eSmart Property 11 by Steve Wright

esmartproperty The digital property magazine

OCTOBER/NOVEMBER/DECEMBER 2008

Lenders must offer mortgage fairness watchdog finds weaknesses

Managing your mortgage seek help if you are struggling

New-build properties new measures aimed at bolstering lender confidence

Stamp duty reform first-time buyers to benefit from increased threshold

Applying for a mortgage during a credit crunchâ&#x20AC;Ś increase the odds in your favour

Tenancy deposit schemes a third of renters are not being protected

PLUS: HOME INSURANCE PROPERTY FACTS CHOOSING THE RIGHT MORTGAGE

Q: Do you want to explore your property options?

A: T ell us what you need? Click here *

eSmartproperty

In this

issue 05 06 07

08 10 12 13 14

30 25

06 08

How energy efficient is your home? a few simple changes can make all the difference

Home insurance protecting your property

First-time buyer average age on the up would-be buyers forced to save for longer before making a purchase

Lenders must offer mortgage fairness watchdog finds weaknesses

Choosing the right mortgage navigating your options

Higher house prices for rural Britain buyers have greater affordability hurdles to jump

Subprime lendinng not such a lucrative market

Government's controversial HIP scheme one year on a valuable weapon in the fight for the protection of consumer rights?

Is now the ideal opportunity to buy investment property? one specialist believes cash-rich investors are in the best position to benefit

15 16 18

Landlords Energy Saving Allowance government offers to help landlords with the cost of insulation

Self-cert mortgages criteria tightened across the market

Applying for a mortgage during a credit crunch increase the odds in your favour

20 21

Tenancy deposit schemes a third of renters are not being protected

First-time buyers are not benefiting FROM property price falls loan numbers down caused by fewer deals available

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eSmartproperty

In this

issue 22

Speeding up the sale of property in the UK market the wrong solution to the problem?

23 24 24 25 28

Stamp duty reform

New regulations for rental propertiesâ&#x20AC;Ś

Student accommodationâ&#x20AC;Ś

Second homeowners leave themselves exposed to unnecessary risk

first-time buyers to benefit from increased threshold

Institutional investors increased allocation to commercial property

The "extensions for all" policy planning permission rules relaxed

Getting to grips with the language of property glossary of property terms

Energy performance certificatesâ&#x20AC;Ś the law requires commercial property energy efficiency ratings

comprehensive system could benefit landlords

university towns and cities a much more financially attractive proposition

taking a few simple procedures can cut the cost of insurance

14 28 18 08

Content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements or constitute a full and authoritative statement of the law. They should not be relied upon in their entirety and shall not be deemed to be, or constitute advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles.

eSmartproperty

How energy efficient

is your home?

A few simple changes can make all the difference Simple actions will reduce both your household fuel bills and CO2 emissions. To make your home as energy-efficient as possible and less expensive to run consider these few simple changes you can make. Probably the most consistent drain on energy supplies is lighting, especially during winter months. An energy-saving light bulb may be slightly more expensive to buy, but they last a lot longer, produce less CO2 and according to the DirectGov - Act On CO2 can also save up to £60 in electricity over its lifetime. Halogen bulbs usually run with 35 watts of power. Switch lights off not only when you leave the house, but as you leave each room. £140 million a year is wasted through leaving lights on in unused rooms. You can avoid heating an empty house by using the timer so your central heating is switched off when nobody's home. If you have radiator valves, you can also turn off radiators in rooms that aren’t being used. Turning your central heating down by one degree could cut your heating bills by up to 10 per cent, according to Act On CO2.

An enormous amount of energy is wasted by washing machines. If you wash clothes at lower temperatures you will hugely reduce your energy expenditure. Next time you buy a new washing machine, or any other appliance, look for the Energy Saving Recommended logo. Any product carrying this logo has met strict criteria on energy efficiency and will therefore cost less to run and reduce carbon emissions. Around 60 per cent of domestic carbon emissions are produced from boilers that contribute a huge part to energy consumption. If your boiler is more than 15 years old, then it’s probably time to look for a new one. Installing a high efficiency condensing boiler could save a sizable sum in the amount you pay annually on your bill. A new boiler works by recovering the heat that it would traditionally have wasted, making it around 15 per cent more efficient than a conventional boiler. Annual boiler maintenance is important to ensure that it is kept in good working order.

could save up to £120 on your energy bills each year by insulating your wall cavities. Installation can take just a couple of hours for a typical three-bedroom house and can be done from the outside. Half of the heat that escapes from our homes is lost through the walls and the loft. Fitting a brush over the letterbox and keyholes is another simple and cheap measure you can take to prevent further heat loss. Double-glazing and pipe insulation are also highly effective energy-saving methods. If everyone in the UK switched off unused appliances, Act On CO2 claims it would save £800 million a year. Leaving appliances plugged in and switched on at the socket means they’re still using energy, so by turning off TVs, games consoles and mobile phone chargers at the mains you will save yourself money.

You could make huge energy savings by installing insulation, or looking into how efficient your current insulation is and improving it. Act On CO2 say you

Need more information? Please email or contact us with your enquiry. If you would like us to email a copy of our digital property magazine to someone you know, please email us with their details and we’ll send them a copy. OCTOBER n NOVEMBER n DECEMBER 2008

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Home insurance Protecting your property Since your home is likely to be your single most important and greatest financial commitment, it is worth increasing your security and minimising expense in case of flood, theft, subsidence and legal liabilities by choosing a home insurance policy with care.

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eSmartproperty

First-time buyer average age on the up Would-be buyers forced to save for longer before making a purchase

While most insurers will cover ‘core’ risks, their terms and conditions will differ. Make sure you read the small print on all policy guidelines in alliance with the risks you personally need to account for. With so many insurance deals on the market it's worth shopping around.

Key points to compare include: n suitability for your particular needs n cost n flexibility: what happens if you miss a payment or wish to cancel or switch? n terms: when does the policy pay out/are there restrictions? Here are some tips on how to make sure you are getting the right level of cover. There are two kinds of home insurance, one that covers the building and the other the contents of your home. First, there is no point in going for the cheapest rate if it doesn’t cover the cost of your bricks, mortar and possessions against loss. While most insurers will cover ‘core’ risks, their terms and conditions will differ. Make sure you read the small print on all policy guidelines in alliance with the risks you personally need to account for. The level of alternative accommodation costs also varies between policies. Since insurance companies charge you premiums based on the likelihood of fire, flood damage and burglary, one way of ensuring a good value deal is to reduce such risks as

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efficiently as you can. Increasing security by upgrading locks on doors and windows, installing burglar and smoke alarms and proving that your property is unlikely to be left unoccupied for weeks on end can result in a cheaper insurance plan. In addition, if your home is especially vulnerable to flooding, some companies offer discounts for clients who take measures to reduce such a risk, for example, replacing timber floors with more water-resistant concrete and moving electrical points to a level above the likely flood plane. It is also worth paying extra for expensive items such as laptops, cameras and televisions.

