Written By Em

Em

Em Morley

Buy-to-let approvals soar ahead of tax changes

Published On: February 11, 2016 at 10:48 am

Author:

Categories: Finance News

Tags: ,,,,,

The forthcoming stamp duty changes have been the catalyst behind buy-to-let approvals soaring in January.

Figures from research conducted by esurv shows that in January, there were 85,432 house purchase approvals. This represented a rise of 20.6% month-on-month. In addition, this was the highest number of monthly house purchase approvals since October 2007, when 87,594 were recorded.

Annually, house purchase lending has risen by 39.3%.

Rush

‘Buy-to-let approvals contributed to the growth in January home lending,’ noted Richard Sexton, director of e.surv charterted surveyors. ‘Concerns about the sector’s growth have sparked a wave of legislation but as stamp duty changes come into effect this April, there’s been a rush to get buy-to-let loans approved. Many have predicted a narrowing of the buy-to-let sector but actually what we’re seeing in lending quarters appears to be the opposite.’[1]

‘This buy-to-let rise also hasn’t been at the expense of first-time buyers. The number of small-deposit loans granted has risen in January and this is a great sign that lenders still have the appetite to give first-timers a chance. Rising wages and a delayed interest rate rise have also boosted first-timer’s prospects. For those investing in a second property it’s also a race to beat April’s legislation-adding an extra boost to overall house purchase approval levels,’ Sexton continued.[1]

Climbs

In addition, small deposit lending climbed in January to reach 12,388 loan approvals. This was an improvement on the 11,546 recorded in December. Annually, this figure rose substantially from the 9,385 small-deposit loans given in January 2015.

Despite January seeing a numerical increase in the total of small-deposit loans granted, this may not necessarily mean an increase in sales. The most recent First Time Buyer Tracker from Your Move and Reeds Rains indicates that in December 2015, there were 26,600 first-time buyer sales. This represented a 4.7% decrease from the 27,900 seen in November.

What’s more, the proportion of total lending compromised by small-deposit approvals in January fell to 14.5% from 16.3% in November and December 2015-forming the smallest proportion since the 13.9% in December 2014.

Buy-to-let approvals soar ahead of tax changes

Buy-to-let approvals soar ahead of tax changes

Bright outlook

Mr Sexton feels, ‘ a buy-to-let surge has pushed down the proportion of small-deposit lending-but this figure conceals a more realistic and upbeat picture. In fact, January has been a positive month for small-deposit borrowers-the number of loans approved have reached their highest total for four months, since September 2015. And the slowdown in small-deposit lending seen towards the end of 2015 hasn’t continued into 2016 so far.’[1]

For first-time buyers, prospects are looking bright. Government initiatives introduced to help first-timers onto the property ladder appear to be working. According to the Treasury, large numbers of aspiring homeowners have taken advantage of the Help to Buy ISA and this is an incredibly promising start,’ he added.[1]

Concluding, Sexton acknowledged that, ‘challenges do remain, supply issues are ongoing and the promise of starter homes may take longer to be realised, but for first-time buyers, lenders remain willing to support

[1] http://www.propertyreporter.co.uk/finance/btl-approvals-hit-nine-year-high.html

 

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

Published On: February 11, 2016 at 9:26 am

Author:

Categories: Property News

Tags: ,,,,,

A shortage of properties for sale and a surge in buy-to-let landlords rushing into the market are pushing up house prices, according to the Royal Institution of Chartered Surveyors (RICS).

The RICS reports that while supply has increased slightly, it is not enough to meet a sharp rise in demand from buy-to-let investors, who are seeking to beat the 1st April deadline for a 3% Stamp Duty surcharge.

Housing stock grew over January, from 44.5 properties per branch in December to 46 at the start of the year. However, this is still down 21% compared to January last year.

The Chief Economist at the RICS, Simon Rubinsohn, explains the figures: “The rise in new instructions in January, although modest, is very welcome.

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

“However, with buy-to-let investors rushing to get into the market ahead of the Stamp Duty hike, the near term pressure on prices is, if anything, intensifying despite a higher level of supply.”

He continues: “How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen, but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.

“Against this backdrop, it is perhaps not surprising that the key RICS indicators point to further rent, as well as house price, increases.”1

As this news arrives, as does the latest data from LSL Acadata, which states that the average house price in England and Wales is now £290,642 – up 0.2%, or £700, over January.

Valuations firm e.surv expects there were 85,432 house purchase mortgage approvals in January, up by more than 20% from the 70,837 recorded in December. It predicts that January’s approvals will be the highest for almost nine years, since October 2007. It names the cause of the rise on a surge in buy-to-let mortgages.

