The number of mortgage deals for buyers with a 10 per cent deposit has continued to drop despite some of the country’s biggest lenders reintroducing deals, new figures reveal.
Lenders pulled over half of all mortgage deals in the wake of the pandemic but in recent weeks both Nationwide and Coventry Building Society began offering 90 per cent loan-to-value deals again.
Experts predicted that more lenders would follow suit in reintroducing these deals, leading to more choice and lower rates for first-time buyers.
But a recovery has so far failed to materialise as the number of deals for small deposit borrowers continued to drop over the course of July, figures from experts at Moneyfacts have revealed.
The number of deals for borrowers with a 10 per cent deposit has more than halved since June
Lenders were quick to axe these deals as the pandemic hit with more low deposit mortgage deals being pulled in the first four months of lockdown than in the entire first year of the financial crisis.
Nationwide has since joined HSBC in offering these deals again, while Coventry Building Society has also offered them for limited periods.
This came as the Chancellor introduced his stamp duty cut and confidence in the market appeared to be back on the up.
Why have lenders pulled low deposit deals?
Lenders have mostly blamed staffing shortages forcing them to rein in new mortgage lending and focus on existing customers, with the majority of the country working from home and a wave of customers requesting mortgage holidays.
Lower deposit mortgages usually take more work to underwrite, as they present a higher risk to the lender.
As a result, if staffing problems at banks and building societies lead to deals being cut, it’s these deals that go first.
It’s also likely that lenders are less willing to lend to those who would have a smaller cushion against negative equity if house prices were to crash.
But despite this new figures from Moneyfacts have revealed that the number of deals available has continued to drop over the past month.
This will hit first-time buyers particularly hard as the group most likely to seek a mortgage with a small deposit.
For example, there were some 70 deals at 90 per cent loan-to-value at the start of the month compared to 67 today, according to Moneyfacts.
To put this into context, there were 780 deals of this kind before the lockdown was implemented in March.
This means that 92 per cent of deals have been cut over this timeframe.
Low-deposit 95 per cent loan-to-value deals have started to see a recovery, with 20 now available compared to 14 at the start of the July.
But the majority of these deals are specialist options – for example family assist mortgages – and won’t be available to most borrowers.
The number of 85 per cent deals has grown slightly over this time however, suggesting that lenders are more relaxed about lending to those who can scrape together a 15 per cent deposit.
Rates have climbed as deal numbers shrink
This crunch at the lower end of the loan-to-value scale, possibly coupled with lenders’ uneasiness about taking on too many risky customers, has seen rates rise for those at the bottom end of the market.
The average rate for a two-year 95 per cent loan-to-value mortgage now stands at 4.25 per cent compared to just 3.94 per cent at the start of July.
This means that if you managed to take a £100,000 mortgage taken over 25 years at the start of July you would be paying £17.21 less every month in interest or nearly £400 over the life of the deal than if you took one today.
Meanwhile the average two-year 90 per cent deals have seen average rates rise slightly to 3.05 per cent from 2.9 per cent over the same time period.
Moneyfacts’ Eleanor Williams said: ‘It remains an extremely fluid landscape in the higher loan-to-value tiers, and while it’s been fantastic to see Nationwide relaunch some 90 per cent products, we may well continue to see ebb and flow in availability whilst the providers who have been able to relaunch in these sectors balance coping with such high levels of borrower demand.’
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My flat has got a leak, is mouldy and the shower doesn’t work. How can I fix this?
I’ve been renting my flat since February 2020. It has an immersion tank which is causing a lot of problems.
The hot tap on my shower barely has any pressure so when I try to get the right temperature it becomes overpowered by the cold water and unfortunately I can’t use it. Instead, I’ve been using my parents house to bathe.
I also had a leak back in June and withheld my rent. After a month, the landlady finally came round and sorted it.
Tenants who have issues with their landlord are not advised to withhold their rent at any time
As the shower still isn’t working I have refused to pay my rent this month as well. Not to mention the place is riddled with mould and after two weeks of living here my walls were covered in mould.
What rights do I have? Do I keep withholding my rent until it is sorted?
Grace Gausden, This is Money, replies: Unfortunately you have had quite a lot of bad luck after moving into a new flat in February.
If not being able to shower isn’t bad enough, you have also had to deal with a leak and mould, which can be incredibly bad for your health if left untreated.
As such, you have withheld rent as you found your landlady wasn’t taking any steps.
However, despite the lag in action, tenants are always advised to keep paying rent as this could lead to a potential court case if left unpaid.
Landlord disputes are always difficult as you want to keep things civil as possible but also want to ensure that all necessary works are done.
Your landlord is responsible for most major repairs to your home if you rent privately which includes any hot water or heating repairs, such as your shower.
