Mar/100
Miners Urged to Claim Refund
A Yorkshire MP has urged miners to move quickly to demand a refund from a Barnsley law firm found guilty of misconduct over compensation claims.The Wentworth MP is reminding former miners and their families that complaints must be lodged with Barnsley solicitors Raleys by the end of February.
In November the firm wrote to 22,000 customers who had deductions paid to the NUM.
Raleys Solicitors took over£7.5m from Miners compensation payouts and passed it to the Miners union. In return the NUM provided Raleys with up to 29,000 clients.
Three Raleys solicitors were suspended for professional misconduct a year ago after a tribunal found the firm failed to act in the best interests of its clients and the NUM deal was of no real benefit to the clients.
Mr Healey MP for Wentworth said: “I know from constituents that not all those who might be entitled to claim back money have received the letters, some may have moved house or want to claim on behalf of deceased relatives.
“Raleys are only giving you until the end of February to reply to this offer, so if constituents haven’t received a letter and think fees may have been deducted from compensation, they should get in touch. I want every miner or their family who is entitled to it to claim this money.”
If you have missed this deadline please contact Miners Rights by the following means on 0800 612 7014 or email info@gravitaslaw.co.uk
Feb/100
Buy-to-Let Top Ten Tips
Buy-to-Let is no longer the hot industry it once was and many investors who bought such properties in recent years have struggled as the mortgage rates soared. However, existing Buy-to-Let investors should now be benefiting from lower rates, if they have fallen on to their lender’s standard variable rate.
However, new mortgage deals remain expensive and experts in the industry acknowledge the fact that now is a tough time for buy-to-let.
With property prices now falling, those investors who have continued with the tried and tested method of investing for rental returns rather than capital growth are tempted.
If investors are prepared to watch the value of their property decrease in the short term and ensure their property meets the criteria of at least 75% to 85% loan-to-value and returning 125% of monthly mortgage payments then it can continue to be a decent long-term investment.
As with any other investment, buy-to-let comes with no guarantees, but, for those people who have more faith in bricks and mortar than stocks and shares here are ten top tips to help you conquer the Buy-to-Let industry:-
1. Don’t set yourself large goals
We have all heard on the news about buy-to-let millionaires who have their huge portfolios of property, however, the days of double-digit house price rises are over. Experts are now recommending that investors invest for income and not short-term capital growth.
Rent should be the key return for buy-to-let. Most buy-to-let mortgages are done on an interest-only basis, so the amount borrowed will not be paid off over time.
After the mortgage, costs and tax are taken into account, you will want the rent to build up over time and then potentially be able to use it as a deposit for further investments, or to pay off the mortgage at the end of its term. This means that you will have benefited from the income from the rent, paid off the mortgage and you will hold the property’s full capital value.
2. Choose an area that may be likely to develop
Deciding on the location of your investment should not be if it is the most expensive or the cheapest property. The location should be a place where people would like to live and this should be for various reasons. Where in the town has appeal? If the property is in a commuter area, where has good transport? Where are the good schools for young families? Where do the students want to live?
3. Spend time doing the calculations
Before you think about looking around properties you should write down the price of houses you are looking at and the rent that you would be likely to get. Traditionally buy-to-let lenders want rent to cover 125% of the mortgage repayments, although many had relaxed this in recent years. They also looked for a 15% deposit, which protects against potential falling prices. But in the wake of the problems in the mortgage market many lenders are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees.
You need to also figure out the following:-
Will your investment work out? What will happen if the property sits empty for a month or two? Make sure you know how much the mortgage repayments will be.
4. Do the research (look around)
Just walking into your bank or building society and asking for a mortgage is not the best idea. It may sound obvious, but people who do this when they need a financial product are one of the reasons why banks make millions of pounds in profit. If you are seeking advice, consider using a specialist buy-to-let mortgage broker.
Remember that asking them for information does not mean that you are under any obligation to use them.
5. Consider how involved you want to be
Buying the property is only the first step, you need to think about how involved you wish to be after completion. Will you rent it out yourself or get an agent to do so on your behalf? Agents will charge you a management fee, but they will deal with any problems that may occur and they will have a good network of plumbers, electricians and other workers if things were to go wrong. You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs. If you choose an agent you do not have to go for a High Street agent, many independent agents offer an excellent and personal service.
You should select a shortlist of agents, big and small, and ask them what they can offer you.
6. Do your research on the current market
If you are new to buy-to-let, what do you know about the market? Do you know the risks, as well as the benefits?
Make sure buy-to-let is the investment that you definitely want. Your money may be able to perform better elsewhere. In recent years a high-rate savings account would beat most investments. Now the rates are lower, but, investing in buy-to-let means tying up capital in a property that may decrease in value.
