Currently, anyone selling a property in the UK is required to have an Energy Performance Certificate (EPC) before they put the property on the market. However, even though the EPC is in the pipeline, the full details of how energy efficient a property is aren’t always available for early viewers.

In a bid to get over this issue, and help encourage home owners to become more energy efficient aware, a new EU Directive will come into force in 2012 making it compulsory for all EPC ratings to be published upfront with for sale adverts, so that everyone will know the ratings before they even look at a property.

If you’re thinking of putting one of your investment properties on the market in the next few years, then experts are advising that it’s a good idea to check the energy efficiency of your property now and, if necessary, get energy improvement work done sooner, rather than later.

In addition to improving individual properties, the new legislation will also help the government on its bid to reduce household carbon emissions by 29% by the year 2020.

I am sure it won’t be long before we are reporting on other successful applicants with Wright & Wright and our other compliance partner firms. 

Barratt Developments, the UK’s second-biggest house builder by volume, and Redrow, another major homebuilder, both reported further decline in sales volumes although Barratt said it believes the situation is stabilising.

Redrow reported that sales volume had fallen 46% and average prices declined by 12%. Barratt said average selling prices of private homes declined 19% during the year, but said that in the second half it had achieved ‘adequate sales volumes’ at planned prices.

‘In the recent six months we have seen higher sales rates, lower cancellations and prices leveling,’ said Chief Executive Mark Clare.

But he added; ‘We are not, however, going to see a sustained improvement in trading conditions until the availability of mortgage finance, particularly in the higher loan to value segment, recovers.’

While Redrow said it was reassured by signs of stability, it complained about ‘chronic shortage of mortgage supply exacerbated by the widespread practice of down valuations by surveyors representing mortgage lenders. Without doubt this is a major obstacle to the recovery of the housing market’.

Bovis Homes said that there is renewed interest in their developments but potential buyers are still unable to secure a mortgage. Persimmon reported a decrease in cancellations and an increase in reservations but also hit out at the lack of lending. ‘We are encouraged by the improvement in sales rates when compared to last year but will remain cautious until mortgage availability improves further and employment prospects stabilise,’ the company said.

Net mortgage lending in the UK hit an eight-year low of £2.3 billion in May, according to the British Bankers’ Association.

The mortgage market has been particularly tough on first time buyers, with lenders increasingly reluctant to advance more than 75% of the value of a property. Although there are signs that this may be easing for some customers. Nationwide, the UK’s largest Building Society is introducing a 125% mortgage for existing customers who are in negative equity and need to move.

And the latest figures from the Council of Mortgage Lenders show that lending criteria stopped tightening in May. ‘We might expect to see a modest easing in these measures over the summer as some higher loan-to-value products came on to the market in recent months and lenders reported that they intend to increase lending at higher loan-to-value ratios,’ it said.

But it also revealed that more first time buyers are having to get help from their parents as they cannot afford the large deposits lenders are demanding.

Source: Property Wire

In the first court ruling of its kind, the judge branded the sale and rent back company Repossessions Stopped ‘dishonest’ for promising the family they could stay in their home for life.

Paul and Amanda Jackson were terrified of losing the home they had occupied since 1984 after falling into arrears with their mortgage, and in desperation answered a newspaper advertisement by a company called Repossessions Stopped.

The company told the couple it would buy their home, pay off their mortgage and let them rent it back indefinitely.

But within two years the Jacksons were threatened with eviction after the property’s new owner defaulted on her mortgage and was herself repossessed.

In a landmark decision, His Honour Judge Worster ruled that the family can either revert to being owner-occupiers, or rent the property for the rest of their lives, with their daughter inheriting the tenancy.

Shelter’s principal solicitor John Gallagher said:

‘This is a huge and important victory for not only the Jackson family but everyone who is tempted by these sale and rent back schemes.

‘I would urge anyone having mortgage difficulties to seek independent advice from Shelter, a Citizens Advice Bureau or other debt counselling organisations before contacting these kind of companies.’

Source: Shelter

SRB landlords and companies have one month to submit an application to the Financial Services Authority for permission to continue their business activities as full regulation kicks in.

Under the new rules, SRB operators will have to demonstrate they meet minimum standards and are fit and proper persons. The regime will require that businesses treat customers fairly, making clear important details, such as the length of time they can stay in the property, before they make their final decision on whether to sell.

