How To Use Remortgaging to Release Equity

Many homeowners in the UK are taking advantage of low mortgage rates and through remortgaging, are finding ways to release equity from their homes. According to Remortgage Quotes Online, you can switch your standard variable rate (SVR) from around 4-5% APR to a fixed remortgage rate of 1.3-1.7% during the introductory offer.

The result of record low mortgage rates means that you can potentially borrow more money against your home, whilst keeping your mortgage payments each month roughly the same.

Releasing money through remortgaging is mostly used for:

  • Home improvements
  • Debt consolidation
  • Christmas shopping and presents
  • Family holidays
  • Gifting to other family members

How Can You Release Equity Through Remortgaging?

To be effective, you will need to have the following:

  • Good amount of equity in your home
  • Good/fair credit rating
  • Good affordability to remortgage
  • Stable income (not recent fall)

In order to remortgage, you will need to meet the checks from the mortgage provider, which have become more stringent over the years. They want to seem a strong affordability, which means that your salary is stable or going up (not falling drastically) and your expenses are not going beyond your means.

If you have a poor credit rating since getting your original mortgage, this can impact your chances of getting a new mortgage deal - or you could be stuck on your standard variable rate.

Naturally, to release money from your home, you will need some equity in it, which is achieved by paying off your mortgage on time for several years.

We review some of the options below:

Release Money When You Remortgage

When applying for a remortgage, you can ask to release or borrow money too - and the payments will just be adjusted to your existing mortgage loan. You may have heard the phrase or your parents complain "Well, I will need to remortgage the house for that one." And this is exactly the case.


The more equity you have in your home the better, otherwise releasing through a remortgage with little equity will just increase your monthly payments.

Second Charge Loan or Advance

You can get a 'top-up' when you remortgage, also known as an 'advance' or simply a second charge loan.

In this instance, you are getting an additional loan to your mortgage and this will mean having two loans on different terms. One could be fixed for 5 years and the other could be variable for 2 years. You cannot borrow as much with the second loan as with the first and the amount you can borrow is based on your affordability. Failing to keep up with repayments can have a negative impact on your credit history and cause you to lose equity in your home.

Equity Release

This is only available to homeowners over the age of 55 and this allows you to release equity from your home, and pay off your mortgage at the same time. This is becoming an increasingly popular for the ageing population in the UK and is currently used by around 60,000 households per year, who borrow on average around £80,000.


Through equity release, you are able to receive one large sum amount, upfront, which is completely tax-free. In exchange, you simply give up some equity in your home, which is claimed by the lender when you die or go into long term care. There are monthly interest repayments or you can choose to have an interest only or rolled up interest added to the full outstanding amount. You also benefit from the house increasing in value, which is then used to pay off your outstanding debt.

You can typically borrow around around 25% to 60% of your property's value through a lifetime mortgage, which is a type of equity release product designed to last your lifetime. Or if you want to borrow money, you can use a home reversion scheme to borrow up to 80%, but this will mean physically selling of your home and you will not be able to benefit if it goes up in price in the future.



Will first time home buyers benefit from Brexit?

Brexit, despite not even being in full flow yet, has had a huge effect on the property market in the UK. This is especially the case in London, where prices have been falling rapidly.


The Brexit referendum has caused a lot of uncertainty for the property market and in other industries too. However, could the falling prices be positive for first-time buyers? It is obviously very negative for current homeowners who want to sell their homes during this time, but what about if you are moving from rented accommodation, and therefore own no property, into a property which is to be purchased by yourself?

It is true that before the result of the Brexit referendum, many had predicted that a vote to leave the EU would depress the housing market, but in fact, benefit first-time buyers. However, this may not have come true now that Brexit is only months away without a deal in place.

Current Homeowners and Brexit

A report conducted by Unbiased named “Buying a Home in Brexit Britain”, found that many people were becoming very cautious when it came to buying and selling in Brexit Britain.

The survey, of 250 UK adult, which was done concluded that there were clear signs of the uncertainty of the market. Around 15 per cent of current homeowners believed that the value of their property had gone down as a result of the 'leave' result of the Brexit vote. Half as many believed that the value of their property had actually increased as a result.

1 in 5 people questioned who were planning on moving houses in the coming year said that they did feel a sense of pressure to sell their property fast.

Prices Falling and the Benefit for First Time Buyers

Interest rates on mortgages are now at record lows and therefore a more affordable mortgage is finally a reality for people. However, the irony of low-interest rates is that they will make it all the harder to grow savings. Thus, too many would-be buyers simply will not be able to raise a large enough amount for a deposit for the property they wish to purchase.