If you know someone who has entered the buy-to-let market, ask them about their experiences.
7. Consider properties away from your home town
Most buy-to-let investors look for properties near where they live, but, your own town may not be the best investment for you. The advantage of a property being close by is you are able to keep an eye on it, but, if you will be employing an agent anyway they should do that for you.
Look further afield and look at towns with good commuting links, that are popular with families or have a sizeable university.
8. Test your negotiation skills
Buy-to-let investors have the same advantage as a first-time buyer when it comes to negotiating discounts. If you are not reliant on selling a property to buy another, then you are not part of a chain and represent less of a risk of a sale falling through. This can be a sizeable asset when negotiating a discount.
9. Discover the potential pitfalls
Before making any investment you should always investigate the negative aspects as well as the positive. House prices are falling and if this continues, will you be able to continue your investment? Even in popular areas properties can sometimes sit empty for some period of time. One rule of thumb many buy-to-let investors apply is to factor in the property sitting empty for two months of the year – this gives a substantial buffer. Sometime homes will need repairing and things can go wrong. If you do not have the funds in the bank to cover a major repair to your property, such as a new boiler, do not invest yet.
10. Which tenant group are you targeting?
Instead of imagining whether you would like to live in your investment property, put yourself in the shoes of your target tenant group. Who are they and what do they want? If they are students, it needs to be easy to clean and comfortable but not luxurious. If they are young professionals it should be modern and stylish. If it is a family they will have plenty of their own belongings and need a blank canvas. It is possible to take out an insurance policy in the event that your tenant fails to pay their rent.
Jan/100
Firm fined for not complying with FSA principles and rules
The FSA has fined a Derbyshire-based financial advice firm and its two partners a total of £49,000.
The failings at Sett Valley Insurance Services were identified during an FSA visit focussing on the fair treatment of customers, as part of its assessment programme for small firms.
The subsequent FSA investigation identified a number of problems with the firm’s sales and advice processes, including a failure to record sufficient information about customers’ personal and financial circumstances to ensure the suitability of any advice they gave, and a failure to communicate with them in a way that was clear, fair and not misleading. The firm’s systems and controls were also inadequate and did not meet the FSA’s requirements.
Jan/100
Mortgage Fraud in legal firms
Investigations carried out by the Solicitors Regulation Authority as part of a crackdown on solicitors involved in mortgage fraud have totalled 106 in a short period of time.
As a result of the audit 22 law firms have now been closed down, and a further 24 cases have been referred to the police for investigation. Another 30 cases have been referred by the SRA to the Solicitors Disciplinary Tribunal, which has the power to strike off solicitors, with other investigations continuing.
The level of fraud is colossal, and it is estimated that this investigation alone has saved lenders between £15m and £20m.
The regulator handled over 400 cases of suspected mortgage and property fraud last year, an increase on the 356 reports in 2008 and just 85 reports in 2005.
The SRA has now issued advice and warnings to all solicitors’ firms, alerting them to the warning signs of suspicious transactions.
It has also reminded firms that they need to ensure they do not become embroiled in fraud and to report any suspicions they may have.
“We are committed to working closely with the SRA during 2010, and beyond, to target corrupt solicitors who we believe are a significant enabler of property fraud.” Robert Wishart, detective superintendent of the City of London Police, national lead force for fraud investigation.
Steve Wilmott, head of the fraud and confidential intelligence bureau at the SRA, says: “Last year the SRA stepped up its work to prevent, deter and tackle mortgage fraud.
“Mortgage fraud is a serious issue for home owners and lenders.
“We are working closely with major lenders and the police to share intelligence and take prompt action.
“Working in collaboration will help us to better understand the threats and give us the opportunity to take preventative and enforcement action to protect the financial community”.
Jan/100
The darker side of right-to-buy
Right to buy was introduced almost 30 years ago, hailed as a social revolution that would transform council estates. The reality shows a less rosier picture of fractured communities, exploitative landlordism and a severe lack of affordable housing. Most of the housing exists as the remains of the “homes for heroes” scheme initiated during the twenties by Prime Minister Lloyd George. Yet it is another historical piece of government policy that has influenced the shape of Britain’s streets. In December 1979 the Conservative government published the housing bill that allowed council tenants’ right to buy their homes. The idea was that those who bought their homes would take pride in their property, looking after them more because they had a personal investment in it. Ken Collins like many others bought his house, through right to buy and has expanded his home into a valuable asset. Ken not only benefited financially, he believes that residents who bought their homes became more responsible for them which in turn improved the quality of the entire neighbourhood.
