BoE signals rate cuts over summer

From Mortgage Strategy:

Bank of England governor Mark Carney has warned monetary policy easing will be needed over the summer in a speech today aimed at reassuring markets.

Speaking in the Bank’s court room, Carney said a first assessment around easing would take place on 14 July with a full forecast outlined in the August inflation report.

Carney adds that if interest rates are too low the hit to bank profitability could reduce credit availability or increase its overall price.

He says: “I can assure you that in the coming months the Bank can be expected to take whatever action is needed to support growth subject to inflation being projected to return to the target over an appropriate horizon, and inflation expectations remaining well anchored.”

http://www.mortgagestrategy.co.uk/boe-signals-qe-rate-cuts-summer/?cmpid=msdaily_2411887&utm_medium=email&utm_source=newsletter&utm_campaign=ms_daily

Simplifying Serious Illness Cover 

A handy tool for all conditions covered by Vitality serious illness cover
http://www.vitalityconditionscovered.co.uk/

From 1^st April 2016 there going to be some changes to Stamp Duty Land Tax for buy to let property purchases.

An additional 3% Stamp Duty will be added to the existing rates when purchasing a buy to let or second home. The table below shows the new rates that will be payable:

BUY TO LET STAMP DUTY CHANGES
Band	Existing residential SDLT rates	Rates for BTL’s/2nd purchases
£0 - £125k	0%	3%
£125,001 - £250k	2%	5%
£250,001 - £925k	5%	8%
£925,001 - £1.5m	10%	13%
£1.5m +	12%	15%

It is important to note that spouses/partners will be treated as one unit. Minor children will also be included. So if a spouse/partner already owns a property in their sole name, the purchase of another property in your name will still be liable for the additional charges. You will however be able to claim a refund for the additional Stamp Duty paid if your spouse/partner sells the property within 18 months. This will have to be requested from HMRC.

If a parent is looking to help a child join the housing market they may also be liable. If a parent is named on the deeds it will be classed as a second purchase and therefore liable for the additional rate.

Foreign property is also included. If for example you own a property abroad and are looking to purchase a home in the Britain you will be liable for the additional rate.

There may be a few exemptions to the new rates however they haven’t yet been confirmed by the government. Landlords with 15 or more properties may be exempt from the additional charges. Also properties valued at £40,000 or less do not require a tax return and may not be subject to the higher rates.

The new rates apply to completions that take place after the 1^st April 2016. If however you exchanged on something before 25^th November 2015 and complete after the 1^st April, you will not have to pay the extra charges.

The chart below was published by the government and is a useful tool that illustrates who will be affected by the changes.

What do the two main parties plan for the housing market over the next 5 years?

This week both Labour and the Conservatives released their election manifesto for 2015. We wanted to see what the two main parties plan for the housing sector in the next 5 years. We have compiled all of the information directly from each party’s manifesto where they analyse what they will look to achieve over the following 5 years.

The Conservatives

We will double the number of first-time buyers, and help more people own their own home

·         We will extend Help to Buy to cover another 120,000 homes

·         We will continue the Help to Buy mortgage guarantee until the start of 2017, and the Help to Buy equity loan until at least 2020

·         From this autumn, we will introduce a new Help to Buy ISA to support people who are working hard to save up for a deposit for their first home. A ten per cent deposit on the average first home costs £15,000, so if you put in up to £12,000, government will put in up to £3,000 more. A 25 per cent top-up is equivalent to saving a deposit from your pre-tax income – making it effectively a tax cut for first-time buyers.

We will build 200,000 Starter Homes and more affordable housing

·         We will build 200,000 quality Starter Homes over the course of the next Parliament, reserved for first-time buyers under 40 and sold at 20 per cent below the market price

·         We will now go further, delivering 275,000 additional affordable homes by 2020. And we will offer 10,000 new homes to rent at below market rates to help people save for a deposit

We will extend the Right to Buy to tenants in Housing Associations

·         We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant.

·         We will also create a Brownfield Fund to unlock homes on brownfield land for additional housing.

We will give you the Right to Build

·         We aim at least to double the number of custom-built and self-built homes by 2020, and we will take forward a new Right to Build, requiring councils to allocate land to local people to build or commission their own home, as you can do in most of Europe.

