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The watchdog has brought a string of cases against building and investment firms on behalf of homeowners who have been tied down in new build homes because of these leases  

More than 30 companies have signed undertakings to change their ground rent terms since 2019 affecting more than 21,000 households, says the body.  

In this case, the authority brought actions against eight investment firms who bought freeholds originally owned by housing developers, including Crest Nicholson, Taylor Wimpey and Redrow.  

Homeowners then came under leasehold contracts that caused their ground rents to double in price.  

It says: “These terms, which kick in every 10 or 15 years, can leave people trapped in homes they cannot sell or mortgage, and their property rights can be at risk if they fall behind on payments.”  

The regulator says all affected leaseholders will now see their ground rents “returned to the original fee amount, the amount charged when the property was first sold” and will not rise over time.    

CMA interim executive director for consumer protection and markets George Lusty says: “Over the past five years, we’ve achieved real and impactful change, with over 21,000 households freed from issues such as costly doubling ground rents.  

“We hope those affected by this update can breathe a little easier knowing they won’t have to struggle against this type of rising fee anymore — particularly when many are already grappling with high costs elsewhere.”  

The eight freeholders in this case are: 

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The move will mean TMA’s directly authorised brokers can access the society’s range of specialist mortgage products, designed for borrowers with more complex needs, including expats, the self-employed, holiday let, and self-build borrowers.

Dudley Building Society also offers mortgages to borrowers who have reached retirement age, or who require mortgage terms that extend into retirement.

Dudley’s distribution director Robert Oliver commented: “We’re thrilled to be able to offer our range of specialist mortgage products to TMA’s members.”

He added: “The addition to TMA’s panel marks the next step in our growth, following the appointment of two new key account managers at the start of the year.”

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The financial services price comparison site says it will use the later life firm’s comparison tool on its platform to give potential borrowers “the flexibility to research different later life lending options in their own time before speaking to an adviser”. 

The move will bring together the later life firm’s technology platform, Equity Release Supermarket as well as its lending partners – who include Aviva, LV= and Hodge. 

Equity Release Group founder and chief executive Mark Gregory says: “There has been a sharp rise in the amount of people now using online tools for research purposes.  

“Given the breadth and depth of MoneySuperMarket’s customer base, we foresee that this partnership will support growth within the market.” 

MoneySuperMarket general manager Ashton Berkhauer adds: “We know more and more homeowners are looking to release equity to support their choices in later life.

“Our partnership with Equity Release Group allows homeowners to compare the equity release market and see the options that match their specific requirements.” 

Equity Release Council chief executive Jim Boyd points out: “One of the biggest challenges facing the equity release industry is how to ensure that property is included when wider retirement conversations are taking place.  

“To get a seat at the table, we need to continue to push for more recognition of the benefits of these products and make it easier for people to explore all their options.   

“We therefore welcome the partnership between Equity Release Group and MoneySuperMarket as it will help more people to have these vital discussions around property wealth during their retirement planning.” 

The equity release market suffered a “turbulent” 12 months with plan sales and drawdowns falling while new lending tumbled 62% to £2.1bn, according to data from Key last month.   

Later life lending was hit by “base rate rises and the aftershocks of the September 2022 mini-Budget”, the lender’s Equity Release Market Monitor 2023 reported.   

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There’s a ‘grand stretch in the evenings’ and that feeling of starting anew that comes with the arrival of spring.

But there are challenges aplenty in the mortgage industry, some of which aren’t so new. As lenders up their mortgage rates, following a downward trend earlier in the year, brokers are again facing a lack of notice on product withdrawals.

The support is there and colleagues genuinely do want to help

In a volatile swaps market, it’s understandable that lenders are unable to consistently provide days of notice. But pulling products with less than 24 hours’ warning is causing brokers a world of stress. So lenders, please do what you can to take some of the pressure off intermediaries’ shoulders.

Speaking of pressure, this month’s cover feature by Leah Milner on mental health in the mortgage industry is a must-read. While the topic is gaining increased attention, the reality is the high-pressure environment, long hours and lack of work/life balance, job insecurity and sense of responsibility many face are not easing off. They are taking a big toll on people’s mental health and causing some to close the door on their career in the mortgage market.