The average age of first-time buyers is continuing to increase, according to research from mform. While during 2007 as many as 50 per cent of first-time buyers were under 30-years-ofage this has now fallen to just 34.5 per cent, according to the mortgage analysts. The principal cause of the change is the tightening of lending criteria by mortgage providers, resulting in would-be buyers being forced to save for longer before making a purchase. The extent of the current situation as seen by mform.co.uk is demonstrated by changes in the average loan-to-values (LTV) and average income multiples. In 2007, lenders allowed average LTVs of 85 per cent, compared with 77 per cent this year. Furthermore, income multiples have fallen from 3.44 times income in 2007 to just over three times now, as a result, first-time buyers now need average incomes of £41,600, compared with £34,000, last year despite recent house price falls.

Rise in demand for rental property Need more information? Please email or contact us with your enquiry. If you would like us to email a copy of our digital property magazine to someone you know, please email us with their details and we’ll send them a copy.

Landlords see the benefits Many landlords are experiencing greater demand for rental property, which has seen an increase of over 65 per cent during the last year, as the credit crunch makes buying harder, according to a recent survey by Your Move. The rise in demand for rental property is being put down to the fall in mortgage lending. Data from the Council of Mortgage Lenders shows a 36 per cent fall in mortgage lending in the last year.

eSmartproperty

Lenders must offer mortgage

fairness Watchdog finds weaknesses

The Financial Services Authority (FSA) has reiterated its call for fairness from mortgage lenders during the current challenging economic times for the UK property industry.

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eSmartproperty

The FSA have reported repossessions increased by 40 per cent over the first quarter of 2008, compared to the same period in 2007. Recent research from the financial watchdog finds weaknesses in the way some lenders are handling arrears and repossessions, with particular regard to consumers with impaired credit histories, or so-called subprime borrowers. The FSA have reported repossessions increased by 40 per cent over the first quarter of 2008, compared to the same period in 2007. Furthermore, the total number of loans in arrears grew by 15 per cent in the year to quarter one of 2008, to stand at 302,000, accounting for 2.44 per cent of total loan book balances. The data shows in these current market conditions more people are struggling to meet their mortgage payments and the FSA have called for firms to treat them fairly. The review was carried out to monitor the effectiveness of the FSA's regulatory regime of mortgage lending, seeking to address key issues in the mortgage sector and ensuring that consumers are treated fairly and that they can make informed decisions. While mainstream lenders were found to be largely conforming

to government and industry standards the FSA reveals problems with several specialist lenders. Specifically the FSA has raised concerns with regard to lenders operating a 'one size fits all' approach, focusing too strongly on recovering arrears according to a strict mandate, without reference to the borrower's circumstances. Some are also taking court action too soon. The FSA’s programme of actions to address the problem areas includes a closer examination of charges, in particular the circumstances in which these are levied, and whether they are compatible with treating customers fairly (TCF) policies. The FSA is also able to refer lenders to enforcement, carry out ongoing supervision to ensure lenders improve their arrears handling and support the Civil Justice Council (CJC) in proposal for a pre-court protocol. Finally, the government body has also published a Good Practice guide to ensure lenders are aware of their responsibilities. The Citizens' Advice Bureau (CAB) has welcomed the FSA's calls, claiming its own evidence

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shows in some cases lenders have taken borrowers to court without exploring all the other options available to address the arrears. In the financial year 2006/07 CAB in England and Wales dealt with over 57,000 problems about mortgage and secured loan arrears, an 11 per cent increase on the previous year. Furthermore, these problems rose by 35 per cent in the first two months of 2008 compared with the same period in 2007. Putting forward the case for the lenders, the Council of Mortgage Lenders (CML) argues the industry is already doing enough. "The CML is surprised at the FSA’s observations on specialist lenders, who have been working extremely hard to manage arrears, but urges the FSA to work constructively with those lenders to ensure there is shared understanding and agreement about the FSA’s requirements," read a statement from the industry body. "The mortgage lending industry is making strenuous efforts to ensure that repossession is only taken as a last resort, when other realistic

alternatives cannot be found that balance the interests of the borrower and the lender." The CML argues lenders are doing enough, specifically: "Providing information for consumers on their own arrears management process to help borrowers understand what to expect and how they will be treated fairly. " "Contacting borrowers in good time when they are coming out of initial deals onto higher rates with increased monthly repayments, and encouraging them to make contact if a financial problem is likely to arise."

eSmartproperty

Choosing the right mortgage Navigating your options

As the market has become more competitive in recent years mortgages have also become increasingly complex and until recent times this has lead to a much wider choice of mortgage schemes available to borrowers.

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eSmartproperty Usually a mortgage is repayable over a term of twenty five years, although depending on the borrowers own personal situation and the lenders criteria, it has been possible to arrange a longer or shorter-term deal, and even vary the length of the repayment schedule throughout the term. Even during the current economic climate, which has dramatically reduced accessibility to mortgage schemes, there are still numerous ways of paying a loan back. Historically lenders have offered a range of different mortgages with varying interest rates, but the credit crunch has lead to many of these being withdrawn. Typically mortgage schemes have been based on the lender's standard variable rate (SVR), a rate above the Bank of England base rate, which the lender can change at any time. However, many mortgage borrowers opt for mortgage products other than SVR mortgage schemes. These include:

Fixed-rate mortgage This allows the borrower to fix the rate of interest they pay on their loan for a set period of time, usually between one and five years, although longer term fixes may be available. This is useful if the borrower wants to ensure that their repayments do not increase during the fixed-rate period. Fixed-rate mortgages can save the borrower money if interest rates are rising, but if the base rate falls they may end up paying more than other borrowers on variable rate deals. A small handful of mortgages will track a different index to the base rate, often the Libor (London InterBank Offered Rate). It can be difficult to keep track of the rates on these loans, so they tend to be less popular with borrowers. Most lenders apply early redemption charges during a fixed or discount period. This can make it costly to move the mortgage during that time. Many short-term mortgage deals revert to the SVR after the initial offer period, which could mean that repayments increase.

Discount mortgage

Capped-rate

This offers a certain percentage off the lender's SVR for a set period, usually between one and five years. As the SVR moves, so does the pay rate on a discount mortgage, so the borrower needs to be able to cope if their monthly repayments increase.

This provides the security of knowing that the interest rate is guaranteed and will not exceed the fixed level during the capped-rate period. With this deal the interest rate can go down and the borrower benefits when rate cuts are announced by the Bank of England.

Tracker mortgage

Interest-only or repayment

This also has a variable rate, this time usually linked to the Bank of England’s base rate. Sometimes this continues for the length of the mortgage, sometimes it is only for a short period at the beginning of the loan. Some lenders may offer discounted trackers, which have a rate that is a set percentage below the base rate, while others add a percentage to the base rate. Both deals move up and down in line with any changes announced by the Bank of England. When rates are going down the borrower is the winner, but when rates start to increase so will the mortgage repayments.

