Jargon Buster "h"
A higher lending charge, also known by the acronym HLC, is a charge applied by lenders when the loan extended to a borrower reaches a higher percentage than the typical percentage of the property value in question. A common percentage is 90% of the property value, so if you take out a loan covering more than this, it is liable to incur a higher lending charge.
The value can also be applied to the amount you buy the property for, rather than the valuation attached to it. For example, a house may be valued at £300,000, but your offer of £295,000 is accepted. If you ask to borrow over 90% of that offer amount, the higher lending charge is likely to be applied.
The fees incurred for this are usually at a greater percentage rate than the term given for the rest of the mortgage. The charge only applies to the amount over the threshold. For example, if you bought a property for £295,000 with a loan for 85% of that amount, no charge would be applicable. However, if you could only provide a 5% deposit, you would need a 95% mortgage deal. This would mean the additional portion of the loan required over the 90% threshold would have the higher lending charge applied, rather than the whole 95%.
Buyers looking to borrow more than 90% of a property value may be asked to provide insurance. This is designed to cover the lender in the event you cannot meet your repayments and your property is repossessed. It represents the greater risk involved in loaning you more than the usual percentage the lender would be willing to provide.
A property is referred to as an HMO if several people live in it independently of each other. This describes a House of Multiple Occupation. There are many categories of housing that could be described in this manner. However, they are all occupied by people who are not from the same household.
The term is used to describe certain properties in the rental market. According to information on the official government website, an HMO is a property rented to three or more people sharing common facilities but rent their own rooms there. Common shared facilities would include the bathroom and kitchen areas.
Landlords in England and Wales who would like to convert a house to several people in this manner may require a licence to do so. Typically, the number of tenants intended to live in an HMO property would number at least five. However, some areas require landlords of HMOs to have a licence if they rent a property to fewer people than this. Regardless of where you live in England and Wales, if you are a landlord and you wish to rent out a property of this nature, the first step should be to confirm whether your council requires you to hold a licence for an HMO. It is always best to officially confirm this, even if you don’t think you need the licence.
Even if not all tenants share common facilities, your property could still be regarded as an HMO if some tenants share in this way. if you hold a licence, it will run for up to five years and must be renewed before it expires. Furthermore, if you have more than one property, a licence would be required for each one if it falls into the definition of an HMO.
A holding deposit describes a payment given to a landlord or agent to make sure a rental property can be reserved for them. It refers to a payment from the person wanting to rent the property, made to either of the above relevant parties. The landlord or agent would then take the property off the rental market. However, any new enquiries received for that property should still be recorded.
If the letting goes ahead, the holding deposit should be used in payment for part of all the main deposit for the property or towards the rent.
What happens if the letting does not go ahead?
It depends on who is at fault for the situation. If the prospective tenant was at fault, the landlord has the right to retain at least part of the deposit paid, if not all of it. This provides a measure of compensation for time wasted.
From the landlord’s point of view, it is important to take no more than around one week’s rent as a holding deposit. This would be a fair amount in compensation if the would-be tenant pulled out.
If the landlord is at fault, or an agent acting on their behalf, the holding deposit paid by the person wishing to rent the property should be returned to them in full.
The importance of a Holding Deposit Agreement or receipt
A document should be drawn up in writing that details the consequences if either party pulls out of the tenancy agreement. The agreement should include information on when the deposit should be returned or retained.
Even when a holding deposit is placed on a property someone wishes to rent, it is not legally binding. The tenant is not required to go ahead if they decide not to, and neither is the landlord or their agent.
A home buyers report is a type of survey conducted on a property. It is an intermediate-level survey typically offered by a mortgage lender. The lender’s surveyor usually carries it out.
It is not as involved as a full structural survey. It only deals with areas of the property that can easily be accessed. This does involve some structural elements, but it does not offer the level of information and insight a would-be buyer would get from a full structural survey. No in-depth investigations are undertaken, and the water, drainage, and heating systems would not be checked or tested.
The report sometimes includes a valuation for the property being checked. In some cases, this may reveal the value of the property is lower than the sum offered to purchase it. If this is the case, you could alter your offer to reflect the information obtained by the report.
The home buyers report is a good option if you are looking to purchase a standard property that appears to be in good condition. However, if you are considering buying an older property, it is wise to opt for a full structural survey instead. This will provide far more information on the structural condition of all aspects of the property. A home buyers report would not be the best survey if you are thinking of buying a property that is several decades – even centuries – old.
Of course, there are always risks. If you purchased a standard modern property following a positive home buyers report, you might still encounter issues the report would not have covered.
This type of insurance is designed to provide cover for all the contents inside the home. It typically covers damage incurred to all included items and the theft of such items if the home should be burgled.
There is no legal requirement to have contents insurance. However, the cost of replacing lost, damaged, or stolen items can be significant. There are lots of affordable policies on the market today, so shopping around is a good idea if you want to get cover.
Many home contents policies provide cover for items if you take them outside the home too. Typical examples would be covering smartphones when you carry them with you during the day. You may also be covered for taking items such as cameras and iPads on holiday.
Outbuildings such as sheds and garages can also be covered by this type of insurance. The best bet is to check the terms of any insurance policy you are considering taking out. You can often get quotes online and adjust the amount of cover required. Doing so will alter the amount you pay for the policy, but you should make sure you are getting the amount of cover you need. You might need to specify other items separately, such as bicycles kept in the garden shed, for example. Some policies include these anyway.
Another point to consider is whether you have any valuables in the home. Items such as expensive jewellery, collectables, or other hard to replace objects may require additional cover or even a separate specialist contents insurance policy. Remember too that you may only get the current replacement value for anything lost, damaged, or stolen. If you want a new-for-old policy, this could cost more, yet it provides greater peace of mind should you ever need to claim.
Home Envirosearch is a report giving information on the history of a named neighbourhood in the UK. It covers such aspects as flood damage, subsidence, and land contamination that may have occurred in the area in the past. You might also see it referred to as an environmental search.
The report covers all historical and potential risks relating to environmental issues. For example, if an area has suffered from flooding in the past, there is a greater chance it could be affected again in future. Similarly, if an area has many reports of subsidence, there is an increased risk that any property in that area may also be affected. Another example would be the presence of mining activity in an area in the past. Even if no mining occurs there today, there could be tunnels underneath a property that could increase the risk of problems in years to come.
The idea is that historical information regarding a specific area can point to likely risks that could occur in the future. Current risk factors are also typically covered by a Home Envirosearch report. For instance, are there any power lines directly over the property for sale? Are there waste management sites within the immediate vicinity? All these factors and other similar ones will be highlighted in the report.
If an issue is raised during the report, it may not necessarily lead to a property sale falling through. However, it does mean the buyer would be aware of all potential risks of purchasing the property if they decide to go ahead with the sale. A lot depends on the severity and frequency of any issues that come up.