There is actually no shortage of people who want to get themselves on the property ladder. But at this point, it is merely a dream rather than a reality for those who are living in the capital, especially.

The report from Unbiased went on to find out that only one in ten prospective buyers sees a realistic chance of getting on the property ladder at all, which is a pretty devastating statistic. This in itself could slow the property market, and maybe even be a large player in the drop in house prices. It is not that people are not wanting to buy, it is that they feel so uncertain that they feel they can’t.

The Silver Lining

It is not all doom and gloom! However, despite early predictions, it does not look as of yet that the Brexit result will make buying your first property any easier. In the current climate, any slack at the lower end of the market is being dominated by those who are buying to let.

Meanwhile, more homeowners are planning to extend their mortgages rather than move. This may well be a sign that they would rather not sell in such an uncertain climate.

For anyone is trying to get onto the housing ladder, there is a ray of hope. Several mortgage providers are now offering 100 per cent mortgages to keep up with the demands of the market. Basically, what this means is that these mortgages do not require any deposits. There are also some providers which are offering very long-term fixed-rate deals of up to ten years.

The fact remains that interest rates have never been so low, so such deals present a unique opportunity for first-time buyers.

Bridging Loans

If you want to sell your property quickly and move into a new property the effects of the Brexit hit, but you do not have time to wait for a mortgage to clear, why not try a Bridging Loan.

They essentially work to bridge the gap between the sale and the mortgage coming through, giving you the flexibility to move when you like.

mortgage financing

How does mortgage refinancing work?

When deciding to take out a bridging loan or not, it can be common for property developers to decide as a strategy to refinance their bridging loans once they have reached the end of the loan term. But what exactly does this mean when it comes to mortgage refinancing? We explain in further detail everything you need to know about this strategy.

Mortgage refinancing explained

In the simplest of terms, refinancing your mortgage is when a borrower who has taken out an old loan (this may be a mortgage or a bridging loan) to then exchange this for a brand new mortgage term, interest rate as well as also potentially a new mortgage term too. Some may decide to get a new mortgage with their existing lender or decide to refinance their mortgage with a new lender entirely.

You can also refinance bridging loans to help with your mortgage. A property developer may decide to opt for a second charge bridging loan in order to secure it against a property already has a mortgage outstanding. This is an option for those who are perhaps interested in raising funds in order to help carry out a renovation project (for example, to build an extension, create a loft conversion or other property improvement projects). This is because your main mortgage isn't being repaid, and you do not need to worry about early repayment charges that could be incurred due to the second charge bridging loan take out which is enabling you to raise the required funds.


How do I find the best mortgage refinancing deals?

If you are interested in the possibility of mortgage refinancing, then it is worth making sure that you are fully aware of:

  • The percentage value of the home that you want to borrow against (the LTV ratio)
  • What the current estimated value of your property is
  • The annual income that you or anyone else who will be named on the new mortgage will be

You should also figure out what type of mortgage you would like to compare when it comes to mortgage refinancing. For example, consider the following:

  • Tracker mortgages: this type of mortgage means that the mortgage rate that you pay is set a percentage above the base rate that has been created by the Bank of England (or your lender's standard variable rate). What this means for you is that if interest rates increase or decrease, the same will go for your mortgage repayments too
  • Offset mortgages: that means your savings account and mortgage are combined together. In this scenario, that means the money which is in your savings account is counted as an overpayment (on a temporary basis) for your mortgage. This has the potential to save you a considerable amount of money over time when it comes to interest paid.
  • Fixed rate mortgages: with this kind of mortgage, the interest rate is fixed for a period of time. In the majority of cases, this will be for a period of between two and five years in total. This can be a great option for you if you want to have the comfort of knowing exactly what your repayments will be costing you each month, without changing as a result of interest rates going up or down.


Is refinancing the right option for you?

It is worth noting that making the decision of mortgage refinancing is not the best decision for all homeowners. Some may consider mortgage refinancing to:

  • To cut down on costs: some homeowners may choose to refinance their mortgage in order to benefit from lower interest rates overall or lower monthly repayments. It is estimated that almost half of all borrowers in the UK are in fact paying more than they need to on their mortgage
  • Raising money: it can help to release equity in your home which can be particularly usefully if you are looking to consolidate existing debts or alternative release money for home improvements.

Who can consider mortgage refinancing?

Providing that you already have an existing mortgage, and meet the criteria set by the mortgage lender, you can be eligible for remortgaging. It may be particularly pertinent to you to consider mortgage refinancing if you are coming to the end of a discounted deal you were receiving, or are coming to the end of a fixed rate period on a mortgage.



