to his personal mortgage and another on a buy to let deal. Mr Mahmood was part of the initial campaign group and admits “the campaign got nowhere due to lack of marketing expertise. The case we had was strong and Skipton have already capitulated for one borrower to avoid Court Action. I am delighted that Mark Alexander and his team at Property118.com have picked up the gauntlet on this one. I am also affected by the West Brom rate hike”.

Mr Mahmood was also keen to point out what he refers to as ‘the Gerald Ratner moment of the Skipton CEO’. This dates back to 5th March 2009 when the Bank of England base rate fell to 1%. At the time the Skipton chief executive David Cutter told FT Adviser “We have pledged our residential SVR will never be more than 3 per cent above base rate and, even with this at its lowest level for 315 years, we will honour our promise.” – LINK

The Legal Action Campaign Against Skipton Building Society

On the back of organising a successful campaign which raised over £450,000 to mount a legal challenge against the West Bromwich Mortgage Company (whose borrowers are affected by a similar issue) Property118.com has sought Counsels opinion on the conduct of Skipton Building Society. Counsel is so confident that he can get the Skipton’s decision reversed if the matter goes to Court that he is willing to work on a “no-win-no-fee” basis to achieve this. His objective will be to get the terms enforced and claim compensation backdated to the date of the increase. However, this will be subject to recruiting borrowers with a minimum combined total of 500 affected mortgage accounts.

NOTE – No-win-no-fee agreements are also known as a CFA (Conditional Fee Agreement) or a DBA (Damages Based Agreement).

The case will be run on similar terms to the legal action against West Bromwich Mortgage Company, i.e. one borrower will represent all those who instruct Counsel to challenge the legality of the rate hike. Any Court order will only apply to the mortgage accounts represented by the legal action. In other words, there will be no free rides.

There will be two representative legal challenges, one on behalf of consumers (i.e. homeowners and landlords with only one buy to let mortgage) and the other on behalf of landlords with two or more buy to let mortgages.

The Barrister we have engaged is Mark Smith of Cotswold Barristers. This is due to his experience in these matters having taken on the UK’s largest ever direct access barristers case against the West Bromwich Mortgage Company.

Costs and mitigation of risk

Cotswold Barristers will administer the action, Innovative Landlord Solutions LLP (the owners of Property118.com) will be responsible for driving the campaign and associated marketing.

We are not asking anybody to part with any money at this stage. However, to fund the campaign, at some point, we will need to begin fundraising to pay for administration and marketing. We will let you know more about this in due course.

Once an initial target of 500 instructions has been obtained, pre-action protocol proceedings will be initiated and papers will be served to the Courts 90 days thereafter. This 90 day period will be known as the Countdown period.

Mark Smith (Barrister-At-Law) will earn nothing unless he wins the case or arranges a settlement for the clients he is representing.

Skipton No Win No Fee

During the Countdown period Counsel will also organise ATE insurance or litigation funding to protect claimants against adverse costs in the event of the legal action failing and the others sides legal costs being ordered to be paid by the group. The case will not proceed if this risk cannot be mitigated, either by these routes or by self-insurance, a model that has worked with great success in the West Brom case.

Legal Action Objective

The objective of the legal action is for the 3% interest rate cap to be Court ordered and backdated to the commencement of the affected mortgages. In other words, those who sign up to this action could receive a lump sum refund (less costs) and lower mortgage payments moving forwards. If the barrister fails to achieve this objective he will be paid nothing for his efforts. If the case succeeds a percentage of the overpayment will be retained to pay ATE insurance, other expenses, and Counsels fee.

For more details please search Google for “Property118 Skipton Building Society Legal Action”

To register your interest please complete the form below.

 


Mortgage Express Meeting? Latest Articles

Before they went bust, did Mortgage Express seek to arrange “review” meetings with you? Mortgage Express Meeting

Did you have a Mortgage Express account manager before they went bust?

Do your other mortgage lenders seek to arrange review meetings?

These are of course loaded rhetorical questions!

OK, I confess, I have become a cynical old sod, just like the long in the tooth landlords I met 25 years ago when I first became a property investor myself. Do all landlords end up like this? LOL

Anyhow, just so you know ……

Mortgage Express are no longer a bank, they are run by a company called UK Asset Resolution “UKAR” which is wholly owned by the Treasury. When the owners of Mortgage Express (Bradford & Bingley) went bust the Treasury used tax payers money to take over the mortgage book. UKAR was then created to recover as much as that money as quickly as possible. Funnily enough, that’s when Mortgage Express account managers began to appear and when they first started contacting borrowers to do reviews. Very few people had a problem with this at first because they thought Mortgage Express was still a bank and they were only acting in the way that commercial banks act. Oh what naivety! Ever since then, Mortgage Express have been creating carnage and to a great degree most of it has gone unreported – until now!  The Daily Mail recently ran this article on the subject.

At Property118 we have been onto Mortgage Express for years!

The articles we’ve published and the subsequent discussions can all be found here >>> http://www.property118.com/tag/mortgage-express/

There is only one reason for your Mortgage Express account manager to request a meeting, they want you to repay your mortgage or find a way to force you to. Perhaps worse, they maybe seeking to gather evidence to call in your loans or to appoint an LPA receiver!

Why would anybody agree to meet them?

You have no obligation to do so and nothing positive can ever come out of it. They can’t lend you more money, they can’t extend your loan term, they can’t reduce your interest rates and they are certainly not going to be sympathetic, regardless of your circumstances.

Don’t feel compelled to meet them either, regardless of how ‘persuasive’ they might try to be.

If Mortgage Express request a meeting you should ask them why they want a meeting and what the consequences of declining a meeting might be. Then ask them to confirm what they have said in writing. If you don’t like the answer you might need professional help.

I do not recommended any Mortgage Express borrower to agree to a meeting with Mortgage Express without being represented by a qualified Solicitor or Barrister.

If none of the following apply you probably have absolutely nothing to worry about:-

  • arrears of one or more monthly payments
  • no insurance
  • arrears on ground rent or service charges
  • you arranged your mortgage with back to back bridging finance (AKA same day remortgage or daylight bridge)
  • the term of your loan has expired
  • unauthorised use of property differing to that which was intended / disclosed at time loan agreement was signed
  • unauthorised works (extension/loft conversions etc) – Lender nearly always requires notice of proposed works and reserves right to withdraw lending at discretion
  • multi-lets where no consents are in place

….. but that’s still not a good reason to meet them, unless you have nothing better to do of course!

If you are at all worried about correspondence you have had from Mortgage Express I offer a service to review it and advise you for a fixed fee of £395 inclusive of VAT – see below. I can’t guarantee to pull a rabbit out of the hat but I can guarantee an honest and independent appraisal of your circumstances and refer you to right people to help you do what’s best for your circumstances.

Oops! We could not locate your form.


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