industry news


Investors facing Brexit fears, longer pensioner mortgages


T


he prospect of a British vote to leave the European Union is causing worries on financial markets with serious concerns


voiced over the impact on the housing sector – with jobs, house prices and rents all in the firing line. The buy to let sector is already set for a


cooling off period after the rush to beat the hike in stamp duty. Other policy changes such as a further reduction in tax relief for landlords are due to kick in from 2017. Investing in buy to let property is on the


verge of becoming unaffordable for traditional middle-class savers as stricter lending rules mean they will soon need at least a 40 per cent deposit to qualify for a mortgage. New, tighter lending criteria set to be


enforced from the autumn by the Bank of England are expected to lock large groups of savers out of the rental market, and limit it to an elite club of wealthy investors. Under the new system borrowers are likely to


have to find nearly twice as much money for a down payment on a property than at present, as around half of buy to let mortgages sold today only require a 25 per cent deposit, according to figures from specialist brokers.


Referendum


The independent RICS says that demand from foreign investors for UK commercial property is now at its lowest level since it started keeping records three years ago. Uncertainty about the EU referendum was cited by 38 per cent of RICS members as the reason for that lack of interest. "There is no doubt that since the EU


referendum became a certainty following the General Election last May, we have seen a decline in interest from overseas investors in UK commercial property," said RICS chief economist Simon Rubinsohn. "At least in the short-term, we know that


international retailers and service providers are finding the UK market less attractive." Of the surveyors questioned, 43 per cent said that a UK exit from the EU would have a negative impact on the commercial property sector, while 6 per cent said it would be beneficial.


Pensioners


In an unexpected move several mortgage lenders have announed they are extending the upper age limit for when people can be paying off home loans. Nationwide is raising its age limit for people


paying off mortgages by 10 years to 85, in the latest sign of the impact of rising house prices on buyers. The building society said the increase was due to "growing demand". It means a 60- year-old could take out a 25-year mortgage as long as they prove they can afford the repayments. The move came after the Halifax increased its


age limit for mortgages from 75 to 80. Halifax said its decision was a response to changing demographics, with people living and working for longer. A recent Halifax survey suggested that one in three 20-45-year-olds expected to be working beyond their retirement age to pay off their mortgage. The policies of rival mortgage lenders for


older borrowers varies. Santander said 75 is its cut-off while RBS' upper age limit is 70. HSBC said it does not turn down mortgages on the basis of age, but reviews applications of those over 75 on "a case by case basis". There have been calls for the industry to do


more to help older buyers after tougher mortgage checks, brought in in the wake of the financial crisis, have made it harder for middle- aged people to get a home loan. Rising house prices have exacerbated the issue, with many people not able to afford to buy their first home until they are in their thirties or forties. Nationwide said the new age limit would


apply to existing customers for all its standard mortgages, but the maximum loan size would be £150,000, and could be no greater than 60 per cent of the property value. It is unlikely a pensioner mortgagor bought


the former garage in Hammersmith, west London that recently sold at auction for £466,000 as the capital’s housing market continues to exist in its own bubble.


Regulator downgrades ratings of two housing associations


The Homes & Communities Agency has downgraded the governance ratings of housing associations in London and the North West, but has stopped short of ruling them to be non-compliant. The downgrades (from G1 to G2) are like a


‘ticking off’ with the social landlords being told they need to improve, or sterner action might be taken against them.


“The downgrades (from G1 to G2) are like a ‘ticking off’ with the social landlords being told they need to improve, or sterner action might be taken against them”


West London based Shepherds Bush


Housing Association was told to improve the assessment and training of board members and noted shortcomings in its stress-testing strategy. A spokesperson for Shepherds Bush said:


“Our board is fully aware of the already identified work to be done on governance and value for money. Plans are in place for a speedy request to the HCA for a formal review later this year.”


Yellow card


Up in the north west, Rochdale Boroughwide Housing was also downgraded to a ‘G2’ rating due to a number of out-of-date gas safety certificates, caused by failings in a managing agent’s handling of a contract. The landlord had spotted the problem


and reported itself to the HCA who concluded that they should have had better oversight. A spokesperson for Rochdale


Boroughwide said it had since ended its management agreement with the managing agent. “RBH is looking forward to working with the regulator to regain our ‘G1’ rating for governance as soon as possible,” it added. Back in London, the HCA gave a ‘yellow


card’ type warning to Origin Housing, that they were at risk of a downgrade over their reliance on shared ownership and outright sales receipts to service its debts. A spokesperson for Origin Housing said:


“Origin Housing remains committed to the provision of new social and affordable housing in London and our board has agreed a balanced and robust business plan to enable us to achieve this.”


www.housingmmonline.co.uk | HMM May 2016 | 7


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