Posts with tag: BTL

Where are the BTL Hotspots?

Published On: July 19, 2018 at 8:03 am

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Categories: Landlord News

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Due to 84% of private tenants being reportedly satisfied with their current accommodation, in addition to 68% being fairly satisfied according to the Government’s English Housing Survey, it is no surprise that the letting market is appearing more appealing for buy-to-let investors. The question is, where are the current BTL hotspots?

When considering rental yields, Luton and Colchester have recently been deemed the best places for buy-to-let investors in the market.

LendInvest BTL Index regularly ranks 105 postcode areas surrounding England and Wales.

Based on the combination of four metrics including capital value growth, transaction volumes, rental yield and rental price growth. The findings revealed that Luton is the top hotspot for the third time since December 2016.

Birmingham and Romford in Essex reportedly present fundamental investment opportunities for buy-to-let landlords, with rental returns marginally higher than Manchester.

Sales Director at LendInvest, Ian Boden commented: “It’d be so easy to look at the underlying data that tells us transaction volumes are down and make dire predictions about the health and wealth of the rental market.

“Instead, what our Index proves once again is that looking at one metric in the housing market is never enough. One metric on its own can’t clearly define the performance of a city’s property market.

“Each of the very top performing BTL locations this quarter is experiencing a slowdown in transactions – substantial falls in places, dips in others. But, the best places this quarter continue to outperform the competition well thanks to strong performances on other, equally important metrics like rental yield, capital gains and rental price growth.

“Data from the BTL Index, UK Finance and our own experience as a mortgage lender strongly suggests that right now a ‘buy, hold and remortgage’ strategy is some investors’ preference while the market works through a possible slowdown.”

Specifically, the top 10 buy-to-let postcodes are as follows, beginning with yield, followed by capital gain, followed by rental price growth and lastly, transaction volume growth:

Luton 3.91% 7.29% 3.70% -6.15%
Colchester 3.63% 6.33% 4.77% -6.73%
Romford 4.09% 4.99% 5.28% -7.84%
Birmingham 4.55% 5.00% 3.66% -6.46%
Manchester 5.36% 4.38% 3.71% -7.35%
Cambridge 3.26% 4.57% 4.76% -6.63%
Northampton 3.99% 6.59% 2.17% -7.36%
Bristol 3.83% 5.51% 2.75% -6.20%
Ipswich 3.42% 5.77% 2.76% -6.16%
Southend-on-Sea 3.62% 6.05% 2.53% -6.93%

Revealed as the bottom 10 buy-to-let postcodes are the following:

East Central London 2.86% -13.86% -0.20% -7.27%
Durham 4.41% -3.03% -2.81% -8.21%
Cleveland 4.23% -2.29% -0.70% -6.58%
Crewe 3.61% -2.30% 0.30% -7.45%
South West London 2.89% -0.07% -0.96% -7.94%
Sunderland 5.29% -3.18% -0.77% -6.15%
West Central London 2.61% -1.69% 0.87% -6.91%
Twickenham 3.38% 2.51% -2.32% -7.33%
Blackburn 4.69% -1.92% 0.55% -6.54%
Lancaster 3.79% 0.90% -1.52% -6.00%

New Buy-To-Let Lending has Plummeted, but Remortgaging Within the Sector is Soaring

Published On: July 16, 2018 at 8:04 am

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Categories: Finance News

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New buy-to-let lending

 

During May, 5,500 new buy-to-let home purchase mortgages were completed, which is down by 9.8% on an annual basis. By value, this accounted for £0.7 billion of new buy-to-let lending in the month, down by 22.2% on May 2017.

However, 14,600 new buy-to-let remortgages were completed in the month, which is up by a sturdy 15% on May last year. By value, this £2.3 billion of lending was up by 21.1% year-on-year.

 

First time buyer mortgages

 

By contrast, some 32,200 new first time buyer mortgages were completed in May, which is up by 8.1% on May 2017. The £5.4 billion of new lending in the month was 12.5% higher on an annual basis.

UK Finance found that the average first time buyer is 30-years-old and has a gross household income of £42,000.

 

Homeowners and home movers

 

The number of new home mover mortgages also rose in May, with 31,100 completions, which is up by 4.4% on May 2017. The £6.6 billion of new lending in the month was 4.8% higher year-on-year.

The average home mover is 39-years-old and has a gross household income of £55,000.

Additionally, there were 36,000 new homeowner remortgages completed in May, some 7.1% more than in the same month last year. The £6.3 billion of remortgaging marked a 6.8% rise in the value of last May’s remortgages.

The Director of Mortgages at UK Finance, Jackie Bennett, comments on the data: “The mortgage market is seeing a pre-summer boost, driven by a rise in the number of first time buyers and strong remortgaging activity. It is also particularly encouraging to see an increase in home movers, after a period of relative sluggishness in this important segment of the market.

“However, affordability remains a challenge for some prospective buyers, and this is reflected by a gradual increase in loan-to-income multiples.”

She adds: “Meanwhile, purchases in the buy-to-let market continue to be constrained by recent regulatory and tax changes, the full impact of which have yet to be fully felt.”