Reasons You Might Be Declined For a Secured Loan

If you are looking to apply for a secured loan, it is important to know that there is a possibility that you may be rejected and if you know the reasons for that, you may be able to prevent it. You may have already applied for a secured loan only to be declined, but are unaware of why this has happened.

In this guide, for your clarity, we are going to look at some of the reasons that you may be declined for an application on a secured loan. But first, let’s look at what a secured loan actually is.

What is a secured loan?

A secured loan can also be referred to as a homeowner loan because a secured loan has the debt associated with it linked (or ‘secured’) to the loan borrower’s property. Secured loans, thus, are only available to be taken out by people who already own or are buying their own homes. A secured loan can be used to borrow anything from the £5,000 mark and upwards.

With a secured loan, the amount you are entitled to borrow, the duration of the loan agreement and the amount of interest which will be offered is wholly dependent on personal circumstances and the amount of free equity which you have in your property.

But if you do qualify as a homeowner, why might you be rejected by a lender for a secured loan?

Poor Credit History

Like with any type of monetary lending, your credit score can make or break your chances of borrowing or can affect the kind of deal available to you. You can read more about your credit score here.

If you have a history of missing payments or failing to repay your previous loans or on your credit card, this can seriously damage your credit history and thus, make you look like more of a risk to a lender.

If this is the case for you, there are things that you can do to improve your credit score including:

  • Always paying your credit card statement in full, each month
  • Only applying for loans when you need them – too many credit search footprints on your file could decrease your credit score
  • Always pay back loans in full, with the interest

Have Made Applications For Payday Loans

Some secured lenders consider payday loans to be a very high risk financial solution and means that you might have been desperate for funds. Not all secured lenders view it this way. One major mortgage provider recently said that payday loans (Source: MY JAR) were fine provided that they were paid off on time. Some providers will not consider it an issue if it was several years ago. Other similar high-cost credit products include cash advances, pawnbrokers and logbook loans.

A Spouse with Poor Credit History

You may have a good credit score, but in actual fact, your legal spouse's credit history may be your downfall when applying for a secured loan. Seeing as marriage ties you in more ways than one, one way is being financially linked, you are seen as a risk if your husband or wife does not have a good credit history attached to their name.

Especially with secured loans, since they are for homeowners, it is assumed that you help either out financially and that the mortgage and so on will be a mutual responsibly.

Your Collateral is Not Valuable Enough

The collateral that you have to offer in order to secure it against the loan may not be seen as valuable enough to the lender. To them, if your collateral is of less value, it is more of a risk lending to you as they will not get their payment back if you fail to pay it.

For a secured loan, your collateral could be your property or a car, for example. If neither of these is deemed valuable enough, your loan request may be denied.

In a similar way, you may only have little equity on your house at the point of application. Basically, what this means is that you do not own enough of the property to gain a secured loan.

How Much Are You Asking For?

Depending on your needs, you may find that you are needing to borrow a little amount or a larger amount. It is true that the amount you are wanting to borrow can play a part in the lender's decision on whether or not to grant you a secured loan.

What Are You Planning on Using The Secured Loan For?

Likewise, a secured lender may refuse you based on the reasoning behind your loan. Many lenders will ask you this question as part of the underwriting process and if it is something they deem unfit, they simply will not grant you a secured loan.

Bridging loans

You may find that you are struggling to get a mortgage in place and time is running out before you lose out on a property which you are hoping to purchase. An option for you might be a bridging loan.

Essentially, a bridging loan is a type of short-term finance which aid you in ‘bridging the gap’ between you and the mortgage, allowing you obtain the property without a mortgage in place prior. Rather than losing a potential property, you can apply for a bridging loan and receive the money in one lump within a few working days. Once the property has been purchased and has access to more finance, you will be required to repay the loan.

Do you have to tell your mortgage provider if you change jobs or get pregnant?

Since changing your job or falling pregnant can have an effect on your finances, you may be earning or less in your new job and obviously, having a child is another outgoing expense.

Therefore, is it protocol to let your mortgage provider know about either of these life changing events?

According to a recent survey created by uSwitch, one in ten women between the ages of 25-45 said that they felt as though they had been discriminated against by lenders once they had expressed their desire to start a family.

Affordability rules which came in 2015 mean that some firms are now required to ask questions about changes in income.

If you fall pregnant

Women have advised to be made aware of the pregnancy pitfalls when applying for a mortgage or are currently paying a mortgage. Due to the change in rules, new parents who are applying for a mortgage from some of the largest lenders are being asked to prove that they will be returning to work after their maternity and/or paternity leave before they can be included in their usual affordability checks.

If the couple or individual is not going to be returning to work within three months, their “return to work” income may not be included in the overall checks. As a consequence, the price of the mortgage may be calculated based on their pay during the period of maternity or paternity leave.

