Written By Em

Em Morley

Record High for Successful Mortgage Applications Seen in Q2

Published On: August 30, 2017 at 10:32 am

Tags: homebuyers,mortgages,property market

The second quarter (Q2) of the year saw a record high for successful mortgage applications, with almost nine in ten (88%) resulting in offers, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).

Record High for Successful Mortgage Applications Seen in Q2

This is 13 percentage points higher than in Q2 2016, when 75% of mortgage applications led to offers, and is the highest proportion on record since the Tracker began at the start of 2016.

The quarterly report, which uses data from BDRC Continental, follows mortgage applicants’ journeys through the intermediary channel, from initial enquiry through to completion.

In doing so, it contrasts the fortunes of brokers with a particular focus on first time buyers, home movers, remortgagers, buy-to-let borrowers and applicants for specialist loans.

The Tracker shows that, despite the political events of Q2 – the snap General Election and resulting hung Parliament – the mortgage market remained buoyant, with gross mortgage lending for the quarter reaching £603 billion – up by 3% from Q1 and 6% on Q2 2016.

Furthermore, of the intermediaries surveyed for the report, 96% stated that they felt confident in the future of the mortgage market, suggesting that this is a trend that may continue.

First time buyers, in particular, have taken advantage of an extended period of low interest rates and lender support, which, despite affordability pressures, meant that the number of successful mortgage applications by this group increased from 71% in Q2 2016 to 88% in Q2 this year – a rise of 17 percentage points.

This proportion of successful mortgage applications is the highest recorded since the Tracker began in Q1 2016, having continued to rise steadily over the past year. The percentage of offers resulting in completions has also grown year-on-year, from 75% in Q2 2016 to 81% in Q2 2017, with 71 of every 100 mortgage applications now resulting in a completion – up from 58 at the start of last year.

The Executive Director of IMLA, Peter Williams, comments: “While the second quarter of 2017 was dominated by political speculation and campaigning, any resulting uncertainty was not enough to send the mortgage market and the determination of aspiring homeowners off their course. The percentage of successful applications continued to grow across the board; a testament to the ability of the intermediaries to match consumers with suitable products in what is an increasingly complex marketplace.

“With house price rises softening and easing affordability pressures, borrower demand and lender supply remains unwavering, heightened by increasingly competitive residential and buy-to-let LTV [loan-to-value] pricing. Greater choice means that, for intermediaries, it is perfectly possible to match a wide range of aspiring homeowners and movers to suitable finance, without compromising on rigorous assessments of borrower capacity to service their mortgage underpinning the market.”

Portfolio landlords should remember that the second phase of the Prudential Regulation Authority’s buy-to-let underwriting changes will come into force next month. Get to grips with them here: https://www.justlandlords.co.uk/news/portfolio-landlord-underwriting-changes/

Why Investing in Scotland is So Hot Right Now

Published On: August 30, 2017 at 9:52 am

Author: Em Morley

Categories: Landlord News

Tags: private rental sector,property investment,rental yields,Scotland

Why Investing in Scotland is So Hot Right Now

Scotland is maintaining its reputation as an attractive destination for property investment. The Scottish private rental sector has doubled in size in the last ten years and the number of households in Scotland is projected to increase by 61,000 by 2021.

Recent statistics have shown that buy-to-let landlords in Scotland enjoy solid returns on investment, on average 4.9%, and increasing rental rates.

If you’re considering Scotland as a destination for your investment, as with any major investment, it’s important to be aware of the trends underlying this landscape.

In last week’s Scotsman, Kirsty McLuckie wrote a thought-provoking article about the number of homes people can expect to own over the course of their lifetimes. Britons in their 20s and 30s (who can loosely be grouped as millennials) will own, on average, 1.7 homes throughout their lives – half the number their parents owned. With homeownership on such a decline, landlords can be confident that the private rental sector will continue to offer a lucrative investment option.

2017 marked the first time in Scotland that potential homeowners have needed to raise £21,000 for a deposit. This represents a barrier to entry for many people, forcing them to stay in the rental market for longer than their predecessors – a rental market with rising prices, further hindering the potential to save for deposits.

