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Buy-to-let mortgages on rise – but landlords would rather quit than meet new eco rules

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There are more buy-to-let mortgage deals available now than at any point during the pandemic, including ‘green’ deals – but some landlords are considering leaving the market due to incoming energy efficiency rules.

The number of deals on the market has reached more than 2,700, according to Moneyfacts, the highest since March 2020 and an increase of nearly 1,000 annually.

It is also 365 more than were available in July 2019, ahead of the pandemic. 

Waste of energy? Availability of buy-to-let mortgages is improving, but some landlords are reticent to take advantage because of upcoming regulations around EPC ratings

Waste of energy? Availability of buy-to-let mortgages is improving, but some landlords are reticent to take advantage because of upcoming regulations around EPC ratings

As well as launching more products in general, lenders are increasingly offering mortgages that reward landlords with energy-efficient properties, as the Government moves to make less energy efficient homes effectively difficult to rent out within the next 15 years. 

But despite these incentives, some landlords have told This is Money they would rather quit the market than spend money bringing their properties up to the required standard.  

The Mortgage Works – the landlord arm of Nationwide and one of the UK’s biggest buy-to-let lenders – has re-introduced loans with 20 per cent deposits after withdrawing them at the beginning of the pandemic. 

They are available for purchase and remortgage with two-year fixed rates starting from 2.49 per cent with a 2 per cent fee and five-year fixed rates starting from 2.99 per cent with a 2 per cent fee.

However, the one key difference from the previously available products is that they are now only available on properties that have an EPC energy efficiency rating of C or above.

Just 2 per cent of homes currently make the A and B grades, while around 85 per cent are either C or D, according to the latest English Housing Survey. Around 13 per cent, more than 14 million, are rated E, F or G. 

Improving homes by adding better insulation or replacing gas boilers can cost tens of thousands of pounds – and some landlords say it is not worth it.  

For certain older homes, it might not even be possible to get up to a EPC C rating. 

Energy efficiency rules ‘by far the biggest threat’ to landlords 

Despite the mortgage incentives on offer, some landlords told This is Money that they were not planning to bring their properties up to scratch and that instead they wanted to quit buy-to-let. 

Most wanted to be anonymous because they did not want their tenants to find out that they wanted to sell before they had finalised their plans. 

One portfolio landlords told us: ‘Of all the punitive recent legislation and anti-landlord changes, nothing comes close to the impending minimum C rating. 

‘It is this alone that will cause me to sell my buy-to-let properties, and I suspect a large number of others. 

‘My properties are old and as such will take a ridiculous amount of money to bring up to a C, even if that were possible, which I suspect it will not be.

‘It is by far the biggest threat to the buy-to-let market and it is within plain sight.’ 

TMW is the latest of many lenders to launch mortgages that are conditional on a property’s green credentials. 

Most are offering higher loan-to-values or lower fees to landlords that own properties with an EPC C or below, though there are some offering better interest rates.  

The Department for Business, Energy and Industrial Strategy is currently consulting on proposals to increase the EPC requirement to a C rating for all tenancies by 2028.

BEIS has said that mortgage lenders could play a key role in meeting the Government’s energy efficiency targets for housing, and suggested that they could be required to track and annually disclose the average Energy Performance Certificate rating of the properties they lend against. 

‘Improving would cost me £5k – and I could be forced to upgrade again’ 

 London-based landlord Peter S. told This is Money: 

‘One flat I own is a pretty Georgian one-bed in North London. All my tenants over 20 years have loved living there, as I did for seven years when younger, and I am always at hand to deal with any problems.

‘The EPC rating is now just below the standard, but to increase it to legal level, I must install gas central heating (being so small it has always been fine with Dimplex heaters). 

‘This will cost me about £5,000 to install, but all signals are gas will then be banned due to environmental costs. 

‘The constant upgrading of requirements is making my business, which has provided great safe and comfortable living for tenants over the years, simply unviable.’

In its announcement of the new deals, TMW referenced the BEIS consultation as the driver behind its decision to only offer the mortgages on homes with an EPC of C or above.

Daniel Clinton, head of The Mortgage Works, said: ‘With impending regulation on the horizon affecting minimum EPC standards across the PRS, we are taking pro-active measures through our lending proposition to support the transition.’  

This week, Paragon Bank expanded its ‘green further advance’ mortgage range, as one of several lenders to venture into this market.

Further advance mortgages allow property owners to access funds to improve their homes.  

Paragon’s new 20 per cent deposit further advances are available for landlords who have four or more mortgaged buy-to-let properties, which are rated A-C, in England and Wales.

One way of improving a home's EPC is by installing better insulation - but some landlords say making improvements isn't worth the cost and they would rather sell their properties

One way of improving a home’s EPC is by installing better insulation – but some landlords say making improvements isn’t worth the cost and they would rather sell their properties

Initial fixed rates start at 3.75 per cent and there are no fees. 

Other lenders that have offered special mortgages or incentives based on EPC ratings this year – either to landlords or owner-occupiers – include NatWest, Nationwide, Barclays, Virgin Money and Kensington Mortgages. 

