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Buy-to-let lending reaches £9.7bn in Q3

Published On: December 8, 2015 at 2:00 pm

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Categories: Finance News

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Despite the Chancellor’s best efforts, buy-to-let lending continues to rise, according to the Bank of England and FCA latest Mortgage Lenders and Administrators Statistics.

Data from the report shows that gross advances totalled £62.1bn in Q3-up by 11.1% than at the same period in 2014.

Rises

The proportion of fixed interest rates rose from 78.9% in Q2 to 80.7% in Q3, with worries about an imminent Bank Rate rise subsiding.

Average interest rates decreased by 7 basis points during the third quarter of 2015 to 2.76%. This was the lowest rate since the series began in 2007.

Residential loan amounts outstanding in Q3 of 2015 totalled £1,281.9bn, an increase of 0.8% in comparison to Q2 2015 and 2.1% over the last year. New commitments rose from £59.3bn in Q2 2015 to £64.2bn in Q3 2015, representing an increase of 19.8% compared to Q3 2014.

Buy-to-let lending reaches £9.7bn in Q3

Buy-to-let lending reaches £9.7bn in Q3

First-time buyers

The total value of residential loans advanced to first-time buyers also went up over the quarter to £12.7bn from £10.9bn. This said, the proportion of lending in excess of 90% LTV decreased by 0.7% percentage points over the period.

There was however an increase in value terms in buy-to-let lending during the past twelve months-from £8.0bn advanced in Q3 2014 to £9.7bn in Q3 2015. The number of new arrears cases in the quarter was 20,335-2.2% lower than in Q2 of 2015 and the lowest since 2007.

However, new cases taken into possession totalled 2,881 in Q3 2015, a rise of 7.7% from the second period of this year. In addition, this was the first increase reported since Q1 of 2014.

 

 

Tenant Demand Grows as Yields Remain Steady

Published On: December 8, 2015 at 12:27 pm

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Categories: Landlord News

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Tenant Demand Grows as Yields Remain Steady

Tenant Demand Grows as Yields Remain Steady

Demand from tenants for rental properties continued to grow around the country in the third quarter (Q3) of the year, according to a survey of almost 2,000 landlords from Paragon Mortgages.

The study also found that rental yields – the annual rental income as a percentage of the property value – have remained steady throughout the year.

The research, conducted by BDRC Continental on behalf of Paragon Mortgages, found that the average national yield was 5.6% in Q3. Amongst Paragon customers, the figure was higher, at 5.9%.

The greatest proportion of landlords, 17%, reported yields of between 3%-4%, while one in ten investors have seen yields of 10% or more. Landlords in Yorkshire and the Humber reported the highest average yield, of 6.1%, with the lowest found in outer London, at 4.8%. However, outer London had the second largest rise in levels of tenant demand.

Regarding tenant demand, the East of England performed the best in Q3, with 52% of landlords reporting an increase in demand. In the North East, just 31% of investors saw a rise, while the national average is 41%.

This indicates strong annual growth in tenant demand across several regions since Q3 2014, with demand in the North East rising from 23% to 31% and in outer London from 42% to 48%.

Director of Mortgages at Paragon, John Heron, says: “This research shows that yields and tenant demand have remained strong throughout Q3, in common with 2015 overall. The figures reflect a steadily improving economic outlook for the UK as a whole and show that more and more people are actively choosing the flexibility of making a home in the private rented sector.

“Yields too have remained stable throughout 2015. Q3’s data shows London and the South East slowing down somewhat, while yields in the regions are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/tenant-demand-continues-to-grow-in-q3-while-yields-remain-stable

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant demand grows in Q3

Published On: December 8, 2015 at 11:52 am

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Categories: Property News

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A report from Paragon Mortgages seems to show that tenant demand has risen further during the third quarter of 2015.

The survey of almost 2,000 landlords also showed that rental yields and annual rental income as a percentage of a property value has remained fairly constant throughout 2015.

Increase

Results from the report indicate good news for buy-to-let landlords, with rental yields averaging at 5.6% across the country in Q3. 17% of landlords reported yields between 3% and 4%, with one in ten landlords recording yields of 10% or more.

Yorkshire and the Humber recorded the largest yields in the period with 6.1%, while London reported the lowest with 4.8%. This was surprising considering the capital has the second largest increase in levels of renter demand.

