Written By Em

Em Morley

Mortgage Approvals Drop to Lowest Level in 9 Months, BoE Data Shows

Published On: August 1, 2017 at 8:04 am

Tags: house prices,mortgage approvals,mortgages,property market

UK mortgage approvals dropped to the lowest level for nine months in June, signalling a loss of momentum in the housing market, the latest data from the Bank of England (BoE) shows.

Mortgage Approvals Drop to Lowest Level in 9 Months, BoE Data Shows

There were 64,684 approvals in June – the lowest figure since September 2016 and down from 65,109 in May.

Howard Archer, an Economist at the EY ITEM Club, comments on the statistics: “The fundamentals for house buyers are likely to remain weak over the coming months, with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth.”

Some analysts believe that uncertainty over Brexit could also dampen the home purchase market.

“Approvals look set to decline further in the second half of this year, as lenders tighten the credit taps and households become increasingly cautious about making major financial decisions,” says Samuel Tombs, of Pantheon.

Meanwhile, consumer credit growth, which has caused concern among regulators in recent months, fell slightly, according to the Bank’s figures.

The annual rate of growth dropped to 10% – down from 10.4% in May, having peaked at an 11-year high of 10.9% last November.

Nevertheless, analysts said that the growth rate remained very strong by historical standards.

Ruth Gregory, of Capital Economics, notes: “This will clearly do nothing to allay policymakers’ fears that unsecured credit is growing too quickly.”

The latest Office for National Statistics (ONS)/Land Registry figures show that house prices rose by an average of 4.7% in the year to May, slipping from 5.3% in April.

In June last year, prices were growing at more than 8%.

Other indices from Halifax and Nationwide also show declines in growth in the wake of June 2016’s EU referendum.

Before the Brexit vote, the Treasury forecast that house prices could be between 10-18% lower by 2018 than otherwise if we voted to leave the EU.

Asking prices in England and Wales virtually unmoved in July

Published On: July 31, 2017 at 11:54 am

Author: Em Morley

Categories: Property News

Tags: asking prices,house price values,landlords,property

Property asking prices in England and Wales were virtually static during July, according to the most recent data released from Rightmove.

Values increased by just 0.1% during the month, with prices flat or falling in seven of the ten regions covered by the Index.

Property Prices

In the North East, prices fell by 1.3% month-on-month. However, they were still up by 1.6% year-on-year. Yorkshire and Humber saw falls of 1% but values here were 4.1% up during the twelve-month period.

Property prices in the North East also fell by 0.7% to hit £186,999. Despite this, values here were still up by 2.4% annually.

In addition, data from the report shows that asking prices in the East and East Midlands fell by 0.7% and 0.4% respectively. Values here however were still up by 3.8% and 4.9% year-on-year.

Greater London saw asking prices rise by 1.1% in July, to hit an average of £641,388. The West Midlands saw monthly rises of 0.7%, while Wales experienced increases of 0.6%.

Sales

What’s more, the investigation shows that sales remained strong in the year to July 2017, with the number of properties sold nearly identical to those seen at the same time in 2016.

Would-be buyers are also seeing the highest proportion of properties on the market at any time during the last seven years. There are 7.6% more sellers coming onto the market in July, in comparison to the same time last year.

Miles Shipside, Director and Housing Market Analyst at Rightmove, feels that limited buyer affordability is acting as a natural price brake.

Asking prices in England and Wales virtually unmoved in July

Shipside observed: ‘Sellers coming to market at this time of year have to price more keenly as the traditionally bubblier spring selling season is over and prospective buyers are distracted by their own summer holiday plans.’

‘A year on from the shock referendum result and subsequent dent in activity levels, the fundamentals remain strong. Low unemployment, low interest rates, strong demand and historic undersupply of homes are mitigating any wobbles in confidence and as a result nearly half the properties on the market, over 45%, have sold. Compared to the period around the referendum a year ago, more sellers have come to market and more buyers are buying. The number of sales agreed is up by 4.6% in June 2017 compared to June 2016, and the number of sellers coming to market is also up on the same period a year ago, with a 7.6% increase in fresh choice,’ he continued.[1]

Comparisons

Mr Shipside went on to point out that, ‘The half way point of 2017 is a useful time to make a comparison with the previous year and the number of sales being agreed by agents is uncannily within fractions of a percent of the number at the same half way point of last year. This year and last year have had their own shocks and distortions, but these statistics show that the distractions have been short-lived and have now evened themselves out.’[1]

‘We can see now that price rises are muted despite high housing demand, indicating we have left the stage of the cycle where price rises exceed the rate of inflation. High demand will continue to underpin prices, but we are seeing stretched affordability limiting the pace of rises, especially in the south of the country,’ he concluded.[1]

[1] http://www.propertywire.com/news/uk/asking-prices-barely-moved-england-wales-june-latest-index-shows/

Over a quarter of tenants keep their pet a secret from landlord

Published On: July 31, 2017 at 10:50 am

Author: Em Morley

Categories: Landlord News

Tags: landlords,pets,rental property,tenants

An interesting new survey of 2,000 tenants from pet insurance provider AnimalFriends.co.uk has revealed that 27% have not told their landlord about their pet before moving into their rental accommodation.

