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Em Morley

Most Landlords Choosing 5-Year Fixed Rate Deals

Published On: January 23, 2019 at 10:31 am

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Categories: Landlord News

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An increasing number of landlords are choosing five-year fixed rate deals when investing with a mortgage, according to the latest Buy-to-Let Index from Mortgages for Business.

In the fourth quarter (Q4) of 2018, 84% of landlords opted for five-year fixed rate deals, which is up from 70% in Q3.

In total, 97% of landlords now choose a fixed rate mortgage. The popularity of five-year fixed rate deals is likely linked to less stringent tests and the promise of greater security in the current uncertain economic climate.

Steve Olejnik, the Managing Director of Mortgages for Business, says: “Whilst, for landlords, the preference for five-year rates is both a protective measure and an opportunity to maximise borrowing, from a market perspective, it will reduce the volume of remortgaging over the next few years. Both lenders and brokers need to take this into account when projecting business growth.”

Elsewhere in the sector, more than half (55%) of all newly submitted buy-to-let mortgage applications were from landlords using limited companies in Q4, which is up from 44% in the previous quarter. This indicates a shift away from borrowing personally.

By value, these applications accounted for 51% of all requested borrowing, which is up from 39% in Q3. Over half of the buy-to-let lenders tracked in the report now offer products to limited company landlords.

“I expect the uptick in the use of limited companies to continue, as landlords adjust their investment strategies to cope with the new tax environment and underwriting guidelines for lenders from the PRA [Prudential Regulation Authority],” Olejnik claims.

The way that lenders charge borrowers has also changed. Nearly half of all products had a percentage-based arrangement fee attached to them, which has risen from 42% at the beginning of 2018. The reason for this is likely to be the market becoming increasingly specialist in nature.

Olejnik explains: “Loans for specialist scenarios tend to be higher, and so lenders are able to claw back some of the margins they have lost through competitive pricing, by applying a percentage-based fee, rather than a flat fee. Almost always, there is no incentive for lenders to offer products without fees for more complex borrowing scenarios.”

The average flat fee rose from £1,423 in Q4 2017 to £1,506 in Q4 2018 – the first time this figure has increased above £1,500 since Q1 2016.

At that time, the average flat fee rate stood at £1,556, as there was a rush of buy-to-let applications as landlords raced to complete transactions ahead of the introduction of the Stamp Duty surcharge on purchases of additional homes.

Staying Up to Date with the New Generation of Student Tenants

Published On: January 23, 2019 at 10:07 am

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Believe it or not, the days of binge-drinking, untidy and carefree students are long gone. The new generation of student tenants has changed with the times, so it’s important for landlords to keep up to date with their needs.

Broadband and utilities provider Glide has put together a helpful guide based on research conducted through YouGov Profiles, which surveyed 1,460 students taking part in their first university degrees.

To help you stay up to date with the new generation of student tenants, read on:

The environment

Seven in ten students (70%) consider themselves environmentalists, compared to less than half (46%) of the general population.

The new generation of student tenants is working for a better future and wants to make a difference in the world, starting with their homes – almost three-quarters consider fitting solar panels on their properties.

You should show your tenants that you are also aiming to improve the environment through your property, such as installing energy saving light bulbs, which could also cut electricity bills for your tenants by as much as 90%.

Broadband and social media

Wifi and broadband are crucial to the new generation of student tenants, not only for their studies, but for their everyday lives as well.

Three in four (75%) admit that they would not be able to manage without the internet and they value super-fast broadband far more highly than non-students, with 82% saying that it’s important to them, compared with 67% of the general public.

They are using the internet as their main source of information, to connect via social media, and to download materials to their phones and laptops.

Savings

The new generation of student tenants is invested in its future and has plans for its savings.

A huge 97% of generation Z believe that they will own their own homes one day. Despite travel ambitions, they see settling down in their own place as a life goal.

With this in mind, they will look to save money anywhere they can to put towards their savings, meaning that they are more likely to look for somewhere to live with low rent in the short-term.

