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Mortgage Trust Updates its Range of Buy-to-Let Products

Published On: July 5, 2016 at 9:19 am

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Mortgage Trust, a specialist lender, has updated its range of buy-to-let products for the summer months.

Mortgage Trust Updates its Range of Buy-to-Let Products

Mortgage Trust Updates its Range of Buy-to-Let Products

The new range includes two, three and five-year fixed rate deals, at up to 80% loan-to-value (LTV).

The lender’s competitive new rates begin at 2.95%.

Mortgage Trust offers a selection of products from The Paragon Group. Its mortgages are aimed at landlords with small portfolios, and are available throughout England, Wales and Scotland.

The new summer range includes a two-year fixed rate deal at 2.95% up to 75% LTV and a two-year fix at 3.25% up to 80% LTV.

For those planning their finances over the longer-term, the new range also offers a three-year fixed rate deal at 3.30%, available with no product fee.

The Director of Mortgages at Mortgage Trust, John Heron, comments: “With this product refresh, we are giving customers yet more choice, and a competitive range of products to support their investment plans. With short and longer-term fixes, and with lending up to 80% available, these products will support ongoing investment in buy-to-let, crucial for supporting the ever growing demand for private rented sector properties.”

Ahead of last month’s EU referendum result, finance expert Paul Mahoney, of Nova Financial, advised landlords to prepare their property investment strategy for the future.

Following the Brexit vote, property expert Howard Leicester insisted that the result may be beneficial for the buy-to-let sector.

Worryingly, however, recent research from Moneyfacts.co.uk found that the number of mortgages available for first time landlords has dropped significantly over the last five years.

If you are thinking of investing in the sector for the first time, you may struggle to find a competitive deal. However, this new range from Mortgage Trust may include a product that supports you on your buy-to-let journey.

Existing landlords will also benefit from the competitive rates on offer this summer.

Drop in Mortgages for First Time Landlords

Published On: July 5, 2016 at 8:47 am

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The number of buy-to-let mortgages for first time landlords has dropped to a record low, according to new research from Moneyfacts.co.uk.

Annually, however, the overall amount of buy-to-let mortgages has risen, which would lead one to believe that the availability of deals for first time landlords has also grown.

Five years ago, just 434 buy-to-let products were available for first time landlords, compared to 813 today. The proportion of buy-to-let mortgages available to first time landlords has also fallen, from 82% five years ago to 75% today.

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Drop in Mortgages for First Time Landlords

Drop in Mortgages for First Time Landlords

The Finance Expert at Moneyfacts.co.uk, Charlotte Nelson, comments: “Despite all the changes to regulation in the buy-to-let market, the number of buy-to-let mortgages has increased; however, first time landlords have been missing out on this boost in product numbers. Indeed, the percentage of the market that is available to new landlords has now dropped to just 75%, down by around 10% in two years.

“As first time landlords don’t have a proven track record in managing rental properties, offering them a buy-to-let mortgage poses a greater risk to the lender, and it’s this risk that is making the number of first time landlord deals remain relatively static.”

She continues: “The additional regulation in the buy-to-let market and the added economic uncertainty following the Brexit vote means even more lenders may reconsider whether first time landlords are a safe bet. As a result, would-be landlords are likely to face more probing questions about their finances than their more experienced counterparts.

“Nevertheless, high rents and rock-bottom mortgage rates mean that buy-to-let is still an attractive proposition for aspiring landlords, particularly those who are fed up with the dismal savings options currently available. However, buy-to-let is not without its risks, so anyone considering it as an option should seek the advice of an independent financial adviser to determine whether it is the best choice for them.”

Landlords warned over purchasing deposit hikes

Published On: July 4, 2016 at 11:01 am

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Concerning new claims from crowdfunding platform Property Partner suggest that tighter lending criteria from the Bank of England could have a severe impact on deposits required from buy-to-let landlords.

The platform indicates that would-be investors in over two-thirds of the UK’s major towns and cities could be forced to put down deposits of at least 40%.