In the long-term the financial benefit to right-to-buy owners is apparent, however the long lasting social effects are clear to be seen in what were previously council estates like Dagenham. Critics of the right to buy scheme argue that right to buy has pushed ‘social housing’ out of affordable areas and replaced it with private sector leasing. Landlords rent these properties out on short term leases to large families, often vulnerable in desperate situation which has an overall negative effect on social cohesion. Furthermore there is evidence to suggest a more under hand practice lurking in London’s council estates. Those reluctant to give up their council tenancies unofficially sub-let properties for cash-in-hand, selling their front door keys, further eroding communities making them increasingly unstable.
It is unsurprising that council tenants choose a less savoury route when we consider the problems taking the official route. This is particularly noticeable in situations were the tenant becomes a leaseholder on buying their ex-council flat. Some councils charge the leaseholders for building improvements, this can lead to demands for vast sums and leave people with no option to sell up rather than remain in their homes. The problem is that the right to buy scheme ignores the fact that many of the council tenants are low income families and rather than handing them an opportunity to secure a home for their future it places them in impossible financial situations leading to debt or worse with no home. Ironically, it is the council that offers an opportunity for those leaseholders struggling to pay back their mortgage a way out, they offer to buy the property back for council housing, some skeptics go so far as to say that the service charges are a way of emptying housing that is desperately needed in popular areas.
The biggest fear is that the reluctance from government to decrease right to buy is taking away the right to rent from people who can not afford to buy. A balance needs to be maintained between those who wish to rent and those who want to become homeowners and the only way forward is to build more affordable housing.
Jan/100
Mis sold Mortgages
Mortgage mis-selling case could impact on repossession
The Financial Ombudsman Service (FOS) has found that a previous homeowner, whose property has been repossessed by their lender, was actually mis-sold their mortgage in the first place.
The petitioner had already lost her home at the time of the FOS ruling but was awarded compensation once it was established that the mortgage had been mis-sold.
According to the Guardian newspaper, on 25th March 2009, the ruling could set a precedent that would prevent repossession where it can be shown that a mortgage has been mis-sold.
The case hinged on rules covering ‘suitable advice’. Nevertheless, some lawyers who have considered the case are hopeful that in future the ‘suitable advice’ clause could be used to actually prevent repossessions occurring in these circumstances.
The scandal of mortgage mis-selling in the UK was addressed in a Citizen’s Advice Bureau report published in 2007, entitled ‘Set up to Fail’.
The report was based on 1,200 case studies from 360 Citizens Advice Bureau across the United Kingdom.
It found that many lenders and brokers were not ensuring that borrowers understood the risks of entering into a mortgage or were aware and agreed with what the policy entailed. The research also revealed that in some cases, it seemed that the lenders did not check whether the borrower could even afford the mortgage repayments from the outset.
Jan/101
What is debt management?
A debt management plan is a structured repayment plan set up by a designated third party, assisting a debtor with repayment of his or her debt. The aim of debt management is to help clear the debts at a reduced level over a fixed period of time to help the debtor make a fresh start with their finances. The client and all their debtors must agree to the arrangement and the client has to be able to meet the requirements.
Deciding to use the services of a debt management company may be hard. It can be difficult for some people to even admit that they need help and many people will wait for their financial life to spiral completely out of control before seeking assistance. Seeking the help of a debt management company early can help you get back in control and assist you towards a debt free future.
A debt management company can help the average consumer take control of their debt problems quickly. They can reduce or eliminate current levels of debt whilst helping the consumer to understand the factors that led to the debt and how to avoid these factors in the years to come. A good debt management scheme can help a consumer create a realistic budget plan to carry them forward in the future once the current debt has been eliminated. Making a monthly budget and keeping to it may well be the most essential financial decision anyone can make, but very few people will take the time to make a budget. Debt management schemes can teach this important skill and also provide their clients with expertise to remain debt free.
How does debt management work?
Firstly a debt advisor will offer advice on ways that you could save money by looking at the way you budget. They can then help you to carry out an assessment of your financial situation and debts by asking you a series of questions. By asking these questions they get a more accurate picture of your finances. It is essential that you are truly honest when they are going through your finances with you to enable the debt advisor to give you the specific help you need. This information is used to calculate how much you can comfortably afford to pay each month out of your disposable income.
Once this amount has been agreed, your creditors will then be approached and asked to cease all charges and negotiate a different repayment schedule with them, which will be easier to manage every month. In most cases creditors are happy to agree to the plans, because they know from experience, that such plans are realistic and sustainable.
You then make a single monthly payment, all of which is distributed to your creditors on your behalf. It is important that the payment is made into your debt management plan every month. Throughout the duration of your plan, you will be able to speak with an experienced debt advisor whom you should contact if you experience any problems whilst the arrangement is in place.
Your debt management plan will be reviewed at regular intervals to ensure that it still meets your circumstances. If your financial situation changes, the debt management company have the flexibility to be able to renegotiate payments on your behalf.
