Landlords rush to remortgage to raise capital for new purchases

Landlords raising capital to fund portfolio expansion are driving the growth in buy-to-let remortgaging.

According to the Council of Mortgage Lenders, remortgaging accounted for over two-thirds of the 21% increase in buy-to-let advances between the first and second quarters of this year.

A survey of mortgage brokers by specialist lender Paragon shows that prime reason for landlords remortgaging is to raise capital for further purchases.  

On average, nearly half (47%) of buy-to-let remortgages handled by intermediaries surveyed were for the purpose of raising capital, while three out of ten (35%) were to achieve a better rate of interest.

Other reasons for remortgaging included landlords’ existing lenders actively encouraging remortgaging (8%) and dissatisfaction with an existing lender (7%).



Remortgaging hit its highest level since the final quarter of 2008 during the second quarter, according to the CML’s figures. The £1.86bn advanced for remortgage purposes represented 53% of the total £3.5bn buy-to-let lending for the period. 



John Heron, Paragon Mortgages’ managing director, said: “Approximately two-thirds of properties in the private rented sector have no mortgage, while the average loan-to-value on those properties with a mortgage is 48%, so there is a huge amount of equity in the sector that landlords are looking to utilise to help fund portfolio growth. 



“CML figures show there was a significant increase in buy-to-let remortgage cases between the first and second quarters of this year, and it appears a large proportion of that is from landlords releasing equity to generate seed capital for portfolio expansion.

“In a market characterised by high rental demand, we could see this becoming more commonplace.”

Sellers' gloom over property market inactivity

Fourteen homes were sold per UK estate agent in the three months to August - the lowest total for more than two years, a survey has found.

Economic uncertainty and a lack of mortgage lending led to the sluggish housing market, the Royal Institution of Chartered Surveyors (Rics) said.
More surveyors reported price falls than price rises in August, Rics said.
And an increasing proportion expected prices to drop further in the next three months.
"The risk is that the worsening economic picture will gradually begin to have a more material impact on sentiment and discourage potential house purchasers, even where mortgage finance is available," said Alan Collett, housing spokesman for Rics.
'Flexibility'
The prediction will bring more gloom to John Carey, a developer for 10 years, who has been trying to sell a block of four homes in Bedford, each for between £120,000 and £135,000, since before Christmas.
There had been plenty of interest from potential buyers, he told the BBC News website, but a number of sales had fallen through, owing primarily to mortgage difficulties for people in the chain.
"I would have expected them [the properties] to have gone by spring, and certainly by May, but here I am sitting in the estate agents in September," he said.
"There is no lender flexibility. A loosening of lending terms will help."
His views were backed up by the Rics report, which reported that surveyors regarded economic uncertainty as the biggest factor affecting activity in the housing market, followed by a lack of mortgage finance.
A smaller number considered that buyers and sellers were staying away from the market because of fears over further house price falls.
First-time buyers
Central Bedfordshire has seen an above-average 4.2% fall in house prices in the year to July, according to the latest figures from the Land Registry, but many of the issues affecting the market here are typical of much of the UK.
At Harrison Murray estate agent in Bedford, staff have seen a sharp drop in the number of first-time buyers coming through the doors since the boom in the housing market.
"Those who do have saved up for a long time, and we are increasingly seeing family members helping out," said senior sales negotiator Jo Howes.
She said these first-timers were now often aged in their late 20s or 30s, rather than new to work and in their early 20s.
The Council of Mortgage Lenders said on Monday that first-time buyers were typically having to find a deposit of 20% of the purchase price to get a home loan.
School effect
Ms Howes said that those having the toughest time in the current market were sellers who had bought new-build apartments in 2006 and 2007 and were now looking to move on.
Often this was because they had bought at the height of the market, had found it easy to get a 100% mortgage, but now needed a bigger home having had children or found a partner.
At the opposite end of the scale were sellers in villages further out of the town centre, with larger homes in areas with good schools.
"They are doing infinitely better than the town centre," she said.
Nationally, Rics said that prices continued to increase in London, with prices falling the most in East Anglia and the West Midlands. Scotland and Northern Ireland also recorded house price falls, the survey said.

Phil Spencer set to become TV 'estate agent'

Could Phil Spencer be about to take an instruction off you – and if so, would you mind?

The genial Phil (what, no Kirstie?) is joining Channel 4’s daytime line-up in a new programme, ‘Phil Spencer: Secret Agent’, in which he comes to the aid of home owners trapped in properties that refuse to sell.

Says the C4 blurb: “After years of property boom, the housing market across the country has been stagnant and estate agents have seen the biggest rise in unsold houses since 2007.

“With deposit requirements up and mortgage approvals down, it’s harder than ever to sell a house.

“Enter Phil Spencer, who will take on the role of secret agent and work with sellers and buyers to help get the market moving again.

“In Phil Spencer: Secret Agent he will attempt to sell houses stuck on the market. But before he meets the struggling home owners he will don his surveyor’s hat to assess the property, looking at it through the eyes of a buyer, as well as researching the local area and housing market.

“Armed with all the information he needs to make a realistic judgement on why the house isn’t selling, he’ll surprise the owners as their new agent and outline his opinions – all the good and the bad – before recommending what needs to be done to get their home sold.”

Apparently, he’ll seek out potential buyers, create shiny new details and arrange an open house viewing.

Phil doesn’t seem to be under too many illusions as to what he’s taking on: “By working right across the country advising both buyers and sellers, I’ll be trying to broker as many deals as possible.

“It’s a big challenge, but my aim is to make a real difference in the market. And just to up the ante, I’m always going to be focusing on one particularly hard home to shift.”

Hmm.