Lenders such as Barclays, RBS and NatWest base their decision on the salaries on the applicants will be receiving after they have returned to work rather than the pay they will receive whilst they are on leave, which seems far more logical.

What can lenders ask about pregnancy?

Lenders are prohibited from asking you whether you are currently pregnant, planning a pregnancy or on maternity leave when you apply for a mortgage. This question would go against the Equality Act 2010 as plain discrimination.

Nevertheless, tighter lending rules mean that they are lawfully required, not just entitled, to take into account any future changes to your incomings – this then works for if you are just changing jobs as well. Of course, having a baby can have an impact on both parties so this should be taken into account by the lender.

They will ask if you are aware of any changes to your income in the near future and if you answer yes because of a pregnancy, the underwriter will look at whether you are able to afford the mortgage as though you already have an additional dependent. This basically means they will factor in any child care expenses.

You can also expect to be asked about your salary on your return to work, the length of your maternity or paternity leave and if you are planning to return to work full-time or part-time.

If you are changing jobs

It is the same premise as if you were to fall pregnant, lenders are now required to take into account any income changes. This could work in your favour if you are getting a larger salary as this will mean you may be able to snap up a better deal on your mortgage if you can afford to pay more off each month. So if you change jobs with a mortgage in place, it is vital as well wise to let your lender know and inquire whether a better deal is available to you if your income has been increased.

According to the Council for Mortgage Lenders, the information about your change in financial situation is gathered to “try to reduce the risk of borrowers taking on debt commitments that could become unaffordable.” Therefore, lenders will ask if you are aware of any changes to your income in the foreseeable future (whether this is due to a new arrival or change in job).

Consider a Bridging Loan?

If you are in need of cash to buy a house urgently but do not have time to wait for a mortgage to clear, an option for you might be a bridging loan. A bridging loan is a type of short-term finance which essentially ‘bridges the gap’ between you and the mortgage, allowing you obtain the property without a mortgage being cleared. Rather than losing a potential property, you can apply for a bridging loan and receive the money in one lump within a few working days. Once the property has been purchased and has access to more finance, you will be required to repay the loan.

The difference between a secured loan and an unsecured loan

You may have come across terms ‘secured’ and ‘unsecured’ when it comes to loans. But what exactly does this mean? In fact, unsecured and secured loans are two very different things and to know the difference between the two is fairly vital before you go ahead and fill out any application forms for a loan of any kind. In this guide, we aim to clear up and confusion and provide clarity on what means if a loan claims to be secured or alternatively, unsecured.

What is a secured loan?


A secured loan is also referred to by some as a homeowner loan. This is because a secured loan has the debt associated with it linked (or ‘secured’) to the loan borrower’s property. Therefore, it becomes obvious that secured loans are only available to be taken out by people who already own or are buying their own homes. A secured loan can be used to borrow anything from the £5,000 mark and upwards.

With a secured loan, the amount you are entitled to borrow, the duration of the loan agreement and the amount of interest which will be offered is wholly dependent on personal circumstances and the amount of free equity which you have in your property.

Essentially, free equity is the difference between the amount you will owe on your mortgage and the actual value of your home.

What is an unsecured loan?

Now we are looking at an unsecured loan. An unsecured personal loan is available to those who have at least a fairly decent credit score. With an unsecured loan, what differs mainly is that you do not have to be a homeowner to obtain it. You can use an unsecured loan to borrow anything which ranges from £1,000 to £25,000. However, keep in mind that they are generally at their cheapest when you are borrowing between £7,500 and £15,000.

To avoid paying more than you should, be sure to always check the terms and conditions for any charges and fees which may not be initially clear, such as an early repayment penalty.

Pros and Cons

Let’s talk about the advantages and disadvantages of both secured and unsecured loans to compare and contrast what is best for you.

Pros of a Secured Loan

  • Taking out a secured loan will mean that the repayment period is usually going to be longer. Meanwhile the fixed monthly payments should make it easy for you to manage the repayments as a whole.
  • The amount available to borrow for via a secured loan is usually much higher than that of a personal loan, which will only go up to about £25,000 in most cases.
  • If you do not have an excellent credit history, you may just find that you actually have little choice but to take out a secured loan over a personal loan. With your property acting as security, you will be seen less as a risk and it will make the loan easier to qualify for.

Cons of a Secured Loan

  • With a secured loan, you will need to keep up repayments or risk losing your home as collateral.
  • There is the potential to be fees and charges such as early repayment penalties as they could increase the cost of borrowing.