One thing that’s clear is that stress breeds stress in all areas of life. So, if we all take a step back and consider how we interact with others, as well as the pressure we put on them and on ourselves, the job will still get done but we may all have fewer new grey hairs at the end of the day.

Lenders, please do what you can to take some of the pressure off intermediaries’ shoulders

The good news, and what keeps so many of us in the industry, is the people within it. The support is there and colleagues genuinely do want to help.

In a LinkedIn post I read today, a well-known and well-liked industry veteran revealed that he had been forced to close his business recently, despite having survived both the credit crunch and the pandemic.

He has put himself out there, searching for new opportunities, and you know that he will be looked after by the wonderful mortgage community.

After all, you get what you give.

Brokers are again facing a lack of notice on product withdrawals

In a few short weeks we will all come together to celebrate this industry at the Mortgage Strategy Awards and it promises to be a great night. Tables are selling fast so, if you are looking to attend, get in now before our early-bird offer ends this month.

In the meantime, enjoy another cracking read in this month’s edition and thank you as always for all your support in keeping our print magazine running.

This article featured in the March 2024 edition of MS.

If you would like to subscribe to the monthly print or digital magazine, please click here.

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Spring Budget: Stamp duty and holiday let tax breaks abolished

In the Spring Budget, the Chancellor announced the abolition of stamp duty relief and holiday let tax breaks. Jeremy Hunt informed MPs that the relief for individuals purchasing multiple properties would be scrapped, citing its frequent abuse and lack of evidence in promoting investment in the private rented sector.

Spring Budget: Chancellor plots £300m holiday let tax raid

In the Spring Budget, the Chancellor planned to scrap £300m in tax breaks for holiday let owners to fund a 2p income tax cut. Jeremy Hunt targeted various tax advantages enjoyed by these property investors to finance the reduction, as reported by the Sunday Times.

Nationwide agrees £2.9bn buyout terms for Virgin Money

Nationwide Building Society has reached a £2.9bn cash deal to acquire Virgin Money, positioning the merged entity as the UK’s second-largest provider of mortgages and savings. The move aims to expedite Nationwide’s strategy, diversify its products and services, and enhance value for customers and members. The buyout, endorsed by both boards, merges Virgin Money’s £57.1bn mortgage portfolio with Nationwide’s £197.9bn home loan book as of April last year.

FTBs now need 72-year mortgages to hit 2022 affordability: UK Finance

According to data from UK Finance, first-time buyers would now need to stretch their mortgage terms to 72 years to afford the same loans that were available just two years ago. In 2022, when the mortgage market experienced relative stability, the average mortgage term for first-time buyers was 30 years.

Market Watch: Please, consult the industry

In his recent Market Watch, Andrew Montlake delved into the challenges brokers confront amid rate fluctuations and increasing swap rates. With speculation swirling around the Budget’s housing emphasis, he stressed the necessity of effective government policies. Montlake also explored innovative schemes like Own New and updates from lenders, showcasing the industry’s resilience in uncertain times.

Spring Budget: Capital gains cut will not free up house sales, says industry

The Chancellor announced a reduction in the higher rate of capital gains tax on residential property from 28% to 24%. While the Treasury expects this move to boost government revenue and increase availability of properties for first-time buyers, many property professionals question its anticipated impact on house sales.

Budget must address first-time buyer issue: Rightmove

Rightmove’s mortgage expert, Matt Smith, emphasised the pressing need for government support for first-time buyers in the recent Spring Budget. Despite some stability in the mortgage market, Smith noted that demand for typical first-time buyer homes had been slow to recover. He highlighted fluctuations in mortgage rates and near-record property prices as key challenges facing first-time buyers.

Blog: Large lenders must rethink PT proc fees

James Lindon-Travers, managing director of Lindon-Travers Associates Ltd, calls for fairer product transfer (PT) procuration fees from large lenders. Despite brokers’ crucial role in the mortgage market, they often receive only a 0.2% fee, which is inadequate considering the workload. Lindon-Travers highlights the mental health impact on brokers and urges lenders to reconsider their approach to compensation to sustain the broker community.

Stamp duty reduction would be ‘growth-friendly tax cut’ in Budget: IFS

The Institute for Fiscal Studies urged the Chancellor to prioritise stamp duty cuts in the Spring Budget, citing them as more effective for stimulating growth compared to other tax reductions. Deputy Director Carl Emmerson emphasised the importance of targeting stamp duties on property and shares for a growth-friendly approach to tax cuts.