Rising ratios

Property Partner has forecasted that interest coverage ratios of 145% could well be enforced. Ahead of the Bank of England’s Financial Stability Report, some providers are imposing stricter rules. These include Barclays and Nationwide, who have already set their interest coverage ratios to 145%.

Should other lenders follow their lead, purchasing a buy-to-let investment with a mortgage in over two-thirds of towns and cities will be impossible without a 40% deposit.

Worcester came out on top of the list with highest financial barriers to entry, should Interest Coverage Ratio be set at 145%. This increase would see landlords permitted to put down a deposit of 61% for a typical property. In monetary terms, this equates to £115,000.

Landlords in the commuter belt, in locations such as Chelmsford, Bedford and Reading, would also face much stricter lending restrictions.

Landlords warned over purchasing deposit hikes

Landlords warned over purchasing deposit hikes

Buy-to-let blow

Dan Gandesha, CEO of property crowdfunding platform Property Partner, observed, ‘buy-to-let landlords have had it tough of late with successive assaults on their potential income. The stricter lending rules expected to be introduced by the Bank of England follow April’s Stamp Duty surcharge of 3% for buyers of second homes and buy-to-lets. And from April 2017, the gradual withdrawal of mortgage interest tax relief will put further restraints on landlords’ profits.’[1]

‘This lending squeeze will only increase the financial barriers to entry to the market, restricting access to only cash buyers or those with hefty deposits and potentially forcing some existing landlords to sell up. Highly-leveraged landlords seeking to remortgage could face a nasty shock, if their bank tells them they no longer qualify for the same loan to value mortgage,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-face-being-locked-out-by-post-brexit-rule-changes.html

 

Council Clamping Down on Landlords That Don’t Comply with Smoke Alarms Law

Published On: July 4, 2016 at 10:24 am

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Wakefield Council is clamping down on landlords that do not comply with the smoke alarms law.

Council Clamping Down on Landlords That Don't Comply with Smoke Alarms Law

Council Clamping Down on Landlords That Don’t Comply with Smoke Alarms Law

As of 1st October 2015, all private landlords in England must install smoke alarms on each floor of their rental property and test them at the start of each tenancy.

Landlords must also install carbon monoxide alarms in all rooms with a solid fuel burning appliance.

The new legislation enables councils to take action against landlords that have not fitted the required alarms, after Parliament approved the Smoke and Carbon Monoxide Alarm (England) Regulations 2015.

Penalties for not complying with the law include a fine of up to £5,000.

The Cabinet Member for Economic Growth and Skills at Wakefield Council, Councillor Denise Jeffery, says: “We want to ensure that all rented properties in the district are safe. Smoke and carbon monoxide detectors are cheap, easy to install and save lives.

“The council is urging all tenants in rented properties to contact their landlord to make sure the correct equipment is fitted in their home. Landlords have a duty to provide them. If your landlord fails to do this, please contact us immediately so that we can take action.”

If the council discovers that a landlord has not fulfilled their requirements, a remedial action notice will be served within 21 days. This notice will require the landlord to comply with the law within 28 days. If they don’t, the council will carry out the work and fine the landlord £5,000.

While many landlords support the aims of the regulations, some are concerned that the Government ignored calls from across the private rental sector to reconsider the timeframe for its enforcement last year.

Commenting on the passing of the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 in Parliament last September, David Cox, the Managing Director of the Association of Residential Letting Agents (ARLA), said: “Whilst these measures are entirely sensible, ARLA is concerned that landlords will not have enough time to comply with the requirements, as it is simply impracticable for letting agents, who may manage a huge amount of properties, to gain access to the properties and to install these alarms on behalf of their clients in the timeframe allotted.”

On behalf of its members, ARLA wrote to the Government on this issue to raise its concerns and suggest that all landlords with existing tenancies should be given more time to comply. Despite the group’s efforts, the Government went ahead and enforced the requirements as planned.