Once a decision has been made on the type of loan, the borrower has to choose whether to opt for an interest-only or repayment mortgage. With an interestonly mortgage each month the borrower repays just the interest incurred on their borrowing. The capital is only repaid the day the mortgage ends, and can be paid off using whatever money they choose. This could be from money built up in a separate investment vehicle or from some other source. If the borrower has not worked out how to pay off their mortgage by the end of the term they could be forced

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to sell off their home to settle the debt. Even if they use an investment vehicle to repay the mortgage it might not grow as much as they expect and could end up with a shortfall at the end of the term, so regular reviews are important. A mortgage can also be split into part interest-only and part repayment, for example, if a top-up loan is taken or the borrower wants to keep their monthly repayments down on part of the debt.

Flexible mortgages Although there is no set definition for the term, a flexible mortgage is widely accepted to enable a borrower to overpay by any amount without penalty, including redeeming the loan. They also allow payment holidays to be taken or underpayment’s providing the borrower has overpaid enough in advance. A flexible mortgage can in addition provide the facility to borrow back on the mortgage (or drawdown) without charging. Not all flexible mortgages offer these features, and some are also available on "regular" mortgages.

Offset mortgages Offset mortgages allow the borrower to combine their borrowing with their savings. This is a kind of flexible mortgage with an extra feature enabling the combination of borrowing with savings and reduces the amount of interest paid over the mortgage term. The borrower’s savings have to be moved to their mortgage provider, and as a consequence will miss out on earning interest on their money, but offsetting can make a big difference to the total cost of the loan. The money is kept separate and can be accessed if required. Current account mortgages are a similar proposition, although they combine the borrower’s day-to-day banking with their borrowing. Offset and current account mortgages often have higher interest rates than other loans, and the borrower needs to make sure they have sufficient savings to make them worthwhile.

Buyer beware When arranging a mortgage there are also other considerations:

Arrangement fees A high proportion of lenders may charge for the work involved in setting up a mortgage or to reserve a loan at a particular rate. The amounts can vary considerably between lenders. Paying more doesn’t always mean that the borrower will receive a better deal. It is also important to check whether the fee is refundable if the deal falls through.

High lending charge Borrowing more than a loan to value of 90 per cent may result in an extra fee being charged. If this is the case it is important to find out the amount, but not all lenders make this charge. This is levied to protect the lender in the event that the borrower fails to keep up their payments.

Insurance tie-ins Some lenders entice borrowers with a lower mortgage rate if they buy their own home insurance products from them. They will sometimes also offer their own mortgage payment protection policy.

Redemption penalties With mortgage special offers, such as fixed rate schemes, a penalty will normally be charged if the loan is paid off early within the offer period. Borrowers should avoid loans with redemption penalties that extend beyond the end of the offer period, otherwise they could be stuck on the lender’s standard variable rate.

Annual percentage rate (APR) The APR tells prospective borrowers the interest rate over the life of the mortgage. This factors in any initial offer rate and then the lender’s SVR to which the mortgage reverts, as well as the impact of fees. The APR does not include the potential costs on leaving the mortgage, such as administration fees and early repayment charges.

eSmartproperty

Higher house prices

for rural Britain Buyers have greater affordability hurdles to jump House prices in rural Britain are 15 per cent higher than in urban areas, according to new research. The fourth annual Halifax Rural Housing Review shows the average level of house prices in rural areas is £235,324, compared to the average urban house price of £204,290. As a result of higher house prices and lower average earnings, those living in rural areas also have greater affordability hurdles to jump.

On affordability terms, the southwest is the toughest place to buy, while the East Midlands is the easiest.

On affordability terms, the south-west is the toughest place to buy, while the East Midlands is the easiest. The average property price in rural areas is 7.3 times average annual earnings compared with a ratio of 6.1 in urban areas.

The most expensive rural local authority in Great Britain is Chiltern in Buckinghamshire, with an average house price of £448,635.

Pendle in the north-west is the least expensive rural area with an average house price of £129,887 followed by the Western Isles (£137,319) and Copeland (£138,111). Housing in rural areas is less affordable than in urban areas due to a combination of higher average prices and lower average earnings. The difficulties for home buyers in rural locations are particularly acute among firsttime buyers and are exacerbated by relatively low levels of social housing provision.

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eSmartproperty

Subprime

lending Not such a lucrative market

As financial institutions announce varying degrees of difficulties and losses caused by toxic assets and bad debts on their balance sheets, and as the US housing market is further subjected to even more repossessions, the word ‘subprime’ has become synonymous with these events. Subprime is the practise whereby a lender gives a loan to a borrower who does not qualify for a good interest rate because of a poor credit history. In effect,‘subprime mortgages’ refers to lending mortgages to people with bad credit. The beginning of the subprime mortgage crisis started back in 2001, when the US economy was first hit by the dotcom bubble crash, which was then followed by the events that took place on September 11th. In the wake of this the US Federal Reserve dropped interest rates to 1 per cent, making borrowing cheap as the US housing market began to boom. Many mortgage lenders thought they saw

a particularly lucrative market by lending to adverse credit subprime borrowers, because they would be able to charge higher interest rates for the riskier customers. As house prices continued to increase until 2006, refinancing these mortgages through homeowner loans or remortgaging was relatively easy. However, house prices had risen sharply along with interest rates, and by the end of 2006 house prices began to deflate. Soon the US housing bubble popped and house prices slumped, leaving many people in a position where they found it difficult to refinance due to negative equity in their property. People began to default on their mortgages,

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which simply meant that they couldn’t pay. This became even more apparent during 2007 and 2008 with many more properties being repossessed as a consequence. A considerable number of mortgage lenders who leant to subprime borrowers repackaged their debt as mortgage backed securities (MBS). The cash flow of these is backed by the principal and monthly interest payments of mortgages. Because of the boom in the US housing markets, many banks and hedge funds saw MBSs as good investment opportunities. However, when the cash flow on them stopped due to borrowers defaulting, the securities lost their value,

resulting in huge losses for those that had invested in them. As a result these events have had a knock on effect on credit markets and the wider world economy.

eSmartproperty

Government's controversial HIP scheme one year on A valuable weapon in the fight for the protection of consumer rights?

Many industry insiders one year on see the government's controversial Home Information Pack (HIP) scheme, as an unnecessary burden on an already struggling industry. Alternatively, the government and consumer groups see the HIP as a valuable weapon in the fight for the protection of consumer rights.

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eSmartproperty

Is now the ideal opportunity to buy investment property? The launch of HIPs was initially announced in Labour's 1997 election manifesto, designed to be a method of increasing speed, transparency and consumer friendliness in the property market. Following consultation it was confirmed the packs would contain an energy performance certificate (EPC), a sale statement and a copy of the title documents for the property, as well as Local Authority (LA) and drainage search certificates. The so-called home condition report (HCR) was not included in the final HIP. This caused one of the earlier controversies with the scheme, with many claiming the removal of this report devalued the scheme. The documents that eventually made up the HIP were designed to speed up the process of buying a house, and reduce the number of property transactions falling thorough at the last moment. It was hoped incidents of gazundering and gazumping would also be reduced. HIPs were originally scheduled to commence on June 1st 2007, but just days before the launch an announcement was made that the programme would instead be phased in over the coming months. Eventually, HIPs were made compulsory for four-bedroom properties on August 1st 2007, with a gradual rollout making the documents compulsory for all properties from December 14th. However, it is important to note the document is still only required at the end of the sale process, not the beginning. While the so-called 'First Day Marketing' of HIPs, requiring the document to be completed when a property is placed on the market, was scheduled to come into

force on June 1st 2008, this has now been delayed until "late in the year."