Prior to that, they were relatively unheard of – but with government pressure unlikely to let up, green mortgages seem to be here to stay. 

Daniel Lee, principal broker at Hamilton Fraser Total Landlord Mortgages, said: This is clearly a condition which will become more prevalent, particularly if in the future mortgage lenders are required to track and annually disclose the average EPC rating of the properties they lend against. 

‘Landlords should take note of this and be looking at ways to make energy efficient improvements to their rental properties, not least so they can achieve the best mortgages rates, but also to protect the saleability and value of their investment.’ 

However, for many, they would rather sell up and leave the market altogether. 

‘I’ll be a holiday let owner instead’ 

Another landlord, who again wanted to be anonymous for fear of unnecessarily worrying his tenants, said: 

‘I am situated in Wales and have a mixture of commercial and residential properties.

‘I have already sold one house last year and will be selling another when it becomes vacant.

‘My reasons for wanting to get out are many, but over regulation in the sector is probably the main one.

The EPC rating rising to ‘C’ is going to hit many landlords hard, because of the ages of some of the properties, it is not economical (or even possible) to bring them up to the required standard, without having to spend considerable sums of money.

‘I am 65 now and I don’t want my benefactors to have a large inheritance tax bill to pay.

‘I have a farm in Monmouthshire with a listed barn and I am going to rent this out for holiday lets, as there is much less hassle and it is a lot more lucrative.’ 

What is happening to buy-to-let rates?

The average two and five-year fixed rates for buy-to-let mortgages are sitting at 2.98 per cent and 3.28 per cent, according to Moneyfacts.

While they have decreased compared to 2019, these are 0.37 per cent and 0.31 per cent higher respectively than a year ago.

Eleanor Williams from Moneyfacts said this was due to lender caution amid the pandemic. 

She added: ‘What is positive is the fact that the overall two-year fixed rate is lower now than in June 2019 – which means those coming off a two-year fixed deal may still find a better deal, depending on how much they have in equity and their circumstances.’

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Courts Service contradicts Garda declaration journalists were barred from court

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The Courts Service has openly contradicted An Garda Síochána’s declaration that journalists were barred from a court sitting in Waterford earlier this month on the orders of a district justice.

Former Fianna Fáil election candidate Kieran Hartley appeared before Judge Brian O’Shea at Dungarvan District Court on October 13th on a Section 6 public order charge for allegedly committing an offence against a family member of a local garda.

Journalists Eoghan Dalton and Christy Parker were barred for more than three hours from entering the court chamber by two gardaí, who said they had been told the judge had directed that no press be allowed in.

The decision to bar the press – the second time that this has happened to a court hearing where Judge O’Shea was sitting following an incident at a Dublin hearing in 2017 – has now been raised with Garda management.

During exchanges with the reporters, who questioned the decision, one garda said “no one is allowed in this morning”, and while they “honestly” did not “know any details of it” they had been “directed by the court to not allow anyone into it”.

The Garda Press Office later that day insisted “the presiding judge had directed that the court be cleared of persons not involved in the case” as a “voir dire” was in operation.

A voir dire normally occurs when a judge seeks to determine an issue in the course of a trial rather than in advance of one, and very rarely applies at District Court level. Journalists may witness proceedings but not report the details.

Direction

Questioned later, however, the press office said: “The court garda cleared the court as requested by the judge”, and that “it is understood that members of the media who so arrived after that point were inadvertently prevented from accessing the courtroom”.

The Courts Service on Friday said: “At no stage did Judge O’Shea or Courts Service officials issue a direction that the case should be held otherwise than in public”.

“The court sitting at Dungarvan District Court on Wednesday, October 13th, was a public hearing. It involved the hearing of certain arguments in a case, before the ‘substantive’ matter might be heard at another time,” the spokesman said.

“In the absence of an order the law requires that the proceedings take place in public: we are committed to that principle. The alleged actions of gardaí in not allowing access to some media is a matter for Garda management.

“These issues have been raised with Garda management,” said the Courts Service, which is understood to have checked its own records carefully ahead of making its public statement.

When the case came to court on September 22nd, solicitor Paddy Gordon, acting for defence solicitor Frank Buttimer, questioned the legitimacy of statements presented by An Garda Síochána. Mr Gordon claimed they were “not our statements and we want them examined forensically”.

Deferring the matter to the October 13th sitting of Dungarvan District Court, Judge O’Shea instructed that investigating Garda Tom Daly be present, along with his notebook and all original statements.

The judge also asked that Tramore District Superintendent Paul O’Driscoll attend the hearing, which would commence at 10am prior to the main court business.

Candidate

Mr Hartley unsuccessfully contested the 2014 European elections as Fianna Fáil’s Ireland South candidate. He resigned from the party acrimoniously in 2018 following his criticism of its handling of matters related to convicted paedophile Bill Kenneally, whose cousin Brendan was a former Fianna Fáil junior minister.

Judge O’Shea did not issue a written verdict on the present case against Mr Hartley, but it is understood the Garda testaments will stand as presented when it is heard.

Mr Buttimer said he was “not in a position to comment at present”.