 

Written by Rose Jinks

Is the Introduction of Extended Contracts Bad News for Buy-To-Let Landlords?

Published On: July 12, 2018 at 8:00 am

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Categories: Landlord News

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According to a leading letting agent, the introduction of mandatory minimum three-year tenancies by the Government could mean that accidental landlords and small scale buy-to-let investors will be confronted with more upheaval.

The proposal of a three-year tenancy by the Government could make it increasingly difficult for buy-to-let landlords to fund their property purchases. However, Partner at Carter Jonas, Fiona Bourke asserts that extended tenancies will increase pressure in alternative ways.

Despite the objective of the plan being to provide private tenants with a high level of security, enabling them to settle down, it is Bourke’s argument that these risks may exceed the benefit of financial security for the smaller scale buy-to-let investors in addition to the accidental landlords.

She comments: ““With more rights being given to tenants, the three-year term potentially has less value to the landlord should tenants decide to leave part way through their tenancy, which they will have the freedom to do.
“Should landlords potentially come across problematic tenants it will also become harder for landlords to manage them if they are locked into a longer-term agreement.

“In my area of Wandsworth [in south London], rental agreements are often much shorter than the national four-year average and we have a significant number of local, individual and accidental landlords who may reconsider their options in light of these changes in legislation.
“Furthermore, such reconsideration could be fuelled further by the prospect of rent rise caps in future.

“Venture capitalists and asset management companies will be buying up property with the ever so slightly more safeguarded guarantee of a long-term return on investment, it [the planned new rules] could bring about a new buy-to-let audience who recognise that we’re fast becoming more of a rental society and the new laws may give landlords more stability in the long run.”

Latest National and Regional Trends Revealed in Belvoir’s Rental Index

Published On: June 26, 2018 at 9:56 am

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Categories: Lettings News

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Belvoir’s first quarter Q1 index, combined with results gathered from a franchise survey regarding tenant and landlord trends, revealed the highest percentage of landlords selling up for over a year, with tax changes, frequent regulation and legislation adjustments stated as the primary reason.

The number of landlords experiencing voids decreased in Q1. This suggests an increased pace in letting, despite the demand for flats being reportedly static to dropping, with far more demand for houses from Q4 2017.

Belvoir CEO Dorian Gonsalves comments: “The trends that Belvoir is reporting are very much in line with our predictions at the beginning of this year.

“As 2018 progresses, there is no doubt that landlords and tenants will find themselves shouldered with an extra burden of cost due to continued government interference in the rental market, which includes the implementation of punitive tax changes.

“As more landlords see their profits eroded, and more legislation is in the pipeline, more landlords are likely to exit the market. We are still seeing new investment in the BTL market, but the number of properties being bought has decreased.”

Statistics provided showed that monthly rents are ranging from an average of £597 in the North West to £658 in the East Midlands. In the South West rents are considerably more, ranging from £724 in the South West to £1,030 in the South East the highest rent is claimed to be in London, at £1,428 month.

In particular, a rental inflation has occurred on four to five-bedroom detached properties. However, generally, rent was stable, with a majority of offices claiming that rents remain static and that any increases that occurred were minimal.

For the remainder of this year, further rental increases are anticipated for properties, specifically, properties for larger families, which currently remain in insufficient supply. Letting rooms is also predicted to remain fixed.

Lenders and Brokers Failing to Contact Clients About BTL Changes

Published On: June 25, 2018 at 8:01 am

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Categories: Finance News

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Regions with lowest void periods revealed by landlord survey

According to the National Landlord’s Association (NLA), mortgage lenders and brokers are being too silent regarding the Prudential Regulatory Authority’s (PRA) changes to buy to let lending.

The NLA claims that despite the regulatory changes to lending criteria in addition to the application process for portfolio landlords, more than 55% remained oblivious.

Discoveries from the NLA’s quarterly Landlord Panel, reveal that just eight per cent of landlords expressed that their lender had been in contact regarding these changes. Furthermore, only 16% of landlords had been contacted by their broker.

Almost 68% of landlords claimed to have had no contact from either their lender or broker regarding such changes. Instead, findings show that lenders and brokers concentrated their efforts on larger portfolio landlords, with 26% of portfolio landlords reporting that their broker had been in contact, and nine per cent confirming that their lender had made contact.

Richard Lambert, CEO at the NLA commented:
“The PRA’s changes will greatly affect the ability of landlords to find new finance and continue to provide good quality affordable housing to those who need it”.

The NLA says that it’s vital landlords are supported through the changes, having issued broad advice earlier in the year urging landlords to contact their mortgage broker or bank before committing to any new property or finance.

“We hope that that the reason such a significant number of landlords haven’t been contacted is because their existing deals are simply not yet close to expiry. However, it’s in lenders’ and brokers’ own interests to speak to landlords about the changes sooner rather than later, otherwise, it could mean a missed opportunity in terms of new business.
“If landlords don’t get the right support and information about how the changes will impact their existing loans, then it could mean higher finance costs that many just won’t be able to absorb”.