One specialist believes cash-rich investors are in the best position to benefit

There have also been concerns over the number of inspectors qualified to assess the EPC element of the document, with the National Association of Estate Agents (NAEA) saying: "The NAEA has consistently expressed concerns regarding the implementation of HIPs as there still remains a shortfall of qualified energy assessors taking the exams."

According to property investment specialist 1st Asset, cash-rich investors are in the best position to buy new property that they have seen for nearly 30 years. The current housing market conditions currently provide buy-to-let landlords and homeowners with the ideal opportunity to buy property at extremely low prices.

The Royal Institution of Chartered Surveyors (RICS) have also blamed HIPs for a decline in sales, asserting: "HIPs have reduced the number of four bedroom family properties coming onto the market, making family homes even more difficult to purchase." Following an announcement from the government, the home information pack scheme has been extended to include a property information questionnaire (PIQ), giving buyers a better idea of the home in which they were are interested. The scheme is still not fully in operation, a year after its launch and nearly a decade after its conception.

1st Asset said that for investors with cash in the bank or those looking for smaller loans, this has got to be one of the best times ever to buy property over the last 20 to 30 years. High-end property consultancy, the Buying Solution, have predicted that buy-to-let investors will wait for prices to reach their absolute lowest before snapping up high-end property on the cheap.

Landlords Energy Saving Allowance Government offers to help landlords with the cost of insulation Landlords have been urged to accept the government's offer to help them with the cost of insulation.

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Those buy-to-let property owners wishing to save themselves and their tenants some money during lean economic times can apply for a Landlords Energy Saving Allowance (LESA) to help fund cavity wall, floor and loft insulation in the rented sector this winter. Not only will this help tenants save money, it should also increase the value of a landlord's property if they should decide to sell it. Recently, the government announced that it is extending the LESA scheme until 2015. Any landlord paying income tax can apply.

eSmartproperty

Self-cert mortgages Criteria tightened across the market

All parts of the mortgage market have been affected by the credit crunch, but self-cert lending has been hit more than most by the lack of financial liquidity, as lenders deem self-cert borrowers to be in the high profile subprime category.

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eSmartproperty

Self-cert mortgages are ideal for the self-employed, who do not have payslips and may not have the three years’ worth of audited accounts that lenders usually require.

Self-cert mortgages are specialist home loans where the borrower does not have to prove their income. This traditionally meant the lender would accept an application where the borrower states their annual earnings without seeking to verify this, you do not need to provide payslips or accounts. However, the recent financial turbulence and greater fears of losses mean lenders are now looking more closely at selfcert applicants. Self-cert mortgages are ideal for the self-employed, who do not have payslips and may not have the three years’ worth of audited accounts that lenders usually require. For example, a start-up business or a sole trader who does not have fully audited accounts might find it difficult to get a mainstream mortgage. In addition, many selfemployed people minimise their income (in full accordance with Generally Accepted Accounting Practice) to decrease their tax liability. This means that on paper the selfemployed can often seem worse off than they truly are. A mainstream lender may not be willing to offer a self-employed borrower a mortgage at a size that they could in fact comfortably afford. But it is not just the self-employed that use self-cert mortgages. There

is a growing army of contract workers in the UK, particularly in fields like construction and IT. While some of these may not strictly be self-employed they may still have problems proving their income if they work in short lucrative spells for different companies over one year. Those with more than one source of income can also face problems getting a mortgage on the high street, particularly if one income doesn’t come from a job but from a trust or divorce settlement for example. In addition, many employed people use self-cert mortgages. Salespeople and others who work on commission, or have variable incomes may find it difficult to secure sufficient lending based on their basic salary alone. Employed borrowers might use a self-cert mortgage if speed is of the essence. Because the lender does not verify income self-cert mortgages can go through more quickly with few hold-ups, subject to valuation. In some cases it may be essential to have a mortgage arranged quickly, such as if you are buying at auction. Self-cert mortgages help many people to get a mortgage at the level they can afford without jumping through hoops imposed by mainstream lenders. While the

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criteria on the high street may suit most people, many fall outside of it and may only be able to buy a property with a self-cert loan. But self-cert mortgages are specialist and by nature higher risk than mainstream borrowing. If the lender doesn’t check the income there is an increased risk that the borrower may not be able to afford repayments and therefore default on their mortgage. Lenders have to price for this risk which means selfcert deals are more expensive than mainstream mortgages. They also carry different criteria, for example deposits may need to be larger and fees can often be higher. The credit crunch has meant that there are now fewer lenders in the market. This is not so much because of a particular problem with self-cert lending but because many specialist self-cert lenders were also heavily exposed to the subprime market. A significant number of specialist lenders have exited the UK market or closed down altogether. Criteria have also tightened in selfcert lending, as across the market. This is why obtaining professional specialist mortgage advice is crucial and could be the difference between being able to purchase a property and losing out.

eSmartproperty

Applying for a mortgage during a credit crunch Increase the odds in your favour

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eSmartproperty

The current credit crunch and economic turbulence have resulted in affordable mortgage schemes becoming even scarcer, so if you are looking to raise mortgage finance what can you do to increase the odds in your favour? Start by checking your credit report. This is your personal credit history of what you have borrowed, such as loans, mortgages and credit cards, plus your repayment record and other information that lenders take into consideration when they decide whether you are a good risk. Items in your credit report, along with details from your application, are used to calculate a credit score, which will determine whether you receive an offer and how much interest you will pay, so it makes sense to ensure that everything is up-todate and accurately reflects your circumstances. Mortgages of 125 per cent and 100 per cent of the value of a property are a thing of the past and even 90 and 95 per cent deals are thin on the ground. So for many, the traditional five per cent deposit is not likely to be enough. Before you make a mortgage application consider saving in a high interest account to build up a deposit and take advantage of any fall in house prices. Make sure your credit history is accurate and up to date. And if you’ve had problems repaying credit in the past, work to improve your credit history. Buyers should also register to vote, as this can count in your favour with lenders. Consider buying with another person or in a shared ownership scheme. It is not just housing associations that can help you get your first property, some house builders are offering this service and some may even help you find a suitable mortgage. From next year, the government is offering a £1,500 grant to first-timers under the Open Market HomeBuy scheme, although this is likely to apply only to key workers in certain geographical areas. For 1.4 million people, 2008 is the year when their fixed-rate mortgage expires, according to the Financial Services Authority (FSA).