Sinn Féin’s justice spokesman Martin Kenny said it was “highly unusual” and that he would be writing to Garda headquarters seeking an explanation. “Justice has to be seen to be done as well as being done, and I find it quite alarming that we’d be in this situation.”

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Darlington is cheapest for homes, London’s Kensington most expensive

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We all know about the North-South divide. We all know about the Prime Minister’s attempt at ‘levelling up’. We all know about the crumbling Red Wall.

But when it comes to property, the facts of the matter tell their own story. According to Churchill Home Insurance, Darlington in County Durham is the cheapest place to buy a property in the country, at just £58 per square foot.

Which is staggering when you compare it to the most expensive — Kensington in central London, where the average price per square foot stands at £1,721. 

Imposing: The Clock Tower in Darlington, County Durham - the cheapest place to buy a property in the country, at just £58 per square foot

Imposing: The Clock Tower in Darlington, County Durham – the cheapest place to buy a property in the country, at just £58 per square foot

Music giants Robbie Williams and Eric Clapton have homes in this exclusive royal borough home, as do entrepreneurs Sir Richard Branson and Sir James Dyson.

But here’s the twist: anyone looking to take advantage of Darlington’s prices might have to move fast because there are plans to turn this market town into the hottest property in the north.

Chancellor Rishi Sunak is opening up a smart new division of the Treasury there over the next five years, moving about a quarter of the department. 

That’s about 400 people, many of whom will be local recruits. ‘We’re giving talented people in the North-East the opportunity to work in the heart of Government, making decisions on important issues for our country,’ explains Sunak.

So what are the draws of these polar-opposite locations?

Kensington is one of the crown jewels of London neighbourhoods featuring not just top museums but also a host of chic cafes, boutique shops, and even Kensington Palace, where the Duke and Duchess of Cambridge live with their children.

There are three Zone 1 underground stations and several independent schools, and you’re a stroll away from the West End. 

Upmarket: A terrace in Kensington, London, where the average price per square foot stands at £1,721

Upmarket: A terrace in Kensington, London, where the average price per square foot stands at £1,721

Top restaurants include Daphne’s and Launceston Place — both favourites of the late Princess Diana — and the iconic Bibendum with two Michelin stars.

There’s no surprises when it comes to property values in this area; they’re stellar. The cheapest property in Kensington for sale on Rightmove in the middle of October was priced at £40,000 and that was just a space in a car park. 

The most expensive listing, by contrast, was a seven- bedroom semi, with an eye-watering asking price of £30 million.

Of just over 510 property sales in the past year, the average price was a slightly more modest £2,169,235, according to Zoopla, but that’s after prices took a 4 per cent knock as fewer people bought in London during the pandemic.

It’s a different story in Darlington, which has a modest average property price of £172,724, according to Zoopla. 

But things are changing; there have been more than 1,600 property sales in the past 12 months and prices have gently risen 4.5 per cent. The most expensive home on sale is a four-bedroom detached house with grounds, for £700,000.

However that’s still an exception, with many more at the other end of the scale, where there are several two-bedroom terrace houses for sale at £45,000.

If you’re moving in, bone up on railway history — the world’s first steam train service began here almost 200 years ago. 

Otherwise, look out for a twice-weekly street market, the revamped Hippodrome theatre and the odd tribute to comic Vic Reeves and businessman Duncan Bannatyne, both brought up in the town.

Darlington is brimming with well-preserved Victorian buildings while you can stroll in the beautiful South Park. If you’re after the best of local food, the two-Michelin starred Raby Hunt Restaurant is the place to go.

The town has the buzz of a place on the move — there are modernisations under way at both the railway station (2 ½ hours to London, 30 minutes to Newcastle) and the indoor market.

Meanwhile, Rishi Sunak’s Treasury initiative is already putting Darlington on the map. ‘I know of several people from London who have moved here thanks to working remotely,’ says estate agent Henry Carver of Carver Residential. 

On the market: North-South divide 

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Facebook admits high-profile users are treated differently

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Facebook’s oversight board said the social media company hadn’t been “fully forthcoming” about internal rules that allowed some high-profile users to be exempt from content restrictions and said it will make recommendations on how to change the system.

In the first of its quarterly transparency reports published Thursday, the board said that on some occasions, Facebook “failed to provide relevant information to the board,” and in other instances the information it did provide was incomplete.

For example, when Facebook referred the case involving former US president Donald Trump to the board, it didn’t mention its internal “cross-check system” that allowed for a different set of rules for high-profile users.

Facebook only mentioned cross-check, or XCheck, to the board when asked whether Trump’s page or account had been subject to ordinary content moderation processes.

The cross-check system was disclosed in recent reporting by the Wall Street Journal, based in part on documents from a whistle-blower.

The journal described how the cross-check system, originally intended to be a quality-control measure for a select few high-profile users and designed to avoid public relations backlash over famous people who mistakenly have their posts taken down, had ballooned to include millions of accounts.

The oversight board said it will undertake a review of the cross-check system and make suggestions on how to improve it.

As part of the process, Facebook has agreed to share with the board relevant documents about the cross-check system as reported in the Wall Street Journal. – Bloomberg

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