National average rents in Scotland show a steady 1.5% growth year-on-year and, in Edinburgh alone, property prices are projected to rise by 23.4% by 2021. Increasing house prices, stagnating wages and the much-maligned gig economy all contribute to fewer houses being bought and sold by people in their 20s and 30s, which in turn drives demand in the rental market.

This social and financial landscape represents an opportunity for buy-to-let landlords – it can be assumed they are more likely to have the necessary capital to place a deposit when an attractive property comes onto the market.

The trifecta of (relatively) affordable property, consistent returns on investment and solid rental incomes make Scotland the perfect place for landlords to build and expand their property portfolio.

By Miles Gilham, MD of Glenham Property

Another estate agent calls for reduction to Stamp Duty

Published On: August 30, 2017 at 9:43 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,Stamp Duty

There has been yet another call for Stamp Duty Land Tax to either be amended or abolished, this time from estate agent Jackson-Stops & Staff.

The estate agent feels that ‘prohibitive levels’ of Stamp Duty Land Tax are preventing those in the domestic market from both buying and selling. This cannot be said for overseas buyers however, who are still being attracted by the weak pound.

Reduction

Jackson-Stops & Staff is calling for a reduction of one-third in Stamp Duty levels, in order to get the market moving again.

Toby Whittome, Sales Director at the estate agent in London, observed: “Potential buyers in central London used to approach us about their next home move, driven by factors like a growing family or need for a home with more bedrooms or a bigger garden. These are the “old reasons” for moving, from before December 2014. Our purchaser registration numbers are up, but the fluidity of the market has diminished hugely. When buyers are looking at 20% transaction costs including stamp duty, solicitor’s fees and moving costs, the attitude becomes: ‘we’re better off staying where we are’.”

“In my patch of Kensington and Chelsea sales have fallen to around 120 a month, compared with around three times that number in peak 2014. In 2016 Kensington and Chelsea contributed £514 million in residential stamp duty receipts, the highest of any local authority.”

Another estate agent calls for reduction to Stamp Duty

Harmful

Nick Leeming, Chairman at Jackson-Stops & Staff, added: “If stamp duty levels weren’t causing so much harm to the million plus market I think we would see the health and fluidity at the lower to middle end of the Greater London market spread to the higher end too.”

“One recommendation is a UK wide reduction in stamp duty levels of around a third, which should boost the property market at all levels, particularly at the million pound plus level. It is worth remembering that in central London typical family homes will likely be worth £1 million or more and, with stamp duty levels preventing these homes entering the market, it means that families are unable to move up or down the property ladder when they need to.”

“Aggregate prices remain stable against a backdrop of economic uncertainty and low transaction levels, demonstrating that demand is sufficient to keep prices supported.”[1]

[1] http://www.propertyreporter.co.uk/finance/national-estate-agent-calls-for-a-one-third-cut-to-stamp-duty.html

Landlords increasing rents and reviewing portfolio sizes

Published On: August 30, 2017 at 8:57 am

Author: Em Morley

Categories: Landlord News

Tags: Brexit,landlords,portfolios,rents

A rising number of landlords are selling off their properties and raising their rents in response to regulatory alterations and political uncertainty. These actions are in a direct response to the Brexit and General Election results.

19% of landlords with 20 or more rental properties has reduced the size of their rental property, according to a new survey from BDRC Continental – on behalf of Foundation Home Loans.

Portfolio Reduction

38% of landlords quizzed said that they had reviewed the size portfolios to make sure they could withstand rising costs. 7% said that they have sold off their properties, in order to reduce portfolio sizes or to diversify.

Apart from political uncertainty, a number of landlords have been deterred by recent tax alterations, including the 3% Stamp Duty surcharge and changes to mortgage interest tax relief.

The percentage of UK landlords who reviewed their portfolio size by region following the results were:

UK	38%
East of England	40%
East Midlands	50%
London (Central)	45%
London (Outer)	40%
North East	43%
North West	34%
Scotland	35%
South East	40%
South West	38%
Wales	32%
West Midlands	35%
Yorkshire	28%

Rent Rises

Landlords in the East Midlands were found to have raised rents the most, with 41% here choosing to do so, more than the total average of 30%.