No more partying

Binge-drinking rates have dropped significantly over the last few years, with almost 30% of young people saying that they do not drink alcohol at all. Most young adults prefer to stay in socialising with a few close friends and a takeaway. So, for the new generation of student tenants, the days of wild parties are over.

That’s right: no drunken property damage, noise complaints and dodgy stains. Instead, students are much more house proud and cleaning is even becoming more of a trend.

These are some of the most important considerations that Glide has found for student tenants today. Therefore, it is essential for landlords to accommodate these as much as possible. In return, the new generation of student tenants looks to be excellent renters, who are both considerate and forward thinking.

Landlords Increasingly Looking for Longer-Term Fixed Rates

Published On: January 23, 2019 at 9:00 am

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In such uncertain economic and political times, it’s no surprise that landlords are increasingly looking for longer-term fixed rates on their buy-to-let mortgages.

Understandably, the majority of private landlords are looking for greater security in the current climate, which may largely explain why many are looking for longer-term fixed rates on their mortgages.

The Melton Building Society has found that fixing for five years is particularly popular amongst landlords.

The cost of two, three and five-year fixed rate mortgages has dropped over the past 12 months, with research showing that most landlords are opting for five-year fixed rate buy-to-let deals.

Dan Atkinson, the Head of Sales and Marketing at The Melton, reports: “Landlords are increasingly looking for longer-term fixed rates since they have reached an all-time low.”

The Melton has recently launched a new five-year fixed rate deal, at 2.75%, for business buy-to-let customers with an interest coverage ratio (ICR) of 145% of the mortgage payment, calculated on an interest-only basis at 4%.

This new product has no application fee and a completion fee of £399.

The Melton offers a range of specialist buy-to-let mortgage products, including holiday buy-to-let and family buy-to-let.

The building society accepts first time buyers, first time landlords and non-owner-occupiers.

Atkinson adds: “The combination of a lower ICR calculation and fixed rate on this product makes buy-to-let from The Melton accessible to a wider range of landlords.”

If you’re a landlord looking for a buy-to-let mortgage, are you increasingly interested in longer-term fixed rates? And are you one of the many landlords that are choosing greater security by opting for a five-year fixed rate deal?

In the current uncertain political and economic times, it may be a wise move to lock into a favourable buy-to-let mortgage rate on a longer-term fixed deal. Let us know your thoughts on investing in today’s climate.

Housing Court Could be Essential to Property Redress System

Published On: January 22, 2019 at 10:59 am

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Categories: Law News

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A housing court could be essential to the property redress system, believes Neil Cobbold, the COO of PayProp UK.

As the Government prepares to end its call for evidence on the need for a dedicated housing court today (22nd January 2019), a range of industry experts have had their say on the proposal.

The call for evidence was launched in November last year, and has been seeking views on whether a specialist housing court would benefit landlords, tenants and the industry as a whole.

The proposed court would deal with property-related disputes, including those regarding property repossessions and substandard rental housing.

It would replace the current system, which requires consumers to pursue their cases through the county courts, magistrates’ courts, High Court or First-tier Tribunal.

Property possession for landlords

One of the key criticisms of the existing system is that it can be difficult for landlords to regain possession of their properties if tenants are failing to pay the rent.

Landlord trade bodies have suggested that this is a barrier to landlords offering long-term tenancies – something that the Government is keen to introduce as a three-year minimum industry standard.

Official figures estimate that the average time taken between a private landlord’s county court claim to possession by a bailiff is over 16 weeks.

“A dedicated housing court could make it easier and quicker for landlords to regain possession of a property via the legal system,” says Cobbold. “What’s more, a simplified system could also make the process easier for landlords to navigate without costly professional legal support.”

Challenging rogue landlords

Another aim of the call for evidence is to determine whether a housing court would make it easier for tenants to seek justice against landlords providing substandard accommodation.

Cobbold explains: “Many renters may not be fully aware of the current course of action they need to take to pursue a dispute with their landlord through the courts.