When contacting your landlady, ensure you send plenty of photos and emails so you have a record of complaints.
Once the landlady is notified, remedial action should be carried out as soon as possible. However, there is currently no set timeline as to when they will need to take action.
Having mould is unpleasant but it can be difficult to know who is responsible to clear it up
You have also said that the flat is ‘riddled’ with mould which could mean it could be unfit for human habitation.
However, with damp, it isn’t always easy to work out if your landlord is responsible for resolving this issue because it can be tricky to find the exact cause of damp without the help of a surveyor, unless it’s obvious, such as a leaking roof.
In most situations they will be but they could also require you to take action such as increase ventilation in the property and ensure you dry wet clothes outside when possible.
Check your tenancy agreement and speak to your landlord before you make significant steps to tackle the damp.
If you still think your home’s unsafe, contact the housing department at your local council.
They will do a Housing Health and Safety Rating System assessment and must take action if they think your home has serious health and safety hazards.
Another option is to seek help from Citizens Advice who will be able to provide more tailored solutions to your problem.
If all else fails, you can take the issue to court. Hiring a specialist solicitor who regularly deals with landlord and tenancy law will be the best course of action to take. However, this should always be the very last option as it will be costly.
Tenants should always read through their contract when settling a dispute with their landlord
A spokesperson for the Tenants Voice replies: The most important thing is to advise is that you have no right to withhold your rent under any circumstances.
A landlord’s repairing obligation is a continuing one during the life of a tenancy and will arise at various times, however, it is never correct for a tenant to withhold rent.
If you get to two months rent arrears that is grounds for a mandatory possession.
The landlords obligation in relation to how water is to provide adequate washing and heating facilities. Adequate is a matter of interpretation on a case by case basis.
However, if the shower is the only available washing facility then it ought to be in good working order and the water ought to be capable of being heated sufficiently.
If there is an alternative washing facility such as a bath then the landlord has no obligation to fit a shower. Poor water pressure would not be actionable if there is sufficient flow to get a shower as annoying as that would be.
In relation to mould, that is a hazard to health under the Homes Health and Safety rating System and should be reported to the Environmental Health officer at the local council.
If the landlord continues to refuse or fail to remedy any disrepair, an action could be taken against them under Sections 11 and 9A of the Landlord and Tenant Act 1985 or Sections 79 to 82 Environmental Protection Act 1990.
Adam French, Which? Consumer Rights Expert, replies: Damp and mould can be a common problem in rented properties. Depending on the cause and the type of mould it is usually the landlord’s responsibility to fix it, so make sure you report it.
If its the landlord’s responsibility but they don’t take action, and the mould is either causing ill health or making the home unsafe, then gather evidence including a medical letter and report it to the local environmental health department to inspect the home.
If the landlord still refuses to make repairs to ensure the home is safe then the tenant can consider using an alternative dispute resolution or seek court action as a last resort.
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Does RateSetter’s takeover by Metro Bank mean the end of casual P2P investing?
Last December, the chief executive of the peer-to-peer lending platform RateSetter, Rhydian Lewis, described new rules designed to better protect casual investors in the sector as ‘a Darwinian process… that will lead to a stronger industry’.
But just eight months later Lewis’ platform, one of Britain’s ‘big three’ in peer-to-peer investing, announced it had been snapped up by Metro Bank – one of the high street lenders P2P platforms were launched to take on – and that it would close its doors to everyday personal investors.
Rather than emerging stronger, the world of casual peer-to-peer investing appears to have done nothing but shrink since those new rules were introduced late last year, with the ‘big three’ leading the way.
RateSetter, one of Britain’s big three peer-to-peer platforms, said it would close its doors to everyday investors after it was bought by Metro Bank, which would fund its loans in future
While RateSetter has been picked up by a bank, Zopa, the UK’s first ever peer-to-peer platform launched in 2005, in June finally secured the licence to become one.
And publicly listed business lender Funding Circle has temporarily closed both the ‘in’ and ‘out’ doors to everyday investors, pausing the secondary market which lets investors sell off loans and barring savers from putting new money into the platform as a condition of being able to hand out government-backed loans.
It insists it will reopen its doors to retail investors, but having originated £300million by the end of June and facilitated 16 per cent of all coronavirus business interruption loans, there is something of an irony in a platform which helped pioneer the model of matching borrowers with individual investors seeing so much business after the latter were no longer allowed to invest.
Eight months on from the start of that ‘Darwinian process’, there is the question of whether casual peer-to-peer investing is an endangered species, or even already extinct.
Big platforms have dealt with higher default rates, even before the coronavirus crisis, and struggled to hand anxious investors back their money. And the collapse of the platform Lendy has cast a shadow over an industry sometimes seen as the Wild West of investing, even if last year’s regulations tightened things up.