By region, the largest rent rises were recorded in:

UK	30%
East of England	33%
East Midlands	41%
London (Central)	24%
London (Outer)	24%
North East	23%
North West	35%
Scotland	15%
South East	33%
South West	31%
Wales	23%
West Midlands	31%
Yorkshire	31%

Landlords increasing rents and reviewing portfolio sizes

Nearly three quarters (71%) of landlords said they had seen a fall in confidence.

Jeff Knight, Marketing Director at Foundation Home Loans, noted: ‘Landlords have been met with a raft of changes, from stamp duty charges to shifts in tax policy, and the lack of certainty on the political front has clouded the picture somewhat. The response has been to ‘batten down the hatches’, streamlining larger portfolios and protecting income by increasing rents – decisions that can be reviewed once the buy to let market is more accommodating.’

‘The fact remains that, whether it’s as a stepping stone to home ownership or a longer term lifestyle decision for tenants, the rental sector is an increasingly important part of the housing mix. This will ultimately be best served by a wide choice of property, and good landlords who can have confidence in decent returns.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/landlords-batten-down-the-hatches-and-increase-rents

Property Market Experienced a Summer Slump in July, Reports NAEA

Published On: August 30, 2017 at 8:49 am

Author: Em Morley

Categories: Property News

Tags: asking prices,first time buyers,property market,property sales

The property market experienced a summer slump in July, as the supply of homes available to buy dipped, according to the July Housing Report from NAEA Propertymark (the National Association of Estate Agents).

Property Market Experienced a Summer Slump in July, Reports NAEA

Housing supply

The number of properties available to buy on estate agents’ books dropped from an average of 37 in June to 35 in July. This is the lowest level recorded for the month of July since records began back in 2002.

Property sales

The proportion of sales made to first time buyers fell from 30% in June to just 23% in July. This is the lowest level seen since last September, when the rate was also 23%. The last time it was lower than 23% was in November 2015, when 21% of sales were made to first time buyers.

Typical of this time of year, the amount of sales agreed per member branch dropped in July. In June, there was an average of 11 sales agreed per branch, compared to just eight last month.

Demand for homes

Seasonality hit home hunters, as the number of people looking for properties declined by 10% in July, from an average of 384 in June to 347 in July. This is the lowest it has been since November 2016, when 344 potential buyers were registered per branch. However, it is a considerable increase from July 2016, when just 298 were recorded.

Sales prices

Just 3% of properties were sold above the asking price in July – an increase of one percentage point on June.

The amount of homes that sold for less than the asking price rose to 80% last month – up from 79% in June and the highest level since December 2016.

The Chief Executive of NAEA Propertymark, Mark Hayward, comments on the figures: “It is natural for the market to dip in the summer and then recover. We usually see a subdued July and August, and then a boom in September, with an influx of new properties coming onto the market – it remains to be seen whether this year is typical. We’d also expect to see the number of house hunters increase, as buyers strive to complete sales before the winter kicks in.”

More investors turning to commercial property investment

Published On: August 29, 2017 at 1:05 pm

Author: Em Morley

Categories: Landlord News

Tags: commercial property,investors,mortgage interest tax relief,Stamp Duty

A rising number of investors are beginning to turn away from residential property and instead of looking to the commercial property market.

That is the view of James Emson, Managing Director of Clive Emson Auctioneers, who believes that investors are being deterred by recent tax hikes.

Commercial Investment

Mr Emson said that recent sales have been given a lift mainly by commercial investors, wit the phasing out of mortgage interest rate relief and introduction of 3% additional stamp duty taking their toll.

The most recent statistics from the firm show that national auction sales of commercial lots rose by 16% last month in comparison to the previous year. This has taken the total value raised to £190m.

More investors turning to commercial property investment

Commenting on the results, Mr Emson said: ‘We are noticing a definite trend towards commercial property sales as investors seek to widen their portfolios. The increased popularity of commercial lots comes as continuing record low interest rates help boost the market while residential sales are not helped by interest rate relief and stamp duty changes.’[1]

In its most recent auction, Clive Emson sold property worth £15m and achieved a sale rate of over 70% from 139 lots.

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/8/more-investors-turn-to-commercial-property-as-residential-sales-dip