Yesterday, we reported that rent price growth for new tenancies in London is at its slowest rate for around two years, announced by HomeLet. Find out more: /london-rent-price-growth-slowing/

SpareRoom has also seen price growth slowing in London, with rent increases in commuter towns such as Swindon and Luton rising by up to four times faster than in the capital. The most expensive room rents in the country are in Reading, at an average of £548 per month.

Another index has also launched, a buy-to-let study by Property Partners, which combines rental income and capital growth. It believes that the best returns for buy-to-let landlords are in the East of England, at 13.2%, with the lowest in the North East, at 4.1%.

London-based estate agent Marsh & Parsons has experienced a 24% increase in applicants over January compared to January 2015. It believes the significant rise is from a surge in first time buyers. The CEO of the firm, Peter Rollings, reports that first time buyers now account for 66% of sales, up from 49% last year. It is believed that this will rise further, as a huge 15,000 prospective buyers have already shown interest in the Help to Buy London scheme. Read more: /over-15000-hopeful-buyers-interested-in-help-to-buy-london/

1 http://www.telegraph.co.uk/finance/property/news/12150353/Rare-rise-in-number-of-homes-for-sale-but-its-not-enough-to-satisfy-huge-demand.html

Over 15,000 Hopeful Buyers Interested in Help to Buy London

Published On: February 10, 2016 at 3:28 pm

Author:

Categories: Finance News

Tags: ,,,,

The Help to Buy London scheme has received more than 15,000 expressions of interest since it was launched on 1st February.

The Government scheme is aimed at helping the capital’s buyers get onto the property ladder.

Over 15,000 Hopeful Buyers Interested in Help to Buy London

Over 15,000 Hopeful Buyers Interested in Help to Buy London

It offers those with a 5% deposit an interest-free equity loan of up to 40% of a property’s purchase price. Buyers using the scheme can only purchase new build homes worth up to £600,000.

They will then need a mortgage of up to 55% of the property’s value.

Find out more about how to access the Help to Buy London scheme here: /help-to-buy-london/ 

However, property expert Henry Pryor has criticised the scheme due to the risk of negative equity.

He states: “Most people taking up the Government’s offer have no first hand experience of negative equity. You need to be over 35 to have lived through a property recession in the capital.

“They are scary things and although you will be sharing the pain with Government, the state will want its money back before you get yours.”1

The Head of Residential Research at JLL, Adam Challis, also expresses concern.

He adds: “I am concerned that the Government’s narrow focus on first time buyer support overlooks the hundreds of thousands that join the private rented sector each year, or the millions on housing waiting lists.

“Help to Buy only addresses a very narrow band of genuine housing need and represents a distraction from the bigger housing supply crisis in this country.”1 

Do you believe the Help to Buy London scheme will have an adverse effect on London’s private rental sector?

1 http://www.propertyindustryeye.com/help-to-buy-scheme-attracts-over-15000-expressions-of-interest-in-just-ten-days/

Renters warned not to leave personal documents behind

Published On: February 10, 2016 at 12:47 pm

Author:

Categories: Landlord News

Tags: ,,,,

The National Landlords Association has joined forces with the Royal Mail to warn tenants across the country to update their address details or take out a redirection service when they move on from a property.

This is to prevent identity theft and financial fraud, with a new survey showing that mail and other personal documents are the sixth most common item left behind by outgoing renters.

Information

In a survey of 1,364 landlords 8% said that they have found or received personal information, including bankslips, payslips, utility and passports after a tenant has vacated their property.

5% said they had to report an item they had found in a home to the police.

Richard Lambert, CEO of the National Landlords Association observed, ‘with a quarter of tenants moving on from a property after just a year, it is no surprise that many forget to inform their bank or building society of their new address.’[1]

‘Recent ONS figures show that application fraud cases-when fraudsters open an account using fake or stolen documents in someone else’s name-rose by 14% last year. This means that renters who don’t update their address details or take out a Redirection service to their new home are putting themselves at risk of identity theft leading to financial fraud,’ he continued.[1]

Renters warned not to leave personal documents behind

Renters warned not to leave personal documents behind

Left behind

Clothes were found to be the top thing that renters leave behind at the end of tenancy agreement, closely followed by toys and, unbelievably, animals! Landlords have reported finding ferrets, snakes and live pet sea monkeys!

The top ten items most commonly left behind by a tenant were found to be:

  1. Clothes (14%)
  2. Toys (14%)
  3. Animals (11%)
  4. Exercise equipment (10%)
  5. Furniture/bedding (10%)
  6. Mail and important personal documents (8%)
  7. Electrical items including kettles, fridges and TVs (7%)
  8. Food (7%)
  9. Cars and car parts (6%)
  10. Gardening/plants/tools (6%)

Other surprising items found left behind were the ashes of a dead relative, 14 car tyres, 20 bikes, four sunbeds, a drum kit and a prosthetic leg!