When it comes to reducing and eliminating current debt, a reputable debt management firm can be a very effective way to reduce debt and eliminate all the stresses it causes. While creditors are often reluctant to work directly with consumers to renegotiate the terms of their debt, they are often very willing to work with a legitimate debt management company who know the lingo of the credit card company or the bank. Speaking the same language, they will know how to negotiate the best possible terms on the repayment of a consumer’s debt. Whenever you find yourself in debt over your head, chances are a debt management service can be a big help.
Jan/100
Plans to help people solve their debt problems as quickly and fairly as possible
Debt Management Schemes are designed to assist those who are in debt and are unable to meet their commitments. In these situations finances are assessed and a monthly repayment deal is negotiated with all their creditors which all sides agree to and the debtor is able to maintain.
The consultation explores whether there would be benefits for debtors through:
- more consistent operators’ charges
- interest and other charges being frozen once a payment plan has been agreed
- the opportunity to pay off debts over time without requirements to sell homes or other assets
- protection from enforcement procedures from creditors (unless the creditor receives court permission
- better advice on the full range of options available to deal with debt problems
- changes, if introduced, to existing schemes would also be aimed at assuring creditors that they:
receive maximum returns
will not need to spend time and money on chasing debts
will have clients’ financial details regularly provided to them in a consistent format
will be confident that they are receiving the maximum possible monthly instalment.
Taking tough, swift action against firms who fail to operate within the rules and who provide sub-standard services to consumers with problem debt remains a high priority. Later this year, the Office of Fair Trading plans to launch a review of its Debt Management Guidance to obtain a clearer picture of compliance levels within the debt management sector and take appropriate follow-up action.
Other measures to help consumers and homeowners in financial difficulty include:
- Changes in eligibility criteria for Income Support Mortgage Interest for homeowners getting Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance or Pension Credit. Where they have a mortgage, those benefits may include an additional element called Support for Mortgage Interest, which assists the homeowner with the interest on their mortgage.
- The Homeowner Mortgage Support Scheme enables eligible borrowers to reduce their monthly mortgage interest payments to affordable levels for up to two years, helping them get back on track with their finances if they suffer a temporary loss of income.
Significant funds invested to strengthen the provision of debt advice, including:
- £130 million in England and Wales between 2006 and 2011 for free face-to-face debt advice
- an additional £10 million last November to support longer opening hours at over 330 Citizens Advice Bureaux
- £5.85 million for the National Debtline to increase frontline staff levels by 50
This is in addition to the investment in legal advice available through the Legal Services Commission to help those in need in the current economic climate.
The new self-help debt advice toolkit being developed by the Money Advice Trust and funded by BIS will enable those who can to negotiate debt repayments with creditors themselves with more targeted advice agency support. This will allow debt advice agencies to prioritise their resources better and advice more clients who need in depth help.
Jan/100
Advantages of debt management plans
Advantages of debt management plans
- Allows you to bring income and expenditure back into line without taking on more borrowing;
- You can follow this option by yourself or with the help of a no fee charging debt advice agency.
Disadvantages of debt management plans
- There is no guarantee that your creditors will accept the reduced payments and/or freeze future interest payments;
- The time taken to repay your debt will increase. The time will further increase if you pay your debts through a fee-charging debt management company;
- Your credit reference file will show details of the Debt Management Plan. This will affect your ability to get credit in the future.
Debt management plans can be a good option if:
- Your financial problems are caused by a temporary reduction in income and the situation will improve in the near future.
Debt management plans can be unhelpful if:
- Your ability to pay your debts will not improve within 12 months.
Debt management plans can be disastrous if:
- The fees taken by commercial debt management companies and the refusal of banks and credit card companies to freeze interest means that your debt steadily increases.
Jan/100
Sale and rent back to right-to-buy home owners
Right-to-buy owners who have come into difficult financial diffculty are being tempted into “sale and rent back”. The scheme offers a way out for many homeowners who found themselves struggling to pay for a mortgage that should have neve been sold to them in the first place. A “sale and rent back” is whereby a homeowner sells their property to a private company at a discount price and in return are allowed to remain in their home as a tenant.
The overall appeal is obvious but But Denise Rooney of Chas Housing Aid Centre, Kirklees, says many schemes fail to deliver: “We have cases where people are allowed to remain in the home for a much shorter time than they were led to believe or the company they sold their home to goes bust, the debt is sold on and they are evicted.” This can result in famikies being left with no where to go or turn to, as they are deemed “intentionally homeless”. The statistcs are backed up by housing charity Shelter who note more than 600 households were classified as intentionally homeless due to mortgage arrears in 2008.
The “sale and rent back” scheme offers a hand to those in desperatefinancial times, but the human cost seems to outweigh the financial benefit.
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