We will protect the Green Belt

·         We have safeguarded national Green Belt protection and increased protection of important green spaces

We will support locally-led garden cities and towns and prioritise brownfield development, making sure new homes are always matched by the necessary infrastructure to support them

·         When new homes are granted planning permission, we will make sure local communities know up-front that necessary infrastructure such as schools and roads will be provided.

·         We will ensure that brownfield land is used as much as possible for new development.

·         We will require local authorities to have a register of what is available, and ensure that 90 per cent of suitable brownfield sites have planning permission for housing by 2020.

·         We will fund Housing Zones to transform brownfield sites into new housing, which will create 95,000 new homes

We will help keep your council taxes low

·         We will encourage voluntary integration of services and administration between and within councils – for example, with the Troubled Families Programme and the Better Care Fund – to promote savings and improve local services.

·         We want local councils to help manage public land and buildings, and will give them at least a 10 per cent stake in public sector land sales in their area.

Labour

We will make sure that at least 200,000 homes a year get built by 2020

To help young people and families get on the housing ladder, we will give local authorities the power to give first call to first time buyers on new homes in areas of housing growth. And we will unlock a Future Homes Fund by requiring that the billions of pounds saved in Help to Buy ISAs be invested in increasing housing supply.

We will increase competition in the housebuilding industry by backing small builders, including through our Help to Build scheme, and by getting the public sector building again.

We will build more affordable homes by prioritising capital investment for housing and by reforming the council house financing system.

We will give local authorities powers to reduce the number of empty homes, including higher council tax on long term empty properties. And to boost the housing we need, we will start to build a new generation of garden cities.

For the 11 million people who rent privately, we will legislate to make three-year tenancies the norm, with a ceiling on excessive rent rises. A ban on unfair letting agent fees will save renters over £600. We will drive standards up by creating a national register of private landlords.

https://www.conservatives.com/manifesto

http://www.labour.org.uk/manifesto

Tesco Bank have announced that in the first half of next year they are going to open up their mortgages to the intermediary market. This is encouraging news for the industry, there have been a number of additions to the intermediary market including TSB earlier this year. The addition of lenders to the market provides more competition which often leads to better rates and also more variety in mortgage products for borrowers.

There has been a lot of talk over the last few months about a price war between mortgage lenders and it seems that this is set to continue. It provides people with an excellent opportunity to either purchase their first house or remortgage onto a more competitive rate. With competitive 5 year and even 10 year fixed rates available, it is a great time to find a fixed mortgage to give people a sense of security over what could be an unpredictable few years.

Your home may be repossessed if you do not keep up repayments on your mortgage.

A fee will be payable of £995 for mortgages up to £500,000, £1,500 for mortgages between £500,001 and £1,000,000 and £2000 is payable for mortgages over £1,000,000

This week the government published details of the implementation of the European Mortgage Credit Directive into the UK market. Although the government has made significant changes to the mortgage market already, there are some other changes to come. They are to be implemented by March 2016 however they are been put into place now in order to give the market as long as possible to prepare for them.

The first change is in the buy-to-let sector. Currently this area of mortgage lending is mostly unregulated because landlords are typically viewed as business borrowers therefore requiring less supervision. However the new legislation means that so called ‘accidental landlords’ will be subject to the affordability assessments as seen in the residential market. An example of an accidental landlord is someone who may have purchased a property with a mainstream mortgage, but due to a change in circumstances, they move away but decide to keep the property as an investment.

The second area is for the Financial Conduct Authority (FCA) to bring the regulation of  second charge mortgage lending more in line with first charge mortgages. The FCA believes that there may be a risk to consumers in this area from poor sales practices and ineffective affordability assessments.

We welcome the implementation of stricter affordability rules in order to help protect the consumer from poor sales practices as well as ensure that they can afford to pay back the loan. It will be interesting to see how this impacts current lending levels as it will be difficult to identify and evidence a professional landlord from an ‘accidental’ one.

Sources:

http://www.fca.org.uk/news/fca-outlines-approach-for-implementation-of-mortgage-credit

https://www.gov.uk/government/news/new-mortgage-regulation-legislation-published