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If you fall into this group, improve your chances of getting an affordable replacement deal by starting to look early. Lenders, especially those offering attractive rates are swamped and applications can take longer than expected to process, so you should begin the hunt for a replacement around three months before your current deal expires. Factor in any transfer or application fees. These have risen in recent months, you might be better off staying with your existing lender, even if the interest rate is a little higher than you can get elsewhere. Pay off as much of the mortgage as you can before you apply. The more equity you have, the better your chances of getting a good deal. The best offers are currently available only to people who own at least 25 per cent of their property outright. If there is a reason why you’ve skipped any repayments in the past, contact the credit reference agency that has your credit report and ask to add an explanation. For example, you might have been ill or had an accident. Lenders will see this and may take it into account. Some people who have built up a portfolio of buy-to-let properties in recent years are finding current conditions difficult. More experienced landlords are seeing falling house prices as an opportunity to snap up bargains. However, this is not market wide, and research from Paragon shows rental yields are stable at 6.4 per cent. If you have assessed the risks and want to invest in property you will almost certainly need a 25 per cent deposit plus arrangement fees, which are typically higher than for owner-occupiers. It’s important to be realistic about potential rental income, lenders are now looking for rents that will typically cover 120 -130 per cent of the mortgage. Make certain your credit report demonstrates that you are a responsible borrower who makes repayments in full and on time. If you have been through a bad patch in the last few years, missed repayments or been turned down several times, it may be better to wait until your credit history looks better.

Spare cash More than 1 in 10 British mortgage holders plan to make overpayments Despite the relative economic gloom that has descended over the European lending market, more than one in ten (12 per cent) British mortgage holders is planning to make an overpayment in the next six months using "spare cash." That is according to research from Abbey Mortgages, which revealed that this figure is three times the number (four per cent) of people planning to make underpayments or take a payment holiday. Interestingly, mortgage payments remain a key financial priority for people even though the economic situation has changed drastically this year. Abbey also found that one in ten people plan to change their mortgage over the next six months. Abbey Mortgages said "A large proportion of mortgages offer borrowers flexibility and the research shows that many people are planning to take advantage of these benefits. It's great to see that people are quite rightly prioritising their mortgage payments ahead of other financial commitments, having a smaller mortgage can mean you get a better deal when you remortgage and of course reduces future monthly outgoings."

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Tenancy deposit schemes A third of renters are not being protected

With a sudden increase in the number of people wanting rental properties, and the growth in 'accidental landlords,' this could lead to a plethora of properties being offered for rent that are not being let legally. Failing to check out your landlord before signing an agreement and handing over large sums of money could end up costing you much more in the long term.

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First-time buyers are not benefiting FROM property price falls A third of renters are not being protected by the government's tenancy deposit protection (TDP) schemes, according to new research. TDP schemes were introduced in April 2007 to protect deposits often treated by landlords as interest free loans or not returned at all, but while all new tenancy should be protected many are not. A poll by LV= reveals 29 per cent of renters who have moved in the last 12 months are not part of a TDP scheme, despite it being a legal requirement. Half of current renters are unaware of the scheme and 27 per cent of private renters say their landlord is signed up. This research, LV= claims, highlights the need for the government to raise the profile of this legislation and for it to be more strictly enforced, to protect both renters and landlords, as awareness is currently very low. The average deposit is over £500, so renters need to make sure they know their rights.

Tips for renting 1. Do not agree to rent a property unless your deposit is protected in one of the government approved Tenancy Deposit Protection Schemes. 2. Only view properties from landlords or agents that are members of a recognised trade association.

3. Reputable agents or landlords will not ask for money upfront, you should not have to pay a registration fee. 4. Any landlords/agents that don’t return calls, miss appointments and do not have good administration should be avoided. 5. Always ensure you have receipts for money handed over, and keep them safe. 6. A good landlord or agent will give you time to read agreements and check inventories thoroughly, do not allow yourself to be rushed. 7. Tenancy agreements that are not written in plain English and include a number of financial penalties should set alarm bells ringing. 8. Don’t just sign the agreement in the office, take a copy home and read it before signing. 9. When you first move in, make a note of any existing damage, such as marks on the carpet or walls, and ensure your landlord agrees that the damage already exists. 10. E nsure you have an inventory and carefully check that it corresponds with all the items in the property. 11. Ensure you have a home contents insurance policy that includes a legal advice helpline, in case of any problems, and accidental damage cover so if you do cause any damage you can claim.

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12. G ive the property a good clean before you leave and take any rubbish away. Meet your landlord at the property so you can run through the inventory and any damage before you leave. 13. E nsure all communication with your landlord is in writing throughout your tenancy. 14. B e aware that a certain amount of wear and tear on a property is to be expected and your landlord cannot withhold your deposit for this reason alone. 15. Consider carefully whether to accept a cheque for the return of your deposit as it can be stopped by the landlord after issue. If you have taken all the steps above and your landlord is still withholding your deposit, and you are not part of a tenancy deposit scheme, obtain legal advice from your insurer or the Citizens Advice Bureau (www.citizensadvice.org.uk).

Loan numbers down caused by fewer deals available According to research from the mortgage analysts mform, there are just 36 deals available directly from lenders to first time buyers looking to borrow more than 90 per cent of the value of a property. The analysis follows a sixmonth period which has seen the lowest number of first-time buyers since records began. First time buyers are being shut out by the majority of lenders while a deposit of 20 per cent is asked for to qualify for many best-buy mortgages. This is equivalent to £37,000 on the average property. The result of this is that just 109,900 loans were issued to first time buyers in the last six months compared to 180,300 over the same period last year. First-time buyers should be benefiting as property prices fall but unfortunately they are unlikely to be able to benefit as very few have sufficient deposits. Commenting mform said, "It was easy to see why so few have bought in the last six months. There's little availability when it comes to generous loan to value ratios and the few lenders still offering above 90 per cent tend to charge a little extra to cover the cost of the increased risk of loss in the event of a forced sale. "

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Speeding up the sale of property in the UK market The wrong solution to the problem? The National Association of Estate Agents (NAEA) recently launched another, scathing attack about Home Information Packs (HIPs).

The packs were introduced during 2007 with the intention of speeding up the sale of property in the UK market, but have been attacked for industry stakeholders who claim they are an unnecessary bureaucratic burden. The NAEA, commented that with the economic situation worsening and the property market still suffering, they are calling on the government to take urgent action on HIPs. The calls for action have become all the more pertinent as the property market has continued to suffer. The NAEA's own figures show each agent is presently completing around six sales a month, down from 12 during August 2007. Furthermore, studies by Halifax and Nationwide show average prices have fallen by 8.8 and 8.1 per cent respectively.

The Carsberg Review of Residential Property has called HIPs "complex" and the "wrong solution" to the problem. Arguing reform is urgent the Royal Institution of Chartered Surveyors (RICS) commented that one of the many things the government needs to do to aid the flailing housing market is to fundamentally reform HIPs to ensure they are fit for purpose for all properties, in all market conditions. Commenting on calls for reform the Association of Home Information Pack Providers (AHIPP), replied they were disappointed that some professionals continued to try and sabotage a reform that is already starting to improve the home buying and selling process for consumers. The AHIPP also points out properties sold with a HIP reach exchange of contracts 12 days sooner than those without.

