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Em Morley

Interest in Buy-to-Let Properties Falls by Over a Quarter

Published On: April 13, 2016 at 8:39 am

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Interest in new buy-to-let property purchases fell by over a quarter in March, as the Stamp Duty deadline loomed, according to new data from Rightmove.

Inquiries dropped by 27% compared with March last year, reversing the upward trend recorded between December and February, when interest rose by 24% annually.

The Head of Lettings at Rightmove, Sam Mitchell, comments: “This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause.

“It could be that some investors are waiting until the tax changes have had time to bed in before they review their business and continue to make purchases. If this removes some of the competition for smaller properties, then it could spell good news for many first time buyers.”1

Interest in Buy-to-Let Properties Falls by Over a Quarter

Interest in Buy-to-Let Properties Falls by Over a Quarter

76% rise in buy-to-let sales in March compared to the previous year, as landlords rushed to beat the Stamp Duty surcharge.

Rightmove also found that the average rental asking price increased by 0.8% in the first quarter of the year.

Average rents ranged from a huge £2,021 per month in London – a 1.6% rise on last year – to £538 a month in the North East – down 0.5%.

However, some of Rightmove’s figures contrast with newly agreed actual rent figures released by HomeLet.

HomeLet’s research shows that the average rent in the capital is now £1,536 – up by 7.7% over the past year – and for the rest of the UK (excluding London), the average rent is £755 per month.

In the North East, however, Rightmove and HomeLet figures are only £7 apart, with HomeLet reporting £531 a month.

HomeLet’s study also found that in March, 37% of its insurance policies were bought by landlords with new properties. This was just 24% last year.

The CEO of Barbon Insurance Group, Martin Totty, says: “We’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.

“However, external factors may now come into play: the Stamp Duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply.

“The data from the HomeLet Rental Index will be eagerly anticipated over the next few months as an indicator of the impact these changes may have on the market. However, despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future, according to official projections.”2 

We will continue providing you with landlord updates on all the goings on of the market.

1 http://www.propertyindustryeye.com/interest-in-buy-to-let-purchases-drops-off-by-over-a-quarter/

2 https://www.landlordtoday.co.uk/breaking-news/2016/4/london-rents-7-7-up-on-last-year

Many Tenants Experiencing Problems with Their Landlord

Published On: April 12, 2016 at 2:44 pm

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More than half of all tenants in London and the South East have experienced problems with their landlord, according to a new study. One of the most common issues is failing to have repair work completed on their rental properties.

The survey by Tenants Plus found that having to deal with bad landlords is the biggest worry of tenants, beating sky-high letting agent fees and rent rises.

Many Tenants Experiencing Problems with Their Landlord

Many Tenants Experiencing Problems with Their Landlord

The research also found that around 40% of hopeful tenants have to view up to five properties before finding a home due to fierce competition in the private rental sector.

The process of finding a rental property is also becoming increasingly stressful, with four in ten tenants worried about the cost of moving home. More than half of the 597 members of generation rent surveyed are worried about problems with their landlord.

Additionally, 4% of tenants in London and the South East said they fear being evicted from their properties. This is the highest rate in Britain and double the national average.

London’s private rental sector has boomed in recent years, as spiralling house prices push the capital’s prospective first time buyers out of homeownership.

At present, around a quarter of Londoners rent from private landlords. It is believed that by 2025, just 40% of those living in the capital will own their own home, compared to 60% in 2000. Shockingly, three quarters of young Britons believe they will live in the private rental sector forever.

In the last ten years, the rental market has been growing by an average of 17,500 households per month.

Research by housing charity Shelter found that around half of those living in private rental accommodation have had to borrow money to cover their rent.

Data from the Government shows that rent prices rose by 19% in London over the last five years, with the typical two-bedroom flat now costing over £1,600 per month.

Tenants Plus’s Wayne Treveil comments on the findings: “It is not agents and landlords that are the main offenders here, but successive governments that do not deliver on new housing promises.

“There is an obvious need for the Government and next mayor to prioritise more stable tenancies and commit to building the genuinely affordable homes young Londoners are desperate for.”1

The Residential Landlords Association (RLA) has recently released its London mayoral manifesto, which details the changes it hopes to see under the new mayor. It includes the call for the mayor to take action on the number of empty homes across the capital.