Pros of an Unsecured Loan

  • Unsecured loans are more widely available to a larger proportion of people. You do not have to be a homeowner. For example, in the case of online payday loans, you may be a tenant, but still eligible for the loan
  • Flexibility is offered in terms of choice as to how long you have to repay the loan – most loan borrowers opt to make fixed repayments for a period of between one to five years.
  • You may find that some unsecured loans come with the option of a ‘payment holiday’ which can be about two or three months are the start of your agreements.
  • Typically, the best loan rates are for borrowers of an unsecured loan who are looking to repay what they borrowed over three to five years. This means they you will pay a higher interest rate to borrow over a shorter period of time.

Cons of an Unsecured Loan

  • The interest charges which are applied to larger or smaller amount can be rather expensive.
  • The best deals are only really open to those who obtain the best and highest credit scores.

If you are looking for a quick way to obtain property and do not have time to wait for a mortgage to clear, bridging finance may be the best option for you.

Read more about unsecured and secured loans with this guide from the and-unsecured-borrowing-explained">MoneyAdviceService.


The Insurance You Need For a Building Project

If you are running a building project, having the right insurance is essential to protect you from any potential mishaps. You can never be certain if your property will be victim of a flood, fire or fly tipping and the financial repercussions could put your entire project at risk.

Whether it is for buy-to-let or renovating an existing property, you need proper insurance to safeguard your investment and some bridging loans will not even go ahead until you have insurance in place. We highlight the main types of insurance you may need below.

Buildings Insurance


Buildings insurance comes under the form of home insurance and is used to help protect any damage to physical aspects of the building. This includes covering doors, walls, fences, roofs, ceilings and floors. It is designed to protect you from any accidental or unintended damage to physical fixtures of the property, which could be as a result of fire, flooding, vandalism or other peril.

With builders, plumbers and electricians likely to be working on your project every day and using heavy machinery, you never know when something could go wrong. Whether it is faulty wiring or poor plumbing, it is not uncommon for a fire or flood to occur.

To claim from your home insurance policy, there needs to be proof that any damage caused was a genuine accident. Insurers will always do a full inspection of the property and damage before paying out a claim.

Contents Insurance 

Contents insurance also falls under your home insurance so policyholders are likely to have a buildings and contents insurance in one policy. Contents refers to physical valuable items that are in the house or flat. This includes any machines, electronics, art, jewellery and other valuable assets. If the place is a complete building site, then most of the contents will not be on the site. But, if you are working on a property where other people are still living and all their goods are still on the premises, then having contents insurance is key in case anything gets lost, damaged or stolen.

For contents Insurance, it is advised to value all your items that you are leaving in your house like the computer, jewellery and TV and take out a policy to cover their value. It is worth slightly over-insuring so that your insurance provider will pay out enough to replace your items. Insurers will typically only pay out what the goods were worth at the time. So if your TV is 5 years old and has fallen in value, you may not receive enough to replace it - hence taking out a little extra cover can be useful.

Public Liability Insurance 

Public liability aims to protect any third parties that come into contact with your building project. When you are renovating a property, you are also potentially impacting people around you including neighbours, passers-by or other tenants of the building.

There are plenty scenarios where public liability insurance can be applied. A common one is if your builders are working on the roof and something like a tile falls off and hits the neighbour’s car or hits a pedestrian walking past. The victim has a right to claim damages because you (or your team) were responsible for this. At this point, you would claim on your public liability insurance in order to settle the victim for any replacements, medical bills or compensation.

Other scenarios include what would happen if your building work accidentally set fire to the neighbour's house? Or what if your boiler broke and then flooded other tenants in the building? This types of damages and repairs could be covered by your insurance.

Business Interruption Insurance 

Business interruption refers to any costs that you have to incur due your project being interrupted. Perhaps you are working on a deadline or you will need to refinance due to the project taking longer than expected. Whether it is a fire, flood, snow, fly tipping or squatters on your premises, there are several things that could make your project delayed. After all, we all know that building work can take longer than we expect.

Rather than suffer the financial burden, your business interrupted insurance can contribute to any additional costs you may have whether it is building costs, loss of rent income or extra costs required to repay your loan.

Professional Indemnity Insurance 

Professional indemnity or PI, is less for you but more the people that you hire. Any professions such as builders, architects, plumbers and engineers are using their expertise when working on your building. However, if they give you bad advice or carry out their work poorly, it could have a huge impact on the overall success of your project and the bottom line.

As a result, you may decide that you wish to take legal action and request compensation for any loss of income or delays in your project. Your potential settlements will come out of the contractor's professional indemnity insurance. So it is a common thing to ask any professionals that you work with beforehand if they have PI cover.

