Interest rates rose for the first time in a decade this month. Though this widely-anticipated move shouldn’t have too much of an impact on the general economy, it may affect your mortgage payments.

The Bank of England’s Monetary Policy Committee increased the base rate from 0.25% to 0.5% (the level it was at in July 2016, before it was cut the following month).

Combined with the looming uncertainty of Brexit and the previously scheduled tax increases and stamp duty changes, lenders could be sent scurrying to re-consider their financial position.  If they do, different types of mortgage can expect to be affected in different ways.

Standard Variable Rate (SVR)

In theory, lenders can charge whatever they want with their Standard Variable Rate. In reality, the SVR will be raised in line with the full 0.25% increase, with immediate effect.

If your mortgage is on a SVR rate, the increase will kick in from December. If you are a new borrower, you’ll be impacted straight away.

Base Rate Tracker

Base Rate Trackers follow the base rate movements by a fixed margin (so, for example, your mortgage rate may be base rate + 1%, or base rate + 2%).

Similarly to the SVR, your mortgage would increase by 0.25% in December, and new borrowers will be impacted straight away. 

Fixed Rate

Many borrowers prefer fixed rate mortgages as, with a rate fixed for the agreed duration, you know for certain what your monthly payments will be every month.

After the end of your fixed term, however, your mortgage interest rate could be increased to the lender’s Standard Variable Rate, which will have been increased in line with the BoE’s increased base rate.  It could be a lot higher than you expect.

If you have 6 months or less to go on your Fixed Rate mortgage, now is the time to start shopping around for your next mortgage.

Reviewing and Improving Your Financial Position

Trevor Jones from Just Financial Services (Wales) Limited says “Although rates have increased, there’s no need to panic. It’s always a good idea to have an annual review of your financial position, with a view to making improvements where possible. If you are in the last 6 months of your Fixed Rate mortgage, you will be able to apply for a new mortgage at today’s rates, which will protect you from any further rate rises. Essentially, you can book your new mortgage 6 months in advance.”

Trevor gives an example of how re-mortgaging can be beneficial:

The client had two properties, both on SVRs.

Property 1 was on standard variable rate 4.49%, paying &201.27 per month interest only.  The re-mortgage is a 2 year fixed rate of 2.99%, paying &168.19 per month interest only.

The client was able to release &5,000 equity from the property, and saved around &33 per month in interest costs.

The total benefit of this re-mortgage was &5,792 over the 2 year period.

Property 2 on standard variable rate 4.49% paying &227.17 per month interest only.  The re-mortgage this time is a 5 year fixed rate of 3.09%, paying &193.13 per month interest only.

The client was able to release &6,000 from this property, and saved around &33 per month in interest payments.

The total benefit of this re-mortgage to the client was &7,980 over the 5 year term.

Combined, this client is now &13,772 better off for re-evaluating his property portfolio and speaking with Trevor. In both instances, the clients were given a free valuation, no arrangement fees, and free standard legal fees.

It’s Not Too Late

Trevor concludes, “It’s not too late; re-mortgage deals are still available.  In fact, the best 2 year fixed fees free re-mortgage rate today is 2.49%.”

To find out how much your mortgage rate will increase, you can use Zoopla's handy calculator by clicking here.

If you need to review your mortgages or are looking to get a BTL mortgage, call Trevor on 01792 894226 or email him directly [email protected].

If you would like some free advice about BTL property market in Swansea, give us a call today to book a meeting on 01792 430100 or email [email protected]

Sources: Just Financial Services (Wales) Limited / Property Industry Eye / Zoopla

Related: New Welsh Land Transaction Tax put 429 Swansea Properties at Risk of Not Selling / Should Swansea Landlords Incorporate Their Property Portfolio?

It has been a year since it became a legal obligation for landlords and agents operating in Wales to be registered and licensed under Rent Smart Wales (RSW).

The legislation officially came into effect in November 2015. The November 2016 deadline marked the end of a grace period for landlords and agents, who were given a year to comply before policing and enforcement would begin. 

Enforcement of Rent Smart Wales

Almost two years in, it has been reported that the first non-compliant letting agent has been successfully prosecuted. They have received a fine of &4,600 and have been ordered to comply immediately.

The first non-compliant landlord received a fine of &5,570 back in May this year. Cardiff Council described the guilty verdict brought against Cwmbran landlord Robert Grovell as "a real milestone”.