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Stamp duty

reform

First-time buyers to benefit from increased threshold First-time buyers are likely to be the main winners of the government's stamp duty reform, according to analysis from Halifax.

New thresholds introduced from 3 September 2008 now mean that if you buy property and the purchase price is £175,000 or less you don't pay any Stamp Duty Land Tax at all. If it's more than £175,000, you pay between one and four per cent of the whole purchase price. The £175,000 threshold (up from £125,000) will remain in place up to and including 2 September 2009. And it is first-time buyers in particular who will benefit from the change, according to Halifax. The average price paid by a firsttime buyer in the second quarter of 2008 was £144,283 with an average stamp duty bill of £1,443. By comparison, the average first-time buyer will pay no stamp duty over the next 12 months.

Therefore, the proportion of first-time buyers who would have paid stamp duty if the threshold had been £175,000 over the past year would have been 31 per cent rather than the 60 per cent of purchases that were above the existing threshold of £125,000. As such, Halifax estimates a threshold of £175,000 rather than £125,000 would have removed 80-90,000 first-time buyers from the stamp duty tax net over the past year. However, it remains to be seen whether savings of roughly £1,500, less than one per cent of the purchase price, will be sufficient to attract buyers.

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Residential property - purchase price

Rate of Stamp Duty Land Tax

up to £175,000 (until 2 September 2009 inclusive)

£175,001 - £250,000 £250,001 - £500,000 £500,001 or more

1% 3% 4%

Property in disadvantaged areas Properties bought in areas designated by the government as ‘disadvantaged’ have historically qualified for Disadvantaged Area Relief (whereby the SDLT threshold was higher than for other residential properties). This relief will not apply for property purchases between 3 September 2008 and 2 September 2009 inclusive. Instead the Stamp Duty Land Tax threshold will be the same as for all other property as shown above. The new threshold is higher than the previous Disadvantage Area Relief threshold of £150,000.

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Institutional investors Increased allocation to commercial property schemes Three quarters of pension fund managers are not reducing their allocation in property in spite of the downturn in the market. Research conducted by the Pensions Management Institute and Prupim reveals that 25 per cent of the 200 pension fund managers surveyed said they were planning to increase their allocation to commercial property, with 50 per cent planning to maintain their current allocation. The remainder said they would reduce their allocation. Prupim commented that given the difficult times in the commercial property market over the past year, this is a welcome vote of confidence from institutional investors. These findings confirm the long sighted nature of pension schemes as investors and it is reassuring to find that pension fund managers and trustees still see opportunities in both the UK and overseas commercial real estate markets over the next three years. The research also found that almost half the UK pension funds that took part have real estate investments in foreign markets, along with an appetite for higher risk returns than they have typically sought in the UK.

The â&#x20AC;&#x153;extensions for allâ&#x20AC;? policy Planning permission rules relaxed Householders will be able to convert their lofts and build rear extensions to their homes without having to seek planning permission. This will allow thousands to build extra rooms or convert lofts into bedrooms. The "extensions for all" policy is designed to ease pressure on families who can't afford a bigger home or can't get a mortgage. Under the changes, people planning to extend for the first time will be able to do so without needing to pay to up to ÂŁ1,000 to be granted

specific planning permission. From October the government relaxed planning permission rules for homeowners looking to extend up and out. Extensions of up to two storeys are now permitted as long as they extend no more than 10ft from the back of an existing property, enough for a small kitchen or spare bedroom. Loft conversions will also be allowed without planning consent, as long as they extend no more than 20cm (about 8in) from the eaves of a property. They must

also be no more than 50 cubic metres in size, approximately the equivalent of a room 18ft by 12ft. In conservation areas, loft conversions will still be restricted but single-storey rear extensions will be permitted. The rules will remove as many as 80,000 householders a year from the planning system. About a quarter of all home development projects that currently require planning permission will be able to go ahead without formal authorisation from councils.

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Getting to grips with the language of property Glossary of property terms

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APR

CAT standard mortgages

Early Repayment Charge

Stands for Annual Percentage Rate which helps you compare the cost of different mortgage deals. It takes into account the amount of interest you will pay, the length of the term of the mortgage, and other charges such as any arrangement fee.

The government has laid down CAT standards, fair Charges, easy Access and decent Terms, to help people identify mortgages which meet minimum standards. If a mortgage is described as meeting the CAT standards it doesn't mean that it is 'government approved' or necessarily right for you.

With some mortgages you have to pay an early repayment charge if certain things happen. For example, if you pay off some or all of your mortgage, or you transfer to a different mortgage rate before the end of the special rate period.

Completion

The difference between the amount you owe on your mortgage and the current value of your property.

Arrangement fee Lenders sometimes charge a fee to cover the work involved in setting up your mortgage or for certain mortgage rates.

Assured tenancy An assured tenancy is a type of residential tenancy in England and Wales that grants a degree of security of tenure to the tenant. A tenant under an assured tenancy may not be evicted without a reason and the rent under the assured tenancy will frequently fall under the supervision of a Rent Assessment Committee.

The day on which a property becomes legally yours.

Conclusion of Missives

Equity

Exchange of contracts

Contents insurance

The swapping of contracts between a buyer’s conveyancer and a seller’s conveyancer. Once you have exchanged contracts you are both legally bound to the transaction.

A policy insuring household contents against theft and damage.

Feudal

Conveyancer

A form of legal title applicable only in Scotland.

A legal expert handling all documentation for the sale and or purchase of a property. This will be a solicitor or licensed conveyancer.

Financial Services Authority (FSA)

Conveyancing The legal process involved in buying and selling a property.

An independent body which regulates the financial service industry in the UK. Their aim is to help consumers become better informed about financial matters and to help protect consumers.

Credit scoring

Fixed rate

Assured shorthold tenancy

A technique used by the lender to assist in the assessment of your application.

A rate of interest guaranteed not to change over a fixed period of time.

An Assured Shorthold Tenancy is the most frequently used tenancy agreement by landlords when letting residential properties. This type of tenancy agreement is also referred to as an ‘AST’ or ‘Shorthold Tenancy’.

Daily interest

Fixed tenancy

With this method of calculating mortgage interest, it is charged on the amount of mortgage outstanding daily. This means lenders take into account any changes in the amount you owe on a day-to-day basis.

A fixed tenancy is for a fixed period agreed in the rental agreement (usually six months or one year). A tenancy could be a fixed term even if rent is paid weekly. If the fixed term ends and no new tenancy agreement is drawn up then the tenancy agreement becomes a periodic tenancy.

This form of tenancy agreement is typically issued by a housing trust or housing association. They offer some security in that as long as you do not break the conditions of the tenancy agreement you may continue to live in the property. Assured tenancies were introduced by the Housing Act 1988 and replaced tenancies protected by the Rent Acts.

