Billions in arrears through rising mortgage rates
The Bank of England is hardly making itself popular at the moment, least of all with property owners, many of whom are facing yet another mortgage hike following the 13th interest rate raise in a row.
The base rate jump, taking interest from 4.5% to 5%, sees mortgages across the country creep up again – taking them to a fifteen year high. After more than ten years of rates sitting below 0.75%, many homeowners with tracker mortgages, or whose fixed deals are coming to an end are being left reeling at the latest figures.
The PM has been blasted for being totally out of touch, following an interview with the BBC’s Laura Kuenssberg at the weekend, where he urged skint mortgage holders to ‘hold their nerve’. Well Rishi, their nerve is all they will be holding, nobody can afford anything else with the way things are climbing!
The PM went on to advise people to have a frank chat with their banks if they are struggling with payments, saying that ‘they can request an extension to their mortgage, or a switch to an interest-only mortgage. None of that will have an impact on their credit rating, and it will save them potentially hundreds of pounds per month on their mortgage payments.’
Whilst undoubtedly a key message, Sunak’s words will have been scant comfort to poor Dave, who called into BBC Radio 5 Live and admitted that he was having to work three jobs to be able to afford his mortgage after the cost rocketed. Just 13 months ago, Dave’s mortgage repayments were £1,700, but thanks to the interest hikes, they are now a pocket busting £2,850 a month – and that’s before the latest changes.
Dave is far from alone. According to the Bank of England’s own figures, mortgage arrears in the UK reached £14.9 billion in the first quarter of 2023, accounting for 0.89% of outstanding mortgage balances. The total increased by 9.5% over the quarter, this is a problem that’s just getting worse.
CEO of Home Financing at Skipton Building Society, Charlotte Harrison, said that they want homeowners to be aware of the help available to them and to not ‘shy away’ from the problem, should they start to get into difficulty. She said:
It is crucial as lenders we offer as much support as we can to ensure borrowers can remain secure in their own homes through this turbulent time. There is a lot of news about the impact the current climate is having on homeowners, but there is little in the news which highlights what support and help is available out there for them already.
The PM might have been criticised, but the message he shared really was an important one. If you are having any concerns about your ability to keep up with your mortgage or are worried about how rate changes are going to impact your repayments, don’t suffer in silence. Speak to your lender or broker as soon as you can, there are options available to help.
16k fine for skirting the rules
Legislation is in place for a reason. We might moan about it, but as good landlords, wanting the very best for our tenants and properties, we all make sure that we are doing everything to the letter, right?
As well as keeping to the letter of the law, making sure everything is safe and ensuring you are protected, there’s some hefty penalties in place if you get things wrong. A landlord in Hackney was recently ordered to repay £16,191 to four tenants after a First Tier Property Tribunal ruled against her.
Hackney Council landlord Jaya Sanah hadn’t licenced her four-bedroom HMO, and her agent had failed to give the tenants the Right to Rent Guide, and no EICR, gas safety or EPC had been carried out on the property. All in all, a bit of a catastrophic failure.
The combination of factors resulted in the huge fine, 60% of the maximum rent. The payment was reduced from the maximum because the offence was not deemed to be ‘serious’, with no allegations of harassment or attempts at retaliatory eviction. Proof, if you needed any, that making sure you have all of the required legal boxes ticked is not only important from a safety aspect, but also a financial one!
With EPCs in mind, there’s yet more news about the upcoming changes. How positive it is open for interpretation though…
Energy minister Andrew Bowie this week admitted that progress on implementing the energy efficiency update has been slow (not very energetic, clearly) and landlords are still in the dark about how exactly they can comply with the new rules.
Currently, the cut-off date to comply is 2028 – with a cost cap of around £10,000 per property. Should upgrades exceed £10,000, landlords may be able to apply for an exemption because the expense of upgrades would make rentals uneconomic.
We are continuing to refine the policy design to ensure that the costs and circumstances relating to energy efficiency improvements are fair and proportionate for landlords and tenants.
Watch this space!