In the East of England, 52% of landlords reported an increase in demand, which was the highest of any area in Q3. This figure dropped to 31% for the North East. Nationally, an average of 41% of landlords said that demand had risen in the period.

This shows a strong annual increase in demand across the country. Demand in the North East has risen from 23% to 31% and in outer London from 42% to 48%.

Tenant demand grows in Q3

Tenant demand grows in Q3

Strong

‘This research shows that yields and tenant demand have remained strong throughout Q3, in common with 2015 overall,’ said John Heron, director of mortgages at Paragon. ‘The figures reflect a steadily improving economic outlook for the UK as a whole and show that, more and more people are actively choosing the flexibility of making a home in the private rented sector.’[1]

‘Yields too have remained stable throughout 2015. Q3’s data shows London and the South East slowing down somewhat, while yields in the region are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/12/tenant-demand-continues-to-grow-in-q3-while-yields-remain-stable

 

 

Renters prefer shorter tenancies

Published On: December 8, 2015 at 10:54 am

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Categories: Property News

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A new investigation has indicated that a growing number of renters now prefer shorter tenancies.

Data from a report conducted by Knight Frank shows that 53% of tenants favour either a six month or one year agreement.

Flexible

The results from the firm’s PRS research shows that rented accommodation as a whole is now becoming a flexible form of tenure, particularly amongst younger workers. 69% of tenants between 18-24 said that they preferred agreements for either six months or a year. 61% of 25-34 year olds said that they also preferred this timeframe for tenancies.

By nature, the rental market allows a lot of freedom and therefore a lot of movement. This mobility is underlined by reasons why people move property, with 30% of tenants who have lived in at least one rented home identifying a desire to upgrade as their motive.

52% of tenants said that living close to their place of work was a key priority.38% of those questioned have lived in five or more rental properties. 23% of these had moved less than a mile from their previous property, with 19% moving more than 60 miles for study or work purposes.

28% said that they would be happy to pay up to 30% of their total gross income on rent. In the capital, 31% of under-25s said that they were prepared to pay 50% of their income on rent.

Almost one-quarter of those in the private rented sector said that they live alone, with 34% living in a home as a couple but with no children. 43% of 18-24 year olds said that they were currently sharing rental accommodation with a friend.

Renters prefer shorter tenancies

Renters prefer shorter tenancies

Priorities

‘The Tenant Survey shows us that priorities for tenants when choosing a property include proximity to their place of work or study, how easily they can reach transport links and how affordable the property is,’ said Grainne Gilmore, Head of UK Residential Research. ‘Tenants are mobile, owing to the flexibility offered by renting as a tenure and while the motivations for moving vary, the largest cohort of respondees identified the wish to upgrade to a bigger or nicer property as their key motivation for moving into their current rented property.’[1]

Tim Hyatt, Head of Lettings at Knight Frank, noted that,’ the face of the Private Rented Sector is changing rapidly amid increasing large-scale investment. Already a dominant form of tenure in the UK, it is also becoming an established asset class and we believe that Knight Frank’s market-leading Tenant Survey provides key insights into the market, addressing the fundamental questions for investors seeking to bring to market a Build-To-Rent development which perfectly meets tenant requirements.’[1]

[1] http://www.propertyreporter.co.uk/landlords/renters-opting-for-shorter-tenancies.html

 

Restrictions on Shared Ownership Scheme to be Dropped

Published On: December 8, 2015 at 9:15 am

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Categories: Property News

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Restrictions on Shared Ownership Scheme to be Dropped

Restrictions on Shared Ownership Scheme to be Dropped

The shared ownership scheme will be broadened so that buyers can use the system more than once, David Cameron has announced.

People already living in a shared ownership home will be able to move to another, allowing them to use the capital they have gained.

Restrictions on the scheme will be dropped, such as limiting eligibility to key workers. From April, anyone earning below £80,000 across England and £90,000 in London will be able to use the system.

Cameron stated: “So many people are attracted to this idea, especially those who thought they’d never have a chance of owning a home.

“But, because it’s been heavily restricted, many of those people have missed out. We’ve had local councils dictating who is eligible, based on everything from salary to profession to where the buyer comes from.”1 

In cheaper parts of Britain, buyers will be able to use the Help to Buy scheme to purchase a shared ownership home with a deposit of just £1,400.