Bank of England base rate This is also known as the Bank of England's repo rate. This rate can go up or down from time to time and is announced by the Bank of England's Monetary Policy Committee.

Building insurance Insurance against the cost of rebuilding a property from scratch following structural damage, for example by flood, fire or storm.

Building survey This is a technical report following an inspection of the property. It will give you a comprehensive account of the condition of the property, describing any structural or other defects.

Capped rate Your interest rate won't go above a certain level the 'cap' during the capped rate period. This means that you can enjoy any rate reductions, yet have the comfort of knowing that your rate won't go above the cap.

The Scottish equivalent of exchanging contracts.

Deed A deed is a legal document signed, sealed and delivered to convey the transfer of a property and to show the legal right to possess it. Different from a Deed Poll which is executed by only one party and usually used to change one's name.

Freehold

Deposit

Guarantor

The money you pay on exchange of contracts as part of your initial contribution to the purchase of your home.

All the various costs itemised on your conveyancers invoice for carrying out your homebuying legal work.

Someone who guarantees to repay the mortgage if the borrower can't or won't for any reason. Guarantees are usually entered into where the borrower's circumstances would not allow them to borrow enough to buy the home they want. For example, parents may act as guarantors for their children when they buy their first home.

Discharge Fee

Higher lending charge

You have to pay this to some lenders for releasing their hold over a property once you have paid off your loan.

Fee or premium sometimes charged by lenders if your mortgage represents a high percentage of the property’s value.

Disbursements

A form of legal title to land which means you are the absolute owner of the property and the land it’s on.

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eSmartproperty

Household insurance

Life assurance

Retention

A way of referring to both buildings and contents insurance.

A form of insurance by which someone’s life is insured. Life assurance policies can run parallel with a repayment mortgage, so the mortgage should be repaid if you die before the end of the term.

Holding back part of a mortgage loan by the lender until repairs to the property are satisfactorily completed.

Local authority search

Government tax you have to pay based on the purchase price of a property worth £175,000 or more. New thresholds were introduced from 3 September 2008 and will remain in place up to and including 2 September 2009.

Initial disclosure document Initial disclosure is the information you will receive from an advisor when you first contact them regarding a mortgage or related product. It informs you about the service you will receive, details whether you will receive advice, what fees may be charged and may help you to decide whether to use that advisor.

Interest-only mortgage You only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce.

Investment mortgage As with an interest only mortgage, you only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce. At the same time, you put money into a separate investment which should grow and pay off the mortgage as scheduled. You must make sure you keep premiums up to date on any mortgage investment products.

Part of the conveyancing process when you buy a property, carried out by your conveyancer. It gives details of any matters which, from the local council's point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.

Stamp duty

Structural engineers report A specialist report from a structural engineer on the condition of a property.

LTV

Survey and valuation

This means 'Loan to Value' and is the proportion of the value or price of the property (whichever is the lower), that you borrow on a mortgage. For example, a £63,000 mortgage on a house valued at £70,000 would mean a LTV of 90 per cent.

A property survey that can include a valuation and should reveal any major faults in the property. It must be noted that valuations do not strictly involve surveys. It is recommended that a buyer should have a survey taken out.

Mortgage deed A legal document establishing a mortgage on a property. This is called a standard security in Scotland.

Tracker rate

Joint tenancy

Mortgage term

Tracker rates vary in line with changes to the Bank of England base rate. During the tracker rate period, any changes to the Bank of England base rate are passed on to you in full.

When two or more people own a property together.

The length of time over which you agree to pay back your mortgage, up to a maximum of 40 years.

Valuation

Negative equity

Arranged by your lender to find out if the property is suitable to lend a mortgage on.

Key Facts Illustration A Key Facts Illustration sets out details of the mortgage product that a customer is interested in. All lenders are required to set out the details in a Key Facts Illustration in the same format, so it's easier for you when you want to compare products. You must receive a KFI before making an application.

Land Registry Fee Your conveyancer pays this on your behalf to register your details in the Land Registry records once you've bought a property or changed your mortgage lender.

Lease Document in which the owner of a freehold property lets out their premises to a named party at a certain price and for a specified time.

Leasehold This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold.

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This is when the amount you owe on your mortgage is greater than the value of your property. It particularly becomes a problem if you want to move house.

Premium Amount you pay on a regular basis, this could be for an insurance policy depending on the mortgage product you choose.

Remortgaging When you arrange a new mortgage on your home, with a different lender and use the new mortgage to pay off the old one. This could be to withdraw equity to spend on home improvements.

Repayment mortgage Your monthly payments will gradually pay off your mortgage as well as the interest if your payments are strictly in accordance with the terms and conditions of the original loan.

Repo rate

This is also known as Bank of England base rate.

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Energy Performance Certificates in Residential Property From 1 October 2008 residential let property will require an Energy Performance Certificate (EPC). The provisions are part of The Energy Performance of Buildings (Certificates and Inspections)(England and Wales) Regulations 2007 SI 2007/991.

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New pressures for more homes 2020 target not high enough The target to build three million new homes by 2020 is not high enough to meet the growth in the number of elderly people and young families, a report says. A paper from the Town and Country Planning Association obtained claims the latest analysis of 2006 population statistics shows that at least a further 500,000 homes are needed in England within 12 years. The new pressures are partly because men and women are living even longer but also because more women are having their children later and long-term migrants are starting families in this country.

EPCs are provided by an approved Domestic Energy Assessor (DEA). The requirement is set out in regulation 5 which demands that a prospective tenant be provided with an EPC at the earliest opportunity and certainly prior to entering into any contract to rent out the property. The regulation goes on to state that the certificate must be provided at the earlier of the prospective tenant being provided with written details about the building or the prospective tenant viewing the building. If the prospective tenant consents the certificate can be provided electronically. Therefore the key trigger point in most cases will be the provision of written details to the tenant and it is probably worth attaching the EPC to all written details. EPCs are provided by an approved Domestic Energy Assessor (DEA). DEAs will need to undergo training and assessment by one of a number of government-approved organisations and will then need to pay an annual subscription to maintain their status. Qualified surveyors do not automatically qualify as energy inspectors but they will be able to qualify more easily. Note that the only requirement for let property is to provide an EPC and that no other part of the Home Information Pack (HIP) regulations applies to rental property. EPCs remain valid for 10 years or until another certificate is produced for the same property. Therefore agents and landlords must make sure they always have the most recent certificate on file. From October 2008 agents will now need to get EPCs for properties that they are marketing to new tenants. As the requirement is on marketing there should be no need to get EPCs for current tenancies or renewals to the same tenants. The

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There is likely to be a big demand for extra houses in the North East and the Midlands as migrants move from the South East. EPC will then need to be renewed every ten years. Where properties enter the market prior to 1 October the position is a little unclear. Experience from the introduction of HIPs suggests that there will be no need to produce EPCs for these properties but the regulations do not say this specifically and so it would be safest to get an EPC for all properties on the market after 1 October. There is absolutely no requirement for the EPC to be at a specific level, for the landlord to seek to improve the rating, or for the tenant to be compensated for a poor rating. Landlords who wish to improve their rating should concentrate primarily on boilers and insulation making sure that they have the most efficient condensing combination boiler available and ensuring that all parts of the property are insulated to minimum building regulations standards. The rating system produces a far greater effect for installation of items than it does for their improvement, so installing insulation where there is none will produce a greater effect than adding more. In terms of the practical position there will be a large number of EPCs required as the regulations come into force and this will then tail off after a few months as many properties coming onto the market will have their own EPCs already from previous sale or rental. Not having a certificate is a criminal offence punishable by a fine. This is enforced by local authority Trading Standards departments. On balance, they are unlikely to take aggressive action on those who mistakenly fall foul of the legislation provided they come into line swiftly once they have been warned.