And while everyday investors have been more concerned about getting out than getting into the sector since the coronavirus caused panic in markets months ago, platforms have said relying heavily on them as a funding source makes it harder to grow and scale.
Landbay, which lends money to buy-to-let landlords, said last December when it shut its doors to retail investors that ‘it has been hard to see how to scale this part of the business on commercial terms that make sense.’
Ravi Anand, the managing director of business lender ThinCats, said: ‘It is very hard to scale lending through crowd-funded money.’
ThinCats also closed its doors to personal investors last December, having made just two loans in 2019 funded by retail money, with the platform saying it was ‘no longer cost effective to raise funds’ that way.
And RateSetter’s acquisition by Metro Bank is a particular blow given it was one of the few platforms almost solely funded by personal investors.
Anand added: ‘For years Ratesetter has been claiming it had a better funding model than banks, clearly it doesn’t. P2P was a moment in time response following the financial crisis.
‘The current coronavirus crisis is showing that alternative finance is relevant to those borrowers that the banks don’t properly address, but lending capital needs to be at scale and stable which means sourced via a bank or through institutional capital.’
This is magnified by the fact that funding for government-backed lending schemes must come from institutional investors like pension funds.
‘If you’re not on these schemes, it’s going to be difficult to do any lending over the coming period’, one industry executive told the Financial Times in June.
Others are less gloomy about the sector’s future prospects.
Charlotte Croswell, the chief executive of trade body Innovate Finance, which represents six peer-to-peer platforms, including the big three, said RateSetter’s acquisition was ‘a natural evolution of the strategic development of the peer-to-peer market.’
The UK’s original peer-to-peer lending platform Zopa still accepts money from casual investors, but having secured a licence to become a bank it is looking to move beyond being simply a peer-to-peer lender
She added: ‘Over time, we would expect to see some platforms as acquirers of complementary businesses, as well as attractive partners and targets for larger, more traditional financial services groups, who are looking to access the tech-led franchises of P2P.
‘In most cases to date, corporate activity has added new funding sources alongside the P2P platform.’
Neil Faulkner, the chief executive of P2P comparison site 4thWay, added: ‘The more closely a loan book matches that of typical bank lending, the more likely it is that the P2P lending business is going to be sold to a bank.
‘RateSetter arranged a lot of standardised, automated, unsecured personal lending, so it fits that bill.
‘RateSetter’s underwriting team and credit analysis will be highly complementary and valuable to Metro Bank’s existing infrastructure.’
But, he said, even with the three biggest peer-to-peer platforms either turning their back on retail investors or altering their horizons, ‘retail investors still have a lot of choice.’
What are the options for those who still want to invest?
While two of the UK’s most recognisable platforms are no longer taking money from casual investors, there are still options around.
Most obviously, Zopa, the third of Britain’s big three, is still accepting investors.
The platform uses investors’ money to fund unsecured personal loans and car loans and offers two options. Its ‘core’ investment offers a projected return of between 2.3 per cent and 4.3 per cent and its higher risk ‘plus’ offer pays a headline rate of between 2.4 per cent and 5.6 per cent.
Investments start from £1,000 and both can be invested into using an Innovative Finance Isa.
Casual investors under Financial Conduct Authority rules, which came in last year, are told not to invest more than 10 per cent of their assets into peer-to-peer investments, while they must also demonstrate they understand the rules around P2P investing.
Funding Circle closed its doors to casual investors as a prerequisite of being able to hand out government-backed loans. It called the move ‘temporary’
In particular they must make it clear they know returns can differ from headline rates, and that investments are not covered by the Financial Services Compensation Scheme in the same way that money held with banks or investment platforms is.
4thWay’s Neil Faulkner also recommends the platforms Loanpad, CrowdProperty and Proplend.
Proplend uses investors’ money to lend to commercial property borrowers at up to 75 per cent LTV.
Investors can invest from £1,000 and can choose to invest in loans which are 50 per cent LTV or less, while the average LTV of the £98.75million worth of loans it has originated is 62.75 per cent.
Investors should be aware of the problems facing the commercial property sector at the moment, however, with most of the UK’s commercial property funds locking in investors’ cash due to a coronavirus crisis crash.
Platforms like CrowdProperty and Loanpad allow investors to invest in property development in exchange for a return. However investments are not protected and may go sour
Loanpad is another property lender, with an average LTV of 28 per cent. Faulkner said: ‘Loanpad loans to developers and other property owners are all for under 50 per cent of the property valuation.
‘Partner lenders with an impeccable, decades-long record in this kind of lending also lend their money on top, to all of the same borrowers.