Employers Liability Insurance  

Of all the insurance types mentioned above, employer's liability is the only one which is required by law. This is cover for any employees that are working on your premises. They must be your own staff that you hire because any staff belonging to your contractors must go under their own separate policy. Failing to show proof of employer’s liability insurance upon request or a certificate can lead to a minimum daily fine of £2,500 and further prosecution.

The idea of employer's liability is that you have a duty of care for any of your staff members and are responsible if they have an accident at work. Working on a building site poses risks, especially with different materials and obstacles that could cause injury. If one of your people gets injured at work, you can claim on your policy in order to pay for any medical bills, compensation or time off work.

You are required to have a minimum of £5 million worth of cover by law of which a policy may only be a few hundred pounds to purchase. The only exceptions are if you run a family business, you are not required to purchase employer's liability cover for your own family members. Also, any freelancers, sole traders or consultants are required to insure themselves and this is not your responsibility.

How Much Does Insurance Cost? 

The cost of insurance will vary on the size of your overall project. Naturally, the refurbishment of a large property which is being changed into 12 rooms will require more staff, budget and insurance than the renovation of a small 2-bed home.

Whilst insurance can easily start from a few hundred or thousand pounds, it is important to cost up the potential risks and what the cost of any damages will be. Using a good insurance provider will help you better understand any risks and levels of cover that you need and it is important to speak to your partners and contractors to ensure that you are all fully covered to carry out the necessary work.


How Rent Reviews Work

What exactly are rent reviews? If you are renting out a commercial premise such as a restaurant, office, warehouse or shop, the landlord has the right to increase the rent after a certain period of time. As a business owner, you need to be on top of rent reviews to maintain control over your costs.

Perhaps the rent needs to change due to higher running costs, increase in inflation or greater demand in the area. We take a look at how they work, and everything else you need to know about the process.

When are rent reviews held?

Rent reviews will usually occur every five years or less than this, depending upon the lease agreement that is signed between the tenant and landlord. It may very well be the case that for short-term leases there aren’t any rent reviews at all, but to be sure about this it is important to check with your landlord.

How is the new rent price determined?

The new rental price is usually determined by the ‘open market rental value’. What this means is that if the landlord was to put this property on the market at the time of review, what amount would he or she expect to receives given the current rental market in the local area, based on similar agreements made to your lease. Factors that determine the open market rental value may include:

  • How the premises are used (for example whether it is being used simply as storage space or as an office space)
  • Level of rents in the area

Rent increases are not always based upon the open market rental value, they may instead be linked to the Retail Price Index which is heavily linked to inflation.

Who decides the new rent value?

If it has been decided that upon a rent review there will be an increase, it is most likely that your landlord will be the one to inform you of this decision. However, if you believe that the rent review is unreasonable, it is possible to dispute the rent review.

This is usually passed onto an independent expert who can assess the individual circumstances between landlord and tenant and decide what would be the best possible agreement to come to. There are companies that specialise in rent reviews including property and leisure management companies and solicitors.

If you do disagree with the proposed rent increase, it is extremely important that you put this in writing to the landlord as soon as you possibly can. This is because a large number of leases will stipulate a timeframe within which you can dispute a rent review. If you miss this deadline, it could mean that you will have no other choice but to accept the increase.

Do rent reviews take into account improvements made to the property?

Generally speaking, any improvements that you have made to the premises during the term of the agreement will not be considered in a rent review. However, if you do make any improvements it is vital you keep a complete record in the event that you are accidentally charged as you will likely need to provide proof. Nevertheless, you should bear in mind that if you have asked the landlord specifically to make improvements during this term, this may be factored into a rent review.

Do rent reviews ever lead to a decrease in rental value?

A question that is often brought up when it comes to rental reviews is what happens if the open market rental value has fallen in the area surrounding the premises. Could this lead to a decrease rent?

Unfortunately, it isn’t as straightforward as that, and it would most likely require you to refer back to your lease agreement. This is because many agreements will include an ‘upwards only’ clause. That means that should the open market value decrease, the rent can only ever remain the same as opposed to decreased.

How much notice do I get for a rent increase?

In the UK, the amount of notice you are given about a proposed rent increase is usually three months ahead of time, via a written notice by your landlord. However, do check in your own lease agreement the specifications of this timeframe, as it can differ depending on the contract.


What Adds Value to Your House?

Adding value to a house is essential for the property developers and investors that use our website. Ultimately they are using bridging finance in London and across the UK in order to purchase a property, renovate it or add value to it so that it can be sold for a higher price for profit or rented out to tenants to generate income.

Our guide below explains some of the best ways to add value to a house or block of flats, whether it is a new build or existing property.