1 http://www.standard.co.uk/news/london/bad-landlords-are-biggest-bugbear-for-private-tenants-a3222376.html

Buy-to-Let Mortgage Rates Drop to Record Lows

Published On: April 12, 2016 at 12:04 pm

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Categories: Finance News

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Buy-to-let mortgage rates have dropped to record lows, according to data from comparison website Moneyfacts.

After learning that they will be hit with a reduction in mortgage interest tax relief and higher Stamp Duty, landlords have finally received some good news.

Figures from Moneyfacts show that mortgage lenders are cutting their rates significantly in order to encourage landlords to continue to invest in the buy-to-let sector, despite the changes.

Indeed, buy-to-let mortgage rates have been continuously decreasing over the past five years, with the fixed rate sector experiencing notable reductions. The table below shows the average rate changes across the market:

[table id=5 /]

Charlotte Nelson, a finance expert at Moneyfacts, explains the changes in the sector: “The buy-to-let market has faced intense pressure recently, but despite this, rates have continued to fall across all fixed sectors. For example, the average two-year fixed rate has fallen by 0.71% in just two years, while the average five-year fixed rate has dropped by an equally significant 0.76% over the same period.

Buy-to-Let Mortgage Rates Drop to Record Lows

Buy-to-Let Mortgage Rates Drop to Record Lows

“While the new rules and Stamp Duty changes could potentially take the shine off buy-to-let investment, property is often seen as a safe bet, and with rental properties in demand and rent high, buy-to-let remains an attractive proposition.”

Nelson also suggests that pensioners are boosting the buy-to-let sector, as many take advantage of the new freedom rules introduced in April last year. During the past 12 months, almost £3 billion has been paid out in cash lump sum withdrawals, according to the Association of British Insurers.

Nelson believes it is “highly likely that some of this money has been accessed with buy-to-let in mind.”

She continues: “Savings rates are currently so poor that many are looking elsewhere to fund their retirement, so lenders have tried to capitalise on this new pool of cash by offering some of the best rates the buy-to-let sector has ever seen.

“In addition, providers also cut rates in the run-up to the Stamp Duty changes in order to attract those keen to buy before they were implemented, which has further aided the downward slide in rates. However, while the current pressures on the market are not yet causing rates to rise, borrowers should remember that they will now be facing tighter lending rules, including stricter affordability checks, so it is even more important for potential landlords to seek financial advice to see if buy-to-let really is the right option for them.”1

Despite many changes affecting the buy-to-let sector, including stricter affordability checks as a result of the European Union’s Mortgage Credit Directive, Nova Financial’s Paul Mahoney insists that buy-to-let “is not dead”, and explains how the forthcoming changes will impact your lettings business: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

1 http://moneyfacts.co.uk/news/buy-to-let/buy-to-let-providers-slash-mortgage-rates/

London rental market begins to slow

Published On: April 12, 2016 at 11:52 am

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Following a year of sustained, record-breaking growth, the London rental market is finally starting to slow.

New data shows that for the third successive quarter, rents in the capital either stayed constant or experienced only conservative growth.

Falls

Many areas of prime central London saw rents tumble, underlining a trend that has seen demand rise in the inner suburb. With wealthy overseas investors being deterred by the upcoming Brexit vote, demand for luxury homes in places like Knightsbridge and Chelsea seemed to have peaked.

With this said, experts are still predicting that a fall in the value of British Sterling will make prime central London more sought after in the coming months.

London rental market begins to slow

London rental market begins to slow

Inner growth

Rental growth in inner London suburbs has continued, with the market growing in confidence. Wandsworth in particular saw steady growth, as did Bayswater, Queen’s Park and Kensal Rise.

However, North London, in particular the regions of Colindale, Golders Green and Hampstead Garden Suburb saw the most substantial rental growth in the last quarter. This was to be expected, following the completion of Crossrail works that had closed the Northern Line interchange at Tottenham Court Road.

Marc von Grundherr, of Benham & Reeves Residential Lettings, noted, ‘this is a much needed pause for breath after such huge gains in rental values. Unfortunately for tenants, this pause may only be temporary.’[1]

‘With increasing restrictions on buy-to-let, more amateur landlords will be exiting the market, leading to a drop in supply in the face of a growing population. Over the long term, rents will inevitably go up,’ von Grundherr went on to warn.[1]

[1] http://www.propertyreporter.co.uk/landlords/londons-rental-market-pauses-for-breath.html

 

Residential landlords ‘should offer longer tenancies’

Published On: April 12, 2016 at 10:57 am

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Residential landlords and property agents in Britain should consider adopting a different approach to tenancies to meet increasing demand.