‘These partner lenders lose their money first. They typically lend around 30 per cent of the total, so that’s a lot of skin-in-the-game.’
Investors can choose its ‘classic’ account paying 3.5 per cent or its ‘premium’ account paying 4.5 per cent. Both can be opened with £10.
CrowdProperty, one of the six platforms represented by Innovate Finance, raises money from investors for property development and allows investors to choose which projects they can invest in, with headline returns of up to 8 per cent.
No projects are currently available to invest in, but prospective investors can register their interest on its website.
Previous developments have seen borrowers take out loans of roughly between 48 per cent and 70 per cent LTV, although headline returns are the same regardless of the value of the loan.
Prospective P2P investors should be sure they are aware headline returns are not fixed, make sure they do their research and know what they’re investing in, be aware their money is at risk and ensure what they lend is suitably diversified over borrowers and platforms.
Faulkner added: ‘Aside from diversifying, the biggest thing that prospective investors can do is to be very critical about what a platform is telling investors.
‘Only if investors feel they are being given a huge amount of information about the experience of the people behind the platforms, their processes and their results, and only if they have no doubts about the platform at all, should they be considering an investment through it.
‘Investors who have lent through transparent platforms only have done very well from P2P. In contrast, those who have been beguiled by interest rates and little supporting information could well be disappointed with their results.’
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More than 100 UK churches are renting out their parking spaces to drivers
Some churches in the UK are earning an average of £200 a month by renting out their parking spaces to drivers, it has been revealed.
A website that allows property owners to hire out their vacant parking facilities says that over 100 churches are now registered online – and making a tidy sum out of their unused car parks.
Parishes that are already utilising the opportunity suggest the move not only helps bring in a little extra cash but also reduces crime levels at places of worship.
O park, all ye faithful: Over 100 UK churches have registered their car parks with a website that hires spaces out to drivers looking to avoid on-street charges and multi-storey facilities
Website YourParkingSpace.co.uk says it has more than 100 churches on its database of 64,000 registered spaces for motorists looking for alternative options to on-street parking and expensive traditional car parks.
It allows drivers to pre-book an allocated space at a private property or business car park from half an hour to block bookings over monthly periods.
The site claims that these churches are pocketing a collective £20,000 a month from utilising their available parking spots – and others should take advantage of the opportunity.
With some 16,000 registered churches in the UK, only a fraction of the total number who could be making a tidy additional income.
Analysis by the website estimates that over 85 per cent of churches have suitable parking spaces that can be offered to motorists looking to avoid steep charges in place by council, private parking firms and multi-storey operators.
St Wilfrid’s Church in Harrogate is one of the 100 or so to offer affordable parking options to drivers.
St Wilfrid’s Church in Harrogate, which is one of the 100 or so UK churches that is renting out its car park to motorists online
The car park has plenty of free spaces and the church says by making spaces available it increases the footfall and reduces crime levels
A parking space at the church, which is just a five minute walk from the town centre, for just one hour costs £1.19 if you book now to use the facilities tomorrow.
For a month, it costs £291.81.
A quick search of car parks in the North Yorkshire area found that that West Park multi storey in the centre of town – which has 343 spaces – charges just 50p for an hour, while parking for two hours in £1.
For use of the space for 12 hours it’s a total of £4.80, which works out at just £96 for a month of weekday-only use.
The church claims that by having more people use the available parking spaces it has and generally walking around the church, it has reduced the level of anti-social behaviour in its immediate surroundings.
St Wilfrid’s Church’s facilities and commercial manager, Rebecca Oliver, said: ‘The parking income helps to support the running costs of the church, which as a Grade I listed building are significant.
‘Using YourParkingSpace.co.uk is a straightforward and affordable way for a church to monetise its car park, without having to spend a lot of time managing it.’
Many churches listed on the pre-booking website are located near city and town centres, where demand for parking is traditionally high
Figures have revealed that around 28 crimes occurred around places of worship in the two years from January 2017.
That’s according to a report published at the end of last year by Countryside Alliance.
It made a Freedom of Information request to the UK’s 45 police forces (of which 41 responded) and found that crimes over the two years totaled a concerning 20,168 cases.
These were a catalogue of offences, ranging from rape and murder to petty theft, the alliance described as ‘extremely distressing reading’.
Many churches listed on the pre-booking website are located near city and town centres, where demand for parking is traditionally high.
Harrison Woods, managing director at YourParkingSpace.co.uk, said: ‘Churches offering their empty parking spaces makes perfect financial sense, you could almost describe it as ‘pray and display’.
‘However, the extra income is just one benefit as a busy car park deters anti-social behaviour, while visitors could also be tempted to have a look around the church if it is allowed.’
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