Three thoughts spring to mind. First, what happens if he does a deal with a buyer introduced by a previous agent? And second, will he finally manage to convince the Great British Public that, actually, being an estate agent really isn’t money for old rope.

Oh, and third, what will he be charging?

Countrywide gets ready for return to stock market

Countrywide, Britain’s biggest estate agency and financial services network, is considering returning to the stock market next year.

The news emerges after its surprise sale of its Bairstow Eves franchise business, which the group said was prompted by a desire to concentrate on its owned branches.

If it does, it will be seeking a £1bn-plus listing – the same value that the company had when it went private in 2007 at the height of the housing market boom, and sold all its shares to US private equity firm Apollo for £1.1bn.

Analysts could argue that the company should be worth more than it was in 2007, since Countrywide’s growth by acquisition last year of Hamptons International. Countrywide’s lettings business has also been booming.

Countrywide’s decision to pull out of the stock market reflected founder Harry Hill’s dislike of having to do business publicly – or, as he famously put it, having to take down his pants in public.

As a publicly listed company, Countrywide was forced into issuing warnings about the housing market, making its share price volatile.

As a private company, it has not had to give out information it would rather keep to itself: for example, the price it paid for Hamptons was not revealed. Nor has it said how much it sold its Bairstow Eves franchise business for earlier this month to Hunters.

Countrywide’s sale to Apollo was followed by the housing market crash and the company laid off hundreds of staff as it struggled with huge debts, driving it to the brink of collapse. A complicated debt restructuring followed, by which Oaktree Capital Management, a specialist investor in distressed companies, acquired an equity stake in Countrywide, along with another private equity firm, Alchemy Partners, and hedge fund Polygon.

The Oaktree deal – said to have called the bottom of the market – reduced Countrywide’s £750m debt mountain to around £150m, and handed the group a £75m cash injection.

Last month, Oaktree raised its stake in Countrywide from 35% to 46%, standing to become a real winner if the group does return to the stock market.

Apollo Management retains a stake of just 25%.

Rightmove bosses pocket millions in share sales

Rightmove managing director Ed Williams has sold 300,000 shares in the company at £12.42, pocketing around £3.7m.

His wife, Joanna Barkwill, also sold 1,600 shares at the same price.

The sales last Thursday, announced in accordance with City rules, mean they sold at a price close to the all-time high.

The total number of shares sold by the couple represented 0.28% of Rightmove’s shares. Williams disposed of 22% of his own shareholding.

However, he still retains just over one million shares and holds options over a further 2.2 million shares.

Also doing well out of Rightmove last Thursday was Nick McKittrick, the company’s chief operating officer and finance director. He ended the day £4.8m richer.

He exercised 388,364 options and sold all the shares immediately at the same price as Williams.

McKittrick retains 129,000 shares and options over some 1.1m further shares.

News of the disposals sent Rightmove’s share price down 1.7%.

It is not the first time that Rightmove’s boss, who has been managing director of the business since it started, has disposed of shares.

In June 2010, he sold almost half his shares in the company for £8m – just one day after Google Maps announced the launch of its UK property search. Days later, his wife bought around £500,000 worth of shares in an apparent gesture to show support.

The share price at that time was about half the current price.

Back in March 2007, Williams sold 300,000 shares.

Connells will be eyeing the latest disposals with mixed feelings: the company sold its 18% stake in Rightmove in December 2008 when the Rightmove share price was on the floor at £1.55.

In the last fortnight, the price has touched a top of £13.07.

14 per cent rise in homelessness shows the need for more homes

The latest Government figures on statutory homelessness in England show that the number of people applying to councils for help with housing has increased by 14% in the last year.
They also show a 26% increase in the number of people accepted as homeless but for whom no accommodation has been secured by local authorities.
Responding to the news, Jenny Edwards CBE, Chief Executive of Homeless Link said:
"The number of homeless people going to councils for help continues to rise. This news underlines the need for urgent action to address the chronic shortage of affordable housing in our cities and our countryside.
"If we want a country where everyone has a roof over their head, we must make it a priority to build truly affordable homes.  More land needs to be allocated for the right type of housing, in the right locations. An efficient planning system is key, with a strong focus on delivering affordable housing.
"The Governments proposal to reform local planning policy is an important milestone towards meeting this need for more homes.  This is not just about buildings, it about stopping the damage that homelessness causes to individual lives and communities."
According to analysis of the figures by Homeless Link, the umbrella body for 500 homelessness charities, the number of applications for help with housing has increased when compared with last year.
Changes between the period from April to June 2011 (Q2 2011) and the same period last year (Q2 2010) include:
- A 14% increase in the total number of applications in the last year (Q2 2010: 22,850 – Q2 2011: 25,980).
- A 1% increase in the number of applications being accepted (Q2 2010: 44% – Q2 2011: 45%).
- A 26% increase in the number of people accepted as homeless but for whom no accommodation has been secured by local authorities (Q2 2010: 3,780 – Q2 2011: 4,770).
- A 4% increase in the number of people becoming homeless due to the end of a shorthold tenancy (Q2 2010: 14% - Q2 2011: 18%).
- A 29% increase in the number of people being placed in bed and breakfast accommodation by local authorities (Q2 2010: 2,410 – Q2 2011: 3,120).

Juice FM to move into One Park West

Liverpool commercial radio station Juice FM is moving its broadcast operation to One Park West in Grosvenor's Liverpool One.
Juice will take a 5,500 sq ft unit in the residential-led building, which contains a gym and cafes alongside 326 flats.
The radio station, owned by UTV Media, said it will spend £1.1m on the new studio, which will be operational in early 2012. The station is currently on Fleet Street in Ropewalks.