Jim Conning, Managing Director of Data Services at the Royal Mail said, ‘it is interesting-and worrying-to see the range of items that tenants leave behind when moving on from a property. We would always advise renters to not only think about the items they can see when they are moving but also the external services that are linked to the property in their name.’[1]

[1] http://www.royalmailgroup.com/fraud-warning-renters-mail-revealed-one-most-common-items-left-behind-move

 

UK Interest Rates May Not Rise Until 2020, Believe Analysts

Published On: February 10, 2016 at 12:24 pm

Author:

Categories: Finance News

Tags: ,,,,

Bank of England

Insecurity in global markets and a weakening US economy will force the Bank of England (BoE) to delay interest rate rises until at least 2020, according to leading industry analysts.

The Economist Intelligence Unit’s (EIU) prediction adds at least three years to the BoE’s timeline for the first increase from the historically low rate of 0.5%.

The forecast will be welcome news for mortgage borrowers, but will disappoint savers.

UK Interest Rates May Not Rise Until 2020, Believe Analysts

UK Interest Rates May Not Rise Until 2020, Believe Analysts

Most analysts expect the first rise in the base rate for almost seven years to arrive at the end of this year or in early 2017.

The Governor of the BoE, Mark Carney, announced in January that the UK faced “a powerful set of forces” that prevented policymakers from increasing rates.

However, in his quarterly inflation report briefing, Carney said that interest rates were “more likely than not” to go up over the next two years1.

Two analysts at the EIU, Danielle Haralambous and Aengus Collins, believe Carney’s announcement is at odds with the downbeat evaluation in the inflation report.

They said: “We now expect record low interest rates to remain in place in the UK for at least the next four years.”

In the past week, the BoE has downgraded the UK’s expected GDP growth for 2016, and indicated that inflation will remain low this year and in 2017.

The EIU analysts found that downward adjustments to official growth expectations reveal that the loss of momentum last year was sharper than anticipated.

They also argued that the UK suffers from “unresolved structural weaknesses” that would prevent wages from rising and from putting pressure on prices.

They reported: “The vulnerability of the UK recovery, combined with the more decisively dovish tone at the BoE, has led to a significant change in our call on monetary policy. We no longer expect tightening for the next four years at least.”

The decision to maintain low rates will remain, despite a build up in inflationary pressures, they added.

The analysts concluded: “The BoE is likely to delay policy tightening in 2019, largely on the basis of our forecasts that the US will experience a downturn in 2019, and rising levels of indebtedness in China will have become a greater source of risk by the end of our forecast period. Our view is that the next increase in interest rates will come in mid-2020.”1 

If rates do not rise until 2020, how will your financial position change?

1 http://www.theguardian.com/business/2016/feb/09/global-economic-woes-delay-uk-interest-rate-rise-2020-bank-england

Buy-to-let alterations will lead to a ‘hike in rents’

Published On: February 10, 2016 at 11:20 am

Author:

Categories: Landlord News

Tags: ,,,,

One of the most respected rental sector analyst’s in Britain has warned that tax changes for landlords could backfire on the Government.

Kate Faulkner believes that upcoming alterations in Stamp Duty and second home surcharges will come back to haunt George Osborne.

Changes

The Chancellor is bringing in both measures with the intention of improving opportunities for first-time buyers, which could otherwise be purchased by buy-to-let investors.

Other onlookers feel that these measures aim to encourage institutional Build To Rent investors, in an attempt to improve the quality of Britain’s private rental sector.

Faulkner however believes that while the upcoming policies may get a small number of would-be buyers onto the ladder, there are large downsides.

Buy-to-let alterations will lead to a 'hike in rents'

Buy-to-let alterations will lead to a ‘hike in rents’

Ignorance

‘Those who need to rent-students, overseas, people in debt, those waiting for social housing-are likely to see a hike in rents. And If buy-to-let reduces, the tax expected to be raised from the increases may not be then able to fund the first time buyer initiatives,’ she stated.[1]

‘So why on earth is George Osborne ignoring the money that investors could put into building instead of buying existing homes? Many landlords with £100,000-plus could help to create new homes. So where are the mini Build To Rent sector initiatives for smaller landlords who are established and want to continue to expand their portfolio?’ she went on to ask.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/top-lettings-analyst-says-buy-to-let-tax-changes-may-mean-higher-rent-less-stock