The main part of the interim regime is the requirement on applicants to provide a sustainable business plan which shows funding streams and evidence that the funding will continue. More specifically, the FSA will be looking to see that applicants have access to funds in order to complete purchases.

One of the major criticisms of SRB has been the lack of transparency. Therefore, under the new rules, SRB operators will have to guarantee access to an independent valuation. In addition, the consumer must be fully aware of the level of discount being offered and that they understand their beneficial interest in the property will cease upon sale.

‘The clock is now ticking if companies or individuals want to continue with sale and rent back transactions. Ethical sale and rent back must be an option for some consumers. It provides flexible tenure and the ability to remain in their property for those who can no longer afford the costs of home ownership,’ said John Socha, Vice Chairman of the National Landlords Association.

‘In the current economic climate, more and more people will be facing financial difficulty including keeping up their mortgage repayments. Although sale and rent back will not stop repossessions, ethical sale and rent back could be a way for homeowners to remain in their properties but become tenants. Only when sale and rent back operators are within a more regulated environment can we be confident that consumers will be treated fairly,’ he added.

Although the interim regime began on the 1st of July 2009, the start date of the full regulatory regime is the 30th June 2010.

Source: Property Wire

The Financial Services Authority (FSA) has today published the details of the regime that it aims to introduce on 1 July to tackle immediate problems for customers in the sale and rent back (SRB) market.

This follows HM Treasury’s announcement yesterday that it is extending the scope of FSA regulation to include SRB, as it considers this to be the most appropriate way of ensuring consumer protection in this market.

This supports the recommendation made last year by the Office of Fair Trading (OFT), following a market study which found that sale and rent back deals had the potential to cause serious harm to homeowners who are often already in a vulnerable position.

A recent FSA survey of 2,006 adults aged 18 and over interviewed across Great Britain found that: 

• only 42% of those surveyed knew that SRB is currently unregulated (meaning that people who currently take part in these schemes do not benefit from the protection afforded by the Financial Ombudsman Service if needed);
• the majority thought they would be entitled to stay in their home for more than five years (whereas the typical contract is six to 12 months); and
• the majority (58%) surveyed thought SRB should be regulated.
• The FSA is taking a two stage approach to regulating the SRB market.  An interim regime will be brought in as soon as any statutory changes come into force (expected on 1 July) in order to address the most immediate problems for consumers, followed by a more comprehensive regime which will start on 30 June 2010.

 Ed Harley, FSA head of mortgage policy, said:

“We know that some consumers enter into sale and rent back arrangements without understanding the costs and risks involved.  This can be a source of real distress for people in already difficult circumstances.  Firms entering our regime will need to run their business in a way that means customers are treated fairly.  This includes making clear to customers important details, such as the length of time they can stay in the property, before they enter into the arrangement.”

Under the interim regime firms will need to meet FSA threshold conditions including the requirement to have adequate resources and to be run by fit and proper people.  Firms will also have to comply with the Principles for Businesses and meet a number of systems and controls and conduct of business rules. 

Firms that are currently unauthorised and that intend to carry on any of the new SRB regulated activities after the commencement of the interim regime will need to apply for interim permission.  Similarly, firms that are currently authorised for other activities will need to apply for interim variation of permission.  Firms are encouraged to start preparing now for authorisation and to apply as soon as the interim regime starts.  

Notes for editors

The policy statement ‘Regulating sale and rent back: an interim regime’ is available on the FSA website.

• SRB schemes involve individuals selling their home, usually at a discount, and obtaining an agreement to remain in the property for a set period – typically through an assured shorthold tenancy of six to 12 months.
• On 2 June HM Treasury published a response to its consultation document, ‘Regulating the sale and rent back market: a consultation’ (published in February). This can be found on its website www.hm-treasury.gov.uk
• The consumer research quoted was conducted by TNS with a representative sample of 2,006 adults aged 18+ interviewed across Great Britain between 1 and 5 April 2009.
• The FSA has published some information on its website to help firms prepare for interim authorisation and shall shortly publish sample application forms on its website to give firms additional help.  The key dates for the regulation of sale and rent back are as follows:
• 1 July 2009: interim regulation expected to begin and firms can start to submit applications for interim permission or interim variation of permission;
• 1 August 2009: the closing date for interim permission applications;
• September 2009: expected publication of Consultation Paper on full regime for sale and rent back; and
• 30 June 2010: SRB regulation under the full regime will begin.
• The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
• The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

Source: Financial Services Authority

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