Fix structural problems first

There is little point in having an elaborate renovation plan to maximise the value of your home if you haven't fixed any major structural problems that exist. Unfortunately,  you may find that these types of repairs will tend to be the most expensive that you will encounter in a renovation project, but they are essential. If you don't sort these beforehand it is likely to put off potential buyers, with any cosmetic improvements becoming completely futile. Things that you should definitely consider fixing include:

  • Rising damp
  • Unstable chimney stack
  • Rotten joists
  • Structural cracks
  • Any collapsed floors
  • Broken roof tiles

Split a house into flats

Did you know that you could add at least 30% to the value of your house by converting the house into flats? This could be particularly lucrative in big cities with high levels of demand, such as London and Bristol. By splitting the house into flats, you can maximise on rental income, and also make the option of renting the property out easier.

Nevertheless, it is important that you verify the demand for flats in the area where you are considering converting the house. There is not much point in splitting the house if flats in the neighbourhood aren't a particularly popular option.

Convert your garage

A very good way of maximising the value of your home involves converting an existing garage into a living area. Many of us these days end up using garages to dump old items rather than for their intended purpose. In fact, a report by RAC revealed that nearly half of garages in the UK (that is nearly five million) aren't being used to park their cars, but rather filled with household items!

If this sounds like you but you are considering selling your home, consider that you could add up to 15% on the existing value through garage conversion. In many cases, converting garages can be easier than with other types of spaces as they can be classed as permitted development, therefore meaning you will not need planning permission. However, don't take this as a given. Check with your local planning authority first so you don't encounter nasty surprises at a later date - which could end up actually reducing the value of your home.

Whilst the garage may not need planning permission, it will be subject to building regulations, which it is vital that you abide too. You can use the local council's building control service who can help make sure that you are complying.

Loft conversion for a new bedroom

Like garage conversions, a loft conversion made into another bedroom could add 15% to the value of your property. This could be even more if you build an ensuite bathroom with it too. Whilst most lofts can be converted, you should check with a builder or architect beforehand to make sure that it is definitely the case with your home. Once this has been confirmed, you should also:

  • Familiarise yourself with the different types of conversion that are available to choose from. For example, Mansard conversions more often than not, require planning permission and so you would need to contact your local authority before building. However, it is important to note most loft conversions are considered like garages as permitted developments.
  • Roof light conversions tend to be the most cost-effective type of loft conversion. Why? because they tend to require the least structural work, with only one or both slopes of a roof needing to be replaced.

Adding a conservatory

On average, adding a conservatory to your property can add an extra 10% to your home's value. Provided you meet general limits and conditions, most of the time conservatories are considered permitted development. This means a conservatory can be built fairly inexpensively and means that you can end up adding far more value to your property than the costs incurred to build it.

However, it is important that you fully consider the design and layout of your house when planning to build a conservatory. Not all conservatories will add value. If it is poorly conceived it could actually end up devaluing your home.

Add more storage space

It will come as not much of a surprise that storage tends to be a real selling point when it comes to buying a home. How many times have you been put off a place because it seems too small, and you just know you won't be able to fit all your items into it? With that in mind, when selling a property, one of the best things that you can do is make use of the spare space in your home. Consider space for shelves and cupboards in areas such as

  • Space above sinks
  • Under the stairs space
  • Dead space on either side of chimney breasts
  • Space in the attic or cellar
  • Unused wall space

Create off-street parking

When the cost of parking can be so expensive, it is no wonder that having off street parking can really increase the overall value of your home. Especially in urban areas, where street parking can be difficult to come by. For example, creating one or two parking space alongside a property or in front of it can really increase the property value. In fact, off street parking is so popular with buyers that experts recommend even sacrificing a front garden in order to accommodate one.


What is the Difference Between Freehold and Leasehold?

Whether you are using bridging loans in London or anywhere in the UK, it usually involves purchasing some kind of property and understanding the difference between the freehold and leasehold of the property is key. It greatly affects your rights over a property, and for many makes the difference between taking or leaving a property.

For one, first time buyers who are unaware of the in-and-outs of a leasehold contract can find themselves facing large expenses and regretting their choice down the line. We explore the advantages and disadvantages of freehold and leasehold below.

In Short

Freehold - owns the property, can make changes at their own will, is responsible for maintaining the land, collects lucrative ground rent, could be a proprietor or management company. Common for most homes in the UK (unless shared-ownership).

Leasehold - based on owning a lease agreement for 99 or 999 years. Despite owning a flat or maisonette, you still have to pay ground rent, service charges and ask for permission to add changes or have pets in the estate. Need to pay to extend lease agreement.