Over half of respondents said that they owned an animal before living in their rental property, but 13% were left with no alternative but to rehome their pets.

Pets (not) at home

A number of landlords refuse to accept tenants with pets, making it difficult for many to secure accommodation. As such, it is unsurprising that several renters with furry friends chose to hide them altogether!

10% of tenants choosing to keep their pet said they had to physically hide them before a visit from their landlord, for fear of severe consequences.

Just last month, the National Landlords Association, warned that new Government initiatives to regulate security deposit fees could see many landlords ban pets, due to the risk of damage being caused.

Over a quarter of tenants keep their pet a secret from landlord

Data from the report reveals that nearly one-fifth of animals had caused damage to a rental property. 12% recorded damages to fittings while 6% ruined furniture.

Westley Pearson, Managing Director of AnimalFriends.co.uk, noted: ‘It’s important to ensure that you’re able to properly look after any animals before you decide to bring one home with you and that includes making sure both you and your pet will have a place to live.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/more-than-a-quarter-of-private-renters-keep-pets-a-secret-from-landlord

OneSavings Bank Implements Submission Platform Ahead of PRA Changes

Published On: July 31, 2017 at 9:44 am

Author: Em Morley

Categories: Finance News

Tags: mortgages,portfolio landlords,PRA

Specialist lending group OneSavings Bank is implementing an online portfolio submission platform, along with property risk software developer eTech, ahead of the PRA changes (Prudential Regulation Authority) regarding portfolio landlord underwriting standards on 1^st October 2017.

The platform, built on the backbone of eTech’s Buy to Let Hub, will give mortgage brokers one straightforward online solution, which will streamline portfolio stress testing and income coverage ratio assessment to provide a rapid response to loan applications, all delivered through one simple broker dashboard for ongoing monitoring and management.

OneSavings Bank Implements Submission Platform Ahead of PRA Changes

Together with input from Mortgages for Business, the platform has been created with the broker experience at the heart of the system. It will allow intermediaries to upload portfolio property details directly onto the platform, either manually or from Microsoft Excel. New portfolios can also be quickly created based on previous portfolio data.

The Buy to Let Hub then automates key criteria variables, sending a summary report automatically to the underwriters, allowing the lender to assess individual applications quickly and efficiently.

The PRA changes will introduce stricter portfolio landlord underwriting standards. Paragon and Aldermore have already revealed how they will be complying with the new rules.

The Sales Director of OneSavings Bank, Adrian Moloney, comments on the news: “As a specialist lender, this sort of bespoke underwriting is in our DNA, so it will be business as usual for us come October. Nevertheless, brokers are our business, and we know they are soon going to be hit with a greater administrative burden, so we want to do all we can to make the transition as smooth as possible.

“I’d like to thank Steve Olejnik and the broker team at Mortgages for Business, as well as the team at eTech, for their expertise and insight in enabling us to provide a solution that delivers the functionality that brokers will find most useful. They’ll be able to upload, monitor and manage the portfolio element of their applications in one intuitive dashboard, with a robust back-end that empowers us as a lender to make quick and accurate decisions.”

He adds: “In just a couple of months, the buy-to-let market will take yet another step toward greater specialisation, and I hope this tech-driven solution will quickly become the gold standard for brokers coming to terms with the new rules.”

Mark Blackwell, the Lending and Surveying Services Director at eTech, also says: “We are delighted to be working with OneSavings Bank to deliver the industry standard Buy to Let Hub. We have worked collaboratively to provide a solution that supports brokers and landlords, and helps make OneSavings Bank easy to deal with in a market becoming ever more specialist.

“We build software to manage property risk and improve efficiency. This is the start of the digital journey with the Hub, with several more phases to follow after September that will deliver more enhancements to the specialist lending market.”

And finally, Steve Olejnik, the COO of Mortgages for Business, concludes: “Once again, OneSavings Bank is blazing a trail amongst the specialist lenders, creating not just a solution to accommodate the new PRA requirements, but also having the foresight to include input from brokers to ensure that the technology is fit for purpose. From our perspective, forewarned is forearmed. OneSavings Bank’s proactivity has helped us to prepare our customers and our processes for the increased administrative burden that all brokers will be required to undertake on the journey to get deals over the line from October onwards.”

We will continue to keep you updated with all news of the PRA changes at Landlord News.