“A housing court could be more accessible and provide people with a single route for redress. The Government has previously pledged to ensure all landlords are part of an approved redress scheme.”

He adds: “While this legislation is yet to be introduced, a housing court could provide tenants with greater protection and opportunity to challenge potentially criminal landlords.”

Effective redress

A dedicated housing court could provide a range of benefits for letting agents, if disputes between landlords and tenants are resolved quicker.

It could also tie in effectively with the Government’s ongoing plans to introduce a single housing ombudsman for the sector.

Cobbold concludes: “A less complicated redress system, which is solely designed to deal with housing disputes, is in the interests of everyone in the industry.

“We now await the results of the call for evidence, and the subsequent Government suggestions and analysis.”

Tenants Prioritise Saving for a Holiday over a Home Deposit

Published On: January 22, 2019 at 10:26 am

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More than a third (39%) of private tenants in the UK are not saving any money towards a deposit for their own homes, according to new research by Intus Lettings.

The letting agent conducted a survey amongst over 2,000 tenants, which found that those renting privately are more likely to save for a holiday (60%) than for a home deposit (47%) in the next ten years.

Other costs that tenants prioritise saving for include Christmas (29%), cars (36%), and a fund for a rainy day (37%).

The study indicates that simply keeping up with rent payments may be a more pressing priority for many tenants than saving towards a home deposit, as more than half (51%) said that they have worried about not being able to pay rent due to financial difficulty.

The Lettings Manager at Intus Lettings, Hope McKendrick, says: “As property costs continue to rise faster than wages in the UK, renters’ ambitions to purchase a home may be giving way to saving for more readily attainable goals, such as a holiday or new car.”

Of those surveyed, 18-24-year-olds were the most optimistic about their chances of affording their own homes, with 55% believing that they will be able to purchase a property in the future. This comes despite 39% of this group currently saving no money towards a home deposit.

Conversely, less than a third of tenants aged over 45 think that they’ll own their own homes one day.

McKendrick adds: “The lack of cash which renters are able to save towards a property seems to start having a real impact as they get older, as each age group surveyed is considerably less likely to believe they’ll ever own their own home.

“Although our research has shown that nearly half of tenants intend to save for a deposit in the next ten years, high costs within the UK housing market mean this isn’t always possible for renters.”

Speakers Confirmed for NAEA Propertymark Conference

Published On: January 22, 2019 at 10:00 am

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The Minister of State for Security, Ben Wallace MP, has been confirmed to speak at the upcoming NAEA Propertymark (the National Association of Estate Agents) Conference.

Wallace will offer insights into the Government’s priorities around anti-money laundering and resulting enforcement at the Conference in February.

The line up also features Joe McEwan, the former head of brand at Innocent, Andrew McMillan, the man responsible for defining John Lewis’ famous customer service, and motivational speaker Nigel Risner, who will talk about getting the most out of the people that you work with.

Clive Robins, of the Competition and Markets Authority (CMA), will also update attendees on the dangers of competition law that they need to be alert to, drawing on lessons from CMA cases and explaining what business cartel behaviour looks like.

For the third year running, Sally Bundock, a business and financial journalist at the BBC, will host the event.

Taking place on 14th February 2019 at 155 Bishopsgate in London, the NAEA Propertymark Conference offers estate agents an opportunity to network with likeminded peers, get up to date with important industry issues, and hear valuable guidance on developing as professionals.

Mark Bentley, the President of NAEA Propertymark, says: “Agents are facing a tough year, with political uncertainty impacting the housing market and an increased focus on economic crime. The National Conference provides a good opportunity for agents to learn from peers and to continue building their knowledge. We have an excellent line up of speakers confirmed and are excited to welcome everyone in February.”

Estate agents, will you be attending the NAEA Propertymark Conference 2019?  It presents a fantastic opportunity to hear from expert speakers from across the industry and stay up to date with any changes to property legislation.

During such uncertain political and economic times, this couldn’t be more important!