But with the credit crunch slowing construction, the authors admit that their targets will be almost impossible to achieve and that there will be a shortfall of more than 750,000 homes by 2016. The number of new builds this year is expected to fall from about 170,000 per annum to 120,000 and is unlikely to pick up for four years.

High-earners looking to rent expect more from landlords Creating the right look for tenants Landlords need to create the right look if they wish to target the best tenants, it has been explained. According to Ideal Home magazine, high-earners looking to rent want more than just basically furnished, drably decorated accommodation. Renters will not invest into property that they do not own, so the responsibility lies with landlords. The best tenants are looking for more than white emulsion and basic beige carpet, and an interior designer can add just the right lifestyle touches to entice them to part with a top rent. Landlords with a number of properties to let can call in the professionals to create the right look for their target tenants, it's a smart move if you want to target highearning young professionals.

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New-build properties New measures aimed at bolstering lender confidence The Council of Mortgage Lenders (CML) has introduced new measures to help bolster confidence lender confidence in the new-build property market, it has announced. From September 2nd, builders and developers of newly-built or renovated properties are being asked by lenders to complete a 'disclosure of incentives' form documenting any discounts being offered by developers to ensure that mortgages are granted on a precise valuation. In the past, lenders have often felt that the valuation and conveyancing process often failed to capture the various discounts and incentives that affect the valuation of a property. It is hoped that the new regulations will have the effect of reducing the risk of mortgage fraud while providing borrowers and lenders with more protection. Commenting on the new system, website SmartNewHomes welcomed the greater transparency that the new valuation process will bring. At a time when mortgage availability is limited, this latest initiative will restore lenders with some much needed confidence when looking to lend on a new build home.

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New regulations for rental properties Comprehensive system could benefit landlords

Landlords could benefit from the introduction of new regulations covering rental properties that draw existing rules together into a comprehensive system, it has been claimed. According to the Association of Residential Letting Agents (ARLA), such regulations, if introduced, could tie various aspects of the private rental accommodation market together without necessarily rising prices. A spokesperson for the group, elaborated there are a lot of good regulations, but because they have come out intermittently it's possible, particularly for a private landlord rather than an agent, to forget about them. If everything is drawn together you have a straight forward checklist.

Recently, a report from the Law Commission entitled Housing: Encouraging Responsible Letting demanded the establishment of a central regulator to oversee landlord associations and professional lettings bodies in England and Wales. It also called for a landlord code of housing management practice and a pilot scheme for home condition certificates.

Energy performance certificates The law requires commercial property energy efficiency ratings From October 2008 any property owner building, selling or letting out commercial property by law needs to provide an Energy Performance Certificate (EPC).Â These certificates will rate a property's energy efficiency with grades from A-G (A being the most efficient) and are there to help distinguish buildings for prospective purchasers and tenants. The regulations on EPC's from October, apply to all remaining buildings apart from a few minor exceptions. Public buildings over 1000 sq.m. will be

required to have Display Energy Certificates. Whilst there is no need to provide a certificate for an existing tenancy, on a sale or letting the EPC must be given free of charge to a prospective buyer or tenant. Certificates must be provided by energy assessors who are accredited and registered with a commercial property scheme and the cost will depend on a number of factors and will need to be factored in when selling or leasing a property.Â

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Property facts Green house demand remains strong

Student accommodation University towns and cities a much more financially attractive proposition Student accommodation is the doyen of the UK's buy-to-let market as rental yields continue to outpace those of other types of property, it has been revealed. According to property website headlineproperty, landlords feel that student accommodation in university towns and cities is a much more financially attractive proposition than property in locations without higher education institutions. At the start of the summer, it was estimated that rental yields on student properties were as much as two per cent higher than those from buy-to-let properties in non-university towns. The website's research indicated that 65 per cent feel that there is still a gap in yields between buy-to-let properties in university towns and those from elsewhere. This was attributed to increased demand for student digs, as more people go to university. Cambridge was the most popular university town among investors, due to its world-famous

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university and steady intake of overseas students. It was followed by Nottingham and Brighton. Recently, research conducted at the Property Investor Show indicated that Nottingham, Durham, Manchester, Hull and Bangor provide landlords with the best opportunities for the purchase of new student properties.

Demand for green accommodation, both in the rented and housing sectors, remains strong according to a Daily Telegraph report. This is despite claims there are very few energy efficient homes being built, even though the government has pledged that all new homes will be carbon neutral by 2016.

Pre-sale exchange ready packs could reduce conveyancing times Paving the way for further improvements An enhanced form of Home Information Packs (HIPs) could massively speed up the house sale process, it has been claimed. According to a report by provider Simply HIP, using pre-sale exchange ready packs, HIPs containing additional documentation, could reduce conveyancing times from an average of 80 days to just seven. A case study completed by the company suggested that HIPs have paved the way for further improvements to be made to the home-buying process, adding that exchange-ready packs remove many of the remaining idiosyncrasies. Responding to the report, the Association of Home Information Pack Providers (AHIPP) said that it continues to work on proposals and protocols for exchange-ready HIPs.

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Second homeowners leave themselves exposed to unnecessary risk Taking a few simple procedures can cut the cost of insurance British homeowners are leaving themselves exposed to unnecessary risk, argues the Association of British Insurers (ABI) by failing to insure their second homes. As many as one in ten second home owners do not cover the property, leading to a preventable threat on their property. "There are specialist insurers around that will insure second homes," said a spokesperson for the ABI. Obviously there is the issue of the value of your homes and security. It depends very much on whether the property is left unoccupied for a long time. If it is part of a guarded complex, it's going to be cheaper than if it's on the middle of a dusty hill-top in the middle of a Greek island." According to research by Zurich Private Clients 52 per cent of second home properties are left completely unoccupied for a month or more at a time. Furthermore, British holiday property

owners have an average of £15,200 of contents in their second homes. With the inherent risks of owning a second home in the UK or abroad being substantially greater than your main residence, there is a real need for an insurance policy that pays particular attention to the special requirements for second homes and provides a wide band of cover. n In addition it is also possible to cut the cost of insurance by following a few simple procedures. n Homeowners should make sure they don't have items in the property other than those that they need. n Don't leave expensive items there unattended. Think about security. Consider whether or not the property needs to be managed and what type of arrangements you have in place for the property to be managed in your absence.

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