That is the view of the Association of Independent Inventory Clerks (AIIC) which has called for longer-term tenancies to be agreed.

The firm said that better preparation should include more administration and more considered thought about the choice of interior design.

Tenant changes

Results from the English Housing Survey 2014/15 indicate that the average private tenancy length currently stands at 4 years. This is a rise from the three and a half years recorded in the previous year’s survey.

In addition, the report found that 46% of 25 to 34 year olds resided in the private rented sector in 2014/15, up from 24% in the previous reporting period.

Patricia Barber, chair of the AIIC, notes, ‘despite numerous reports suggesting that the average tenant doesn’t want a long term contract, the official statistics shows that the average tenancy lengths are increasing, particularly among families, as people rent for longer.’[1]

Re-think

The AIIC is urging landlords to really think about what features will make their rental property seem like a home and what could entice renters to stay for longer.

Barber observed that as tenancies last for longer, this underlines the importance of organisation for landlords: ‘when tenants stick around for longer, often the chances of confusion and disagreement over certain issues are increased when the tenancy does eventually come to an end.’[1]

‘The longer time goes on, the more likely landlords and tenants are to forget details from the tenancy agreement or important information about the deposit and that’s why stringent administration, including keeping copies of everything and organising it accordingly, is so important,’ she added.[1]

Residential landlords 'should offer longer tenancies'

Residential landlords ‘should offer longer tenancies’

Importance of inventories

Landlords should make sure, the AIIC states, that they recognise the importance of records and evidence, particularly for long-term agreements. This once again underlines the need for a thorough, professional inventory to be conducted at the start of the tenancy.

‘There are more grey areas over the condition of a property the longer a tenancy goes on. A detailed inventory will help landlords and tenants to determine exactly how the property’s condition has changed over the course of the tenancy, what can be deemed fair wear and tear and what needs to be replaced and therefore deducted from the tenant’s deposit,’ Barber concluded[1].

[1] http://www.propertywire.com/news/europe/uk-landlords-tenancy-terms-2016041211782.html

Is the North East the buy-to-let hub?

Published On: April 12, 2016 at 9:20 am

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Interesting new statistics may have revealed where the future of buy-to-let will be most prominent.

Research from the National Landlords Association shows that the half as many landlords in the North East have decided to sell their property during the past year than those in the rest of England. But just how will this affect the area moving forwards?

Northern Rule

In comparison to those in the North East, the number of landlords looking to sell in London has quadrupled since the announcement of increased stamp duty and cuts to mortgage tax relief.

Over the same period, the total of landlords looking to offload their property in the North East rose by only 7%. This was 40% less than the national average rise of 12%.

Further figures released by ARLA indicate that demand for rental properties in the North East rose by 17% between January and February of this year.

Property values in the North are still around half as much as those in the South. The average home in the North of England costs over £150,000 less than a similar property near to London.

Is the North East the buy-to-let hub?

Is the North East the buy-to-let hub?

Attractive

Ajay Jagota, founder and Managing Director of North-East sales and lettings firm KIS, observed, ‘there’s already been speculation that the tax changes could see 500,000 rental properties sold this year, but that doesn’t mean that their owners aren’t going to buy elsewhere-and anecdotally there seems to have been a real uplift locally in enquiries from investors from outside of the region looking to invest in property in the North East.’[1]

‘There’s no question that the region will become more attractive to investors in the coming months. Not least because the North East’s lower house prices will mean that the 3% rise in Stamp Duty on additional properties introduces last week and Bank of England plans for new affordability tests and stricter borrowing limits for buy-to-let mortgage won’t be so painful in this part of the country,’ Jagota continued.[1]

Yields

Mr Jagota went on to say, ‘the return on a typical buy-to-let property in London is currently something like 5.2% compared to as much as 7% in somewhere like Gateshead. You get a similar rental yield on a property in Peterlee than you do in London, with the added attraction that you can buy almost five properties there for the price of one in the capital.’

‘We don’t offer the same capital appreciation as other regions of the UK, but it’s clear that the North East has a lot to offer property investors-and as more competition can lead to lower rents and better homes, they have a lot of offer renters too,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/could-the-north-east-become-the-uks-new-buy-to-let-capital.html