Legal & General lifetime mortgages business dives 53% to £299m

Legal & General’s lifetime mortgage advances, including retirement interest-only home loans, fell by 53% to £299m compared to last year, attributed to decreased demand amid higher interest rates. Despite this, the company emphasised its disciplined approach to pricing and underwriting in its full-year statement. Additionally, Legal & General outperformed the wider equity release market, which saw lending decline by 62% to £2.1bn last year, according to Key’s Equity Release Market Monitor 2023.

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For its 90% LTV products, Kensington has decreased rates by up to 55bps across its Select, Professional, Heroes, eKo, and Core ranges.

Kensington has also reduced arrangement fees across all 90% LTV products from £1,299 to £999.

Kensington’s lowest Select 90% LTV for its two-, three-, and five-year fixed rates are now 6.89%, 6.59%, and 6.44% respectively, all of which include a £999 fee.

Rates on Kensington’s Hero Mortgage range remain 10bps below those of its Select range.

In addition, Kensington has lowered rates on selected 95% LTV products by up to 35bps. It has also lowered arrangement fees from £1,299 to £999 on all 95% LTV products.

Kensington’s lowest Select 95% LTV for its two-, three-, and five-year fixed rates are now 7.39%, 7.09%, and 6.94% respectively. All include a £999 fee. Kensington’s 95% LTV products also all offer a free valuation, including both fee and fee free products.

Kensington chief commercial officer Vicki Harris commented: “Our decision to lower rates for selected 90% and 95% LTV products highlights our sustained commitment to meeting the needs of our customers as market conditions continue to evolve”.

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“Throughout this period, we have maintained pricing and underwriting discipline,” the financial services giant adds in its full-year statement. 

The firm’s lifetime mortgage trading outperformed the wider equity release market, as lending in this sector tumbled 62% to £2.1bn last year as plan sales and drawdowns fell, according to Key’s Equity Release Market Monitor 2023 last month.    

The report said later life lending last year was hit by “base rate rises and the aftershocks of the September 2022 mini-Budget”. 

Overall, Legal & General reports full-year operating profit at £1.7bn, broadly in line with the prior year but around 5% below market expectations. 

Its institutional annuities trading jumped 30.5% to a record £13.7bn over the period. 

The group adds it is on track to meet its five-year targets from 2020 and 2024, which includes dividends growing at 5% a year and capital generation between £8bn to £9bn, currently at £6.8bn. 

Legal & General chief executive António Simões says the group “demonstrated resilience in challenging markets to achieve record new business volumes in pension risk transfer, UK annuities and US protection, increasing our store of future profit”. 

Shares in early trading fell 2.2% to 239.9p. 

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The rise in rents comes as the lettings services firm calls on Chancellor Jeremy Hunt to help tenants ahead of the Spring Budget on Wednesday. Lets are 7.4% higher than a year ago.  

The business says: “Income tax cuts and assistance to help people get on the property ladder are rumoured amongst other changes within the property industry. But so far, nothing has been hinted at for the rental market.”  

London’s average monthly rent fell by 0.5% to £2,070 in February from the previous month, but is 4.8% higher than a year ago, according to the HomeLet Rental Index.  

The cheapest region in England, the North East, saw a price increase since January of 1.5% to £655, which is 5.7% higher than the previous 12 months.  

The study points out that the rent-to-income ratio for tenants continues to rise, with renters spending 33.3% of their wages on rent, before utilities and other living costs. This figure is 2.3% higher than in 2023.  

HomeLet and Let Alliance chief executive Andy Halstead says: “Mounting costs in property management and maintenance have sent rental prices through the roof, which is a lose-lose situation.   

“Tenants are struggling to sensibly match their wages to monthly rent, and landlords are faced with defaults and vacancies as a result.   

“We’d like to not only see the rental market considered in the Spring Budget, but action brought about.   

“More support for landlords dealing with the soaring cost of living, which can then be passed on to tenants and go somewhat into mitigating the soaring overheads we are sadly reporting on most months in our rental index.”  

The government’s Renter’s Reform Bill, which promises to boost tenant rights, is currently making its way through Parliament, although it is bogged down by a series of proposed amendments to alter and water down the legislation.  

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