In reality, enforcement officers are relying on agents, tenants, and neighbours to report non-compliant landlords.

Agents can only offer information on the landlords they come into contact with. Assuming tenants might feel a greater allegiance to the Welsh Government than the person putting a roof over their head and expecting them to report their own landlords might be a little optimistic.

There have also been questions surrounding whether RSW have the man-power to really tackle rogues continuing to trade below the radar, which doesn’t do much to inspire any further confidence. 

Rent Smart Wales Figures

We are still no clearer on just how many landlords are operating in Wales. Without knowing how many landlords there are, there is no real way to measure the success of the Welsh Government's Landlord Licensing Scheme.

Rent Smart Wales are reporting that:

• 85,265 landlords have now registered with the scheme
• 16,716 licenses have been issued
• 2,641 agents have obtained licenses
• 173,636 properties have been registered
• 10,072 registrations have been started but not yet finished
• 7,279 landlords and agents are currently being assessed

On the FAQ section of their website, RSW are not able to advise when the applications currently being processed will be completed, suggesting wait-times may now exceed the initially-advertised eight weeks.

In an article published on Friday, the BBC quoted RSW as saying they believed there were 90,000 landlords currently operating in Wales, meaning by their statistics, the majority have now registered. Where this figure has come from, however, is unclear.

Fit and Proper

Are you a landlord currently operating in Wales without being registered/licensed with Rent Smart Wales? Regardless of the apparent issues with enforcement, it is the law, and the aim of the legislation - to improve knowledge and standards in the Private Rented Sector - is a noble one. Click here to visit the Rent Smart Wales website today to start your application.

If you are a Rent Smart Wales registered landlord looking for an agent to manage your property, give the team at McCartan a call on 01792 430100 and we can arrange a free one hour property consultation for you. 

Sources: Rent Smart Wales / BBC / RLA

The Government has finally released guidance on the minimum rating for rental properties that will be coming into effect next April (our previous blog on the EPC changes can be read here). 

Exemptions to EPC Regulation

The Government has now clarified that exemptions will apply if: 

• the landlord is unable to obtain funding to cover the cost of making improvements
• all improvements which can reasonably be made have been made, and the property remains below an EPC rating of Band E.

Interestingly, this means that if a landlord is not able to obtain funding to undertake the recommended improvements via one of four options detailed below, they will be exempt from meeting the minimum energy efficiency level.

Funding Available for EPC Regulation

The four options available are:

• a Green Deal Plan
• Energy Company Obligation or similar scheme
• Funding provided by central government or local authority or third party at no cost to the landlord
• a combination of any of the above

The regulation is based on the principle of ‘no cost to the landlord’. Where funding is available to cover the cost of the recommended improvements, the landlord will be required to undertake them. If funding is not available to cover the whole cost, then the exemption applies.

Furthermore, changes to the way EPC grades are calculated could mean that having another assessment carried out on a property could raise the banding without landlords having to undertake any improvements.

Landlords need to be cautious about spending money on making energy performance improvements to avoid unnecessary costly outlay.

You can view the Government’s Domestic Private Rented Landlord Guidance in full by clicking here.

If you would like to book for a new EPC to be carried out at your property, so you can work out whether you will need to obtain funding for improvements, please give the team at McCartan a call on 01792 430100.

Sources: Gov.UK / PainSmith on Guidance / PainSmith on Funding in Detail / PainSmith on Funding Continued

Related: Could your EPC stop you from letting out your property in Swansea? / Are you liable for paying your tenant's water bill?

It's currently on the market for &69,995, and has been let in the past for &425pcm, which brings in a yield of 7.28% without even factoring in making an offer to lower the purchase price.

This type of property attracts single professionals due to its close proximity to the M4 (J44), Llansamlet Enterprise Zone, and various other large employers.

It is relatively low maintenance, and is ready to go on the open market to let straight away, keeping costly void periods to a minimum.

McCartan Lettings have been managing this property for over 5 years. We have a full maintenance and letting history and, in our opinion, it would make a great addition for investors looking to grow their property portfolio in Swansea.

The property is on the market with online agent House Network, and the brochure can be viewed by clicking here.

If you would like more information about where the best places to buy to let in Swansea are, give us a call on 01792 430100 to book a free 30 minute consultation.  

Related: Planning to Invest in Swansea? / Swansea in Race for City of Culture 2021