All landlords across England must comply with the law, or risk facing a hefty fine.

Property demand rises by 3% during Q2 of 2016

Published On: July 4, 2016 at 10:03 am

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The latest National Hotspots Index for the second quarter of 2016 has today been released by estate agent eMoov.co.uk.

This Index looks at property demand levels across Britain, recording the changing supply and demand for the UK’s most popular locations. It monitors the number of properties sold in contrast to those actually on sale.

Rising demand

Figures from the latest Index shows that property demand in the UK has risen by 3% from quarter one to stand at 40%. Homeowners in London saw demand fall by 2% to 39%.

Despite the rise in demand ahead of April’s Stamp Duty deadline, changes to this tax have had a detrimental effect on the capital’s property market as a whole.

If London is removed from the national figures, demand for property has actually risen by 8% since the first three months of the year.

Hotspots

The London borough of Bexley is the hotspot for UK property demand, with 71%. Outside of the capital, Bristol leads the way for demand, with 69%.

In the North East, there has been a resurgence in terms of interest in housing. Stockton-on-Tees (47%), North Tyneside (46%), Gateshead (42%) and Durham (37%) have all seen notable increases in demand from the firs quarter of the year.

Property demand rises by 3% during Q2 of 2016

Property demand rises by 3% during Q2 of 2016

Stamp Duty impact

Russell Quirk, founder and CEO of e.moov.co.uk, said, ‘the changes to stamp duty tax brackets for those looking to secure a second home or buy-to-let property seem to have hit the London market harder than the rest of the UK.’[1]

‘Despite London tending to drive the UK market as a whole, it would seem for once, it has taken a back seat whilst the rest of the UK has enjoyed upward growth on the first quarter of this year. That said, national demand is still lower than the levels seen at he back end of last year and the big decider on which way it goes now will be Britain’s choice to leave the EU’, he continued.[1]

Concluding, Quirk said, ‘there has been a lot of talk about the consequence of this vote on the UK property market with many forecasting a detrimental impact on house prices. We don’t believe this to be case and I’m certain that come Q3, our Index will show a further increase in property demand across the nation.’[1]

[1] http://www.propertyreporter.co.uk/property/property-demand-up-3-in-q2-says-emoov.html

MP Supports Tax Cuts for Private Landlords

Published On: July 4, 2016 at 9:10 am

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MP Supports Tax Cuts for Private Landlords

MP Supports Tax Cuts for Private Landlords

An MP has spoken out in Parliament in support of tax cuts for private landlords, insisting that they should not have been excluded from a Capital Gains Tax (CGT) reduction revealed by the Chancellor in his Budget statement.

Kevin Hollinrake, a Conservative MP and co-founder of Hunters estate agents, believes that George Osborne should not have denied landlords a tax break on their property profits.

Landlords face a hefty 28% CGT bill when they sell their buy-to-let properties, a rate that the Chancellor himself has described as one of the highest in the developed world.

Residential property was deliberately excluded from the tax cut, which will see investors in other asset classes benefit from a reduction from 28% to 20% in the higher rate of CGT, and from 18% to 10% in the basic rate.

Hollinrake is tabling an amendment to Clause 72 of the Finance Bill, which would extend the new 20% CGT rate to private landlords when they sell their rental properties to a sitting tenant.

The motion to put the measure into an amendment to the Finance Bill, which is currently going through Parliament, was originally suggested by the Residential Landlords Association (RLA). The organisation believes that a growing number of landlords are now thinking of leaving the buy-to-let sector, as property investment becomes financially unsustainable for them.

Recent research from the RLA found that a huge 77% of private landlords would consider selling their property to tenants if the rate of CGT was reduced.

The RLA is now urging its members to write to their local MP, encouraging them to back the proposed change to the Finance Bill.

Ahead of the Chancellor’s Budget statement earlier this year, the Royal Institution of Chartered Surveyors also called for landlords to be exempt from paying CGT if they sell their properties to tenants.