A recent report from Leeds Building Society found that there were many misconceptions about shared ownership, including that these properties are difficult to get mortgages for.

Managing Director of the National Association of Estate Agents (NAEA), Mark Hayward, comments: “It’s welcome news that the Government is putting the proposed plan for expansion of shared ownership into action.

“By relaxing some of the existing restrictions, a potential 175,000 aspiring homeowners will be given the opportunity to own their own home, as well as allowing existing shared ownership homeowners the opportunity to step up the ladder.”1 

1 http://www.propertyindustryeye.com/cameron-announces-broadening-of-shared-home-ownership-scheme/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Protect Your Property This Winter

Published On: December 7, 2015 at 4:50 pm

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Categories: Property News

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This weekend sees Christmas upon us once a month, but Storm Barbara is threatening to take away the festive cheer for many. With this in mind, ensure you protect your properties this Christmas to avoid any damage.

Winter weather, particularly flooding, can cause real and structural damage to a property. Not only will your tenants be forced out of their home, but you will have to claim on your landlord insurance. You may find that if your actions or inactions caused the issue, you could be liable for some, or all, of the repairs.

If you know that your tenants will be away over the holiday season, it is vital that you protect your property to avoid any winter-related damage.

With this in mind, follow these tips and arrange an inspection with your tenants, before it’s too late!

  1. Check the lagging in your loft

Head up to the loft and check the lagging around the water pipes and cold water storage tank. Even small gaps could let in cold air and freeze the pipes, or even the water in the tank. If there are pipes in the attic, eaves and cupboards, they are typically more exposed and are prone to freezing.

  1. Leave the central heating on permanently
Protect Your Property This Winter

Protect Your Property This Winter

This is something that you should advise your tenants to do – leave the central heating on at a minimum temperature of 15°C to protect against damp and condensation. Fitting thermostatic valves to the radiators will allow you (and your tenants) to set the valves so that the radiator comes on when the temperature falls below a certain level. This enables the heating to be kept on low without having to heat the entire house all of the time.

  1. Lag the pipes

Alongside leaving the central heating on low permanently, lagging the pipes will prevent them freezing.

  1. Check the property when it is empty

If your tenants will be away over Christmas, check the property when they are out. The main cause of a burst pipe is if they have frozen, and if this isn’t noticed early enough, water damage to the fabric of the property could occur due to leaks, causing significant damage.

  1. Seal holes in walls

Wherever a cable or phone line comes through the exterior wall, check to ensure the hole is sufficiently sealed to stop cold air getting in or warm air escaping.

  1. Leave cold taps dripping

If the property will be unoccupied for a period of time, leave at least one cold tap dripping slightly on each floor. Even the slightest of drips can reduce the risk of water freezing significantly inside the pipes, but only leave taps on if you have a cold water storage tank and are not draining down the water system.

  1. Leave cupboard doors open

If the home is going to be empty, it is a good idea to leave any cabinet or cupboard doors open in the kitchen and bathroom, to allow warm air to reach any hidden pipes.

  1. Leave doors open

If your tenants are going away, suggest they leave the doors within the house open, to enable heat to circulate around the property. Also, leaving the loft hatch open will aid this.

  1. Know where the water stop clock is

If you don’t know already, find out where the water stop clock is and ensure it is easy to turn off and is accessible. Also, make sure your tenants are aware of this too. In an emergency, it is important that it is easy to turn off. If it isn’t, have it checked by a qualified plumber.

  1. Drain the water system

If your tenants will be away for long periods, drain the water system. The water storage tanks (hot and cold) should be drained, as well as the radiators and central heating pipes.

  1. Insulate the overflow pipe from the boiler

Condensing boilers are known for their efficiency, but in the winter, there is a risk of their overflow pipes freezing and causing damage to the property. Avoid this by getting a boiler with a Siphon trap, which releases the water in one amount. Other ways to guard against a frozen overflow pipe is to insulate the pipe or simply shorten it, so there is not as much of the pipe exposed to the outside.

  1. Check your insurance policy

Ensure that your landlord insurance covers you for winter-related damage. If there is an emergency that must be repaired before causing further damage to the property, your policy must cover this so that work can be completed as soon as possible. If the home becomes uninhabitable, make sure your policy covers loss of rent so that you don’t miss out on payments.