The UK property market is a very liquid and fast-moving sector with new trends emerging on a regular basis. Some of the interesting trends of late include:-
Nationwide with rent mortgage breakthrough
Prominent UK mortgage company Nationwide has teamed up with proptech company CreditLadder to offer a significant breakthrough in the rent mortgage sector. Traditionally rental income has not counted against an individual’s credit score although this is now changing. In an interesting development, the joint venture with CreditLadder will allow the two parties to monitor rental payments for tenants. As and when their credit rating justifies a mortgage application, they will be invited to apply for a Nationwide mortgage. While there is no certainty that the mortgage would be accepted, this is an interesting proactive development in this area.
Buy to let investors switch to company status
A recent survey by Precise Mortgages has cast a very interesting light on the buy to let sector and the difference between company and individual tax benefits. It would appear that 64% of landlords who currently own more than four properties will use limited company status for future acquisitions. This compares to just 21% of private landlords who have yet to adopt limited company status and the potential benefits going forward. This was to be expected with individual tax incentives reduced and costs increasing – compared to the limited company structure which still revolves around the concept of offsetting costs against income.
Urban vehicle dwelling on the rise
In 2018 Ruth McAllister, a postgraduate student of the University of the West of England, extended her letting agent experience to study what have become known as “urban vehicle dwellers”. These are effectively individuals who have been forced to live in vehicles because of the high rents in places such as Bristol. There have also been issues with regards to the quality of private rental accommodation, the dubious security of short-term leases and a lack of social housing. While this does highlight rental hotspots across the UK, it also casts a light on the social housing sector. Let’s not forget, until just recently a number of councils across the UK were still offering the right to buy to tenants. Council property numbers have reduced dramatically since the introduction of right to buy in the 1980s by the Conservative government.
Issue of mortgage prisoners is being addressed
While the mortgage industry is often seen as innovative and forwardthinking, a number of mortgage customers have been left behind in recent times. Commonly referred to as “mortgage prisoners” these are individuals who secured their mortgage finance prior to the introduction of new affordability calculations. In many cases their mortgage providers are now uncompetitive, often taking a step back in the marketplace, but due to their financial status, many customers are unable to switch to significantly lower remortgage rates. Thankfully, the authorities are now making their way through the tens of thousands of individuals caught in this predicament although progress is currently painfully slow.
The above trends in the UK property market perfectly highlight both the forwardthinking innovative nature of the sector as well as the fact that many people are often left behind in its wake. The idea of “urban vehicle dwellers” increasing in the number is frightening although thankfully the local authorities are now taking more interest. The opportunity to have rental income included in your credit report is welcomed, although on the subject of buy to let investment perhaps some private landlords require a refresh of the recent tax and regulatory changes?