Scottish Rental Yields Continue to Perform Better than England and Wales

Published On: July 31, 2017 at 9:18 am

Author: Em Morley

Categories: Landlord News

Tags: rent arrears,rent prices,rental yields,Scotland

Scottish rental yields for landlords continue to perform more strongly than those in England and Wales, according to the latest index from Your Move Scotland.

While returns across much of England and Wales have been squeezed in the last 12 months, Scottish rental yields have remained solid. The average rental property in the country returns 4.9% to investors – exactly the same as a year ago.

Rent price growth

The Buy-to-Let Index for June 2017 also shows that rents have continued to rise across many parts of Scotland. The average rent in the country is now £569 per month – 1.8% higher than last June, when the typical price was £559, and up by 1.4% on May 2017.

Scottish Rental Yields Continue to Perform Better than England and Wales

The Edinburgh and the Lothians region continues to boast the highest rents in Scotland, at £661 per month. Prices in these areas have also enjoyed strong growth over the last 12 months. In June last year, the average property let for £639 a month, meaning that prices have risen by 3.5% in a year.

The only other area of Scotland to record rents above the £600 mark in June was the Highlands and Islands region, where the average price hit £602 – 2.9% higher than last year.

At the other end of the scale, the East of Scotland, including Aberdeen, is currently the cheapest place to rent in the country. The average price here is £541 per month.

On a monthly basis, prices rose in most parts of Scotland. The Edinburgh and the Lothians region saw rents increase by 0.8% – higher than anywhere else.

The South and East of Scotland both experienced growth between May and June, of 0.4% and 0.1% respectively.

Scottish rental yields

Scottish rental properties continued to reward landlords with high returns in June, Your Move Scotland also reports.

Across the country, the average yield was 4.9% during June, which is exactly the same as both May and June 2016.

This stability compares favourably with properties in England and Wales, where investors have continued to see their yields squeezed over the past year.

In June, the average yield in England and Wales was 4.4%. Only landlords with properties in the North East and North West of England enjoyed higher returns than those in Scotland – 5.2% and 5.0% respectively.

Tenant finances

Across the entirety of Scotland, some 18.3% of tenancies had rent arrears of one day or more during June, the index reveals.

This is higher than the 12.3% recorded in May, suggesting that tenant finances have deteriorated. Scotland’s arrears rate remains above the level seen in England and Wales. Across both nations, the average level was 7.0% in June.

The Lettings Director of Your Move Scotland, Brian Moran, says: “Slow and steady is the name of the game in Scotland. While the political landscape has changed dramatically, the rental market continues its solid progress.

“Rents across Scotland are now 1.8% higher than a year ago and have risen by 1.4% in the last month alone.”

He continues: “Landlords are enjoying excellent returns on their investment, with the typical property returning 4.9% to owners – a strong performance in today’s economic context.

“Landlords south of the border will be envious of the Scottish market, as returns are much stronger than in most regions of England and Wales.”

Perhaps you’ll be encouraged to invest in Scotland thanks to the strong performance of Scottish rental yields?

Tax changes causing landlords’ confidence to fall

Published On: July 31, 2017 at 8:46 am

Author: Em Morley

Categories: Landlord News

Tags: investment,landlord confidence,landlords,properties

The most recent quarterly index from BM Solutions and BDRC Continental indicates that landlord confidence has slipped across all key indicators

Data from the report, carried out with the BDRC Continental Landlord Panel, uncovered that landlords’ confidence in their own business and wider sector has fallen, due to a raft of recent tax changes.

Profitability

Despite the dip in confidence levels, many buy-to-let investors have seen their profitability remain high. 86% of landlords asked said that they still make a profit from their letting business.

31% said that they make a full-time living from their portfolio, while 55% use the income to supplement their earnings from their day job.

Encouragingly, the number of landlords looking to expand their portfolio has increased, from 13% in Q1 to 15% in Q2.

However, almost 20% of landlords are looking to cut the number of properties in their investment portfolio during the next 12 months. This can be attributed somewhat to tenant demand falling further in the last three months, with 19% of investors reporting a decline.

falling real estate prices - conceptual symbol with green arrow

Tax changes causing landlords’ confidence to fall

Gloomier

Head of BM Solutions, Phil Rickards, noted: ‘Landlords are feeling somewhat gloomier in the second quarter and we know some are finding it difficult to adjust to the recent tax changes, which is why those with portfolios of over 11 are most likely to be looking to decrease the number of properties they own in the next year.’[1]

‘This quarter the report has also highlighted declining tenant demand and a fall in intentions to raise rents. However, even against this backdrop, along with profitability remaining high, rental yields have edged up from the first quarter to 6%,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/landlord-confidence-falls-as-tax-burden-increases