What is leasehold?Lease agreement

Leasehold properties and the land they stand on are owned by a landlord, also known as the 'freeholder'. When you buy a leasehold property, you own the property, but only for a defined time period set out with the freeholder. Leases are usually long term and can range from 90 years to as much as 999 years. Some can be as short as 40 years.

When a property’s lease ends the freeholder regains ownership of the property, unless the leaseholder extends the lease, which we will cover in more detail later in this article.

What you need to know about leasehold properties:

The leaseholder and freeholder draw up a contract that explains the legal rights and responsibilities of both parties. This usually includes:

Maintenance terms

The freeholder is usually responsible for maintaining the exterior of the property such as the roof and outside walls. Some leaseholders may request their ‘right to manage’, in order to assume this responsibility instead.

Ground rent

Leaseholders pay a yearly ground rent to the freeholder, which can either be a fixed charge or increases over time. In the past leasehold properties had ground rent fees as low as £10. Alas, today, ground rent fees currently average at £371 a year for a new build property and £327 for properties built prior to 2016, according to Direct Line for Business.

Ground rent fees are not usually a concern amongst new homebuyers. However, some developers of new-build homes have been inserting clauses into leasehold contracts setting the ground rent to andal-engulfing-new-home-buyers-leasehold">double every decade. This meant thousands of cases where the ground rent would soon spiral to extortionate levels. A ground rent of £300 a year could cost £2,400 a year in 30 years, or an astonishing £9.8m after 150 years.

While this may not be an issue for you as a new owner who would like to sell within ten years, these kinds of clauses make it difficult – if not impossible – to sell a property. Buyers are likely to be adverse to scheduled increases, whereas lenders will need to consider these exponentially growing costs into any potential buyer’s mortgage application.

Since this ground rent scandal surfaced and in effort to combat this extortion, the government has proposed a complete ban on new houses sold as leasehold, and to reduce ground rents to zero.

In the meantime, if you fail to pay the ground rent, a landlord could take you to Court to recover the debt. In severe cases, the landlord could attempt to recover possession of the property. They can only do this, however, if the amount outstanding is £350 or more and you have been in arrears for three years or more.

To eliminate your ground rent...
You can abolish your ground rent fees by extending your lease under the Leasehold Reform Act 1993. This is known as ‘peppercorn rent’.

Service charge

Owning a leasehold property also means you need to pay a yearly service charge to the landlord or management company for the general maintenance, insurance and repairs on the property. This can add a hefty amount to your yearly expenses. A third of management companies have increased their service charges over the last two years, increasing the average cost to £1,683 a year.

Service charge typically covers the cost of heating, lifts, lighting and cleaning of common areas. It may also be used to create a fund for larger one-off expenses, such a roof replacement or refurbishing a lift.

Although some older properties command a fixed yearly service charge, most newer leases have a variable service charge, which changes depending on the size of the property and the costs estimated by the freeholder each year.

Permission for building work

Leaseholders need to obtain permission for any major building work on the property – and this can come at a large cost too. Some buyers are charged £100 by the freeholder for a mere response to their letters, and as high as £2,500 for permission to build a conservatory. And that’s on-top of the fees needed to obtain planning permission from the local council!

No pets

This one is dependent on the freeholder. But depending on the contract, leaseholders can face other restrictions, including not owning pets, no smoking or subletting the property. Failing to fulfil the terms of the lease can result in the lease becoming forfeit.

Why is the length of the lease important?

Properties with short leases can be difficult to sell. The longer the lease, the easier it will be to sell the property on.

What is freehold?

Owning the freehold of a property means ownership of the property and land on which it stands with no limit to the period of ownership. Buyers typically go for freehold as it has many benefits, namely avoiding paying thousands to the landlord and having the freedom to initiate building work without delays from the freeholder.

When buying a freehold property, you can benefit from:

  • Zero annual ground rent
  • Zero service charge
  • Zero chance of over-billing on maintenance fees from the freeholder
  • No delayed maintenance
  • You have responsibility for maintaining the building exterior (roof and outside walls)
  • You don’t have to request permission before doing building work

Now that we’ve delved into the unpleasant details of a leasehold contract, freehold sounds like a pretty good deal. Of course, some people still opt to buy their property on leasehold. In that case, to improve your chances of selling the property in the future and to avoid those increasingly high maintenance and garden rent fees, you could buy the freehold of the property.

How to buy the freehold on a leasehold property

As a leaseholder, you may be able to gain freeholder status by buying the property outright. This is called ‘enfranchisement’. Although the process can involve complex legal procedures and may be costly, it can be immensely beneficial to you as a homeowner.

The ability to buy the property outright depends on whether you own a house or flat and it will be important to seek professional advice and assistance. The HomeOwners Alliance is a good source of guidance in this area.