Posts with tag: buy to let investors

Buy-to-Let Purchases to Outstrip Remortgages as Landlords Rush to Invest

Published On: January 15, 2016 at 12:04 pm

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Over 2015, buy-to-let remortgage transactions surpassed purchase loans by more than 2:1, according to the latest Complex Buy to Let Index from specialist broker Mortgages for Business.

It found that in the fourth quarter (Q4), remortgages for vanilla buy-to-let properties accounted for 64% of all transactions. Remortgages for Houses in Multiple Occupation (HMOs) and Multi-Unit Freehold Blocks (MUFBs) experienced even greater activity, at 78% and 88% respectively.

Buy-to-Let Purchases to Outstrip Remortgages as Landlords Rush to Invest

Buy-to-Let Purchases to Outstrip Remortgages as Landlords Rush to Invest

Managing Director of Mortgages for Business, David Whittaker, explains: “The results aren’t surprising; for some time now, landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plan further purchases.”

Although, he does expect this to change: “I anticipate that we will see a reversal of this trend in the first quarter of this year, as landlords hurry to expand their portfolios before the Stamp Duty surcharge kicks in on 1st April.”

And Paul Mahoney, the Managing Director at Nova Financial, agrees. He says: “The 3% Stamp Duty premium for buy-to-let properties and second homes has put somewhat of a deadline on those seeking or considering a property investment. That has and will continue to cause a spike in activity in the lead up to April.

“The change makes completing on an investment prior to the 1st April more attractive and we have found this is spurring those considering an investment into action. We expect the market to return to normality following April and continue the strong performance experienced in 2015.”

Whittaker has also already seen a change in the market: “The number of enquiries for purchase finance is already well ahead of where we were this time last year, particularly from those looking to sell their personally owned property into a corporate vehicle.”

From 1st April, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty on properties worth over £40,000. Those purchasing 15 or more properties in one transaction will be exempt from the charge.

Mortgages for Business’s data shows that yields across all property types recovered in Q4 2015, but in real terms they continue to remain static, as rental income fails to keep up with house price growth. However, returns for more complex investments remain strong.

The amount of lenders offering buy-to-let mortgages has remained at 33, although the number of buy-to-let mortgage products available has increased slightly to an average of 975 over the quarter.

Whittaker comments: “It is unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies.

“Of course, that figure is only an average – at one point at the beginning of December our tracking system, Mortgage Flow, showed 1,168 products.”1

How have/will the changes affect your investment activity?

1 http://www.mortgagesforbusiness.co.uk/news-insight/2016/january/btl-purchases-could-outstrip-remortgages-in-q1-2016/

 

Valuations Firm Confirms that Landlords are Rushing to Buy

Published On: January 14, 2016 at 9:32 am

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A national surveying and valuations firm has confirmed that landlords are rushing to purchase buy-to-let properties, after predictions that many investors will seek to complete buys before tax changes in April.

Connells Survey & Valuation reported that it conducted a huge 86% more buy-to-let valuations in December than in the same month of the previous year.

Although this figure represents a slight monthly drop of 1%, this is far less than the traditional seasonal declines in other types of valuations, notably for home movers, first time buyers and those remortgaging.

Valuations Firm Confirms that Landlords are Rushing to Buy

Valuations Firm Confirms that Landlords are Rushing to Buy

The Director of the firm, John Bagshaw, comments: “December’s results are a reflection of the ever-increasing demand for homes as investment opportunities, as buy-to-let landlords join home movers seeking to make some sort of profit from their property.”

He adds: “The added factor of the April 1st Stamp Duty increase has spurred many investors who might have been sitting on the fence to take the plunge and enter the buy-to-let market before its profitability takes a hit.”1

From 1st April, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty. In addition, landlords will face cuts to their mortgage interest tax relief and the restrictions applied to the Wear and Tear Allowance. Read more here: /tax-experts-express-confusion-over-new-wear-and-tear-allowance/

As a result, estate agents are forecasting a surge in springtime sales in the buy-to-let sector.

When the tax changes are implemented, they expect the buy-to-let market to slow down, which could potentially boost the number of first time buyers getting onto the property ladder.

The Director of Situ Homes, Oliver Knight, reports: “In 2015, landlords accounted for one in four property sales. After April, we expect this to reduce significantly, perhaps paving the way for more first time buyers to secure a home.”2

Chairman of the Hunters group, John Ozwell, gives his predictions for the midlands: “We are expecting a flurry of investors buying property to let before April because of the changes introduced by the Chancellor in the Autumn Statement. It will be a busy start to the New Year for the property market across the region.

“We expect sales and listings to be running at the same level which we have experienced since last summer, or perhaps slightly up on that.

“2015 was a good year for the midland market. In 2016, property prices are expected to keep rising, by approximately 4% to 5%. There will continue to be shortage of stocks throughout the UK, particularly properties for first time buyers, making the market even more competitive and driving up sales and prices.

“With interest rates forecast to stay low throughout the year – possibly just seeing a small rise – banks and building societies will have even better deals available, again strengthening the market here in the midlands.”2

1 http://www.financialreporter.co.uk/finance-news/annual-housing-market-activity-up-29.html 

2 http://www.propertyreporter.co.uk/property/estate-agents-predict-sales-surge-ahead-of-stamp-duty-rise.html

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

Published On: January 7, 2016 at 9:27 am

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A major figure in the property industry has spoken up about the Government’s interference in the private rental sector.

The Director of Commercial and Franchising at chain Belvoir, Dorian Gonsalves, warns that tax changes for private landlords could discourage investment in the sector.

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

He also urges the Government to “dramatically” increase the supply of social housing in order to reduce pressure on the private rental sector.

However, ministers’ plans currently go against Gonsalves’ wishes, as the Housing and Planning Bill is now heading towards its third reading in the House of Commons.

Propositions under the bill include extending the Right to Buy scheme to housing association tenants; opponents describe the bill as the end of social housing.

Gonsalves also believes that landlords may have “second thoughts about buying properties”, due to Chancellor George Osborne’s mortgage interest tax relief cuts and further 3% Stamp Duty charge on buy-to-let investments.

Referring to the Housing and Planning Bill’s focus on homeownership, Gonsalves says: “Whipping the public up into a home buying frenzy is not very sensible, as prices rise when the population feels they need to acquire a must-have commodity. If the opposite happens and prices stagnate, builders will not build.”

He continues: “With net immigration currently at over 300,000, over 1.5m people on council waiting lists, population forecasts as high as 85m by 2050 and 10m people already renting, it is clear that much more social housing is required.

“The Government has pledged 400,000 new builds in the next five years, but it is likely that 200,000 of these will be in and around London, and locations won’t be ideal due to lack of building land at sensible prices.

“The remaining 200,000 will be spread across the other 1,000 or so towns and cities across the UK, so there will probably be just 200 new affordable properties in each town or city.”

He adds: “The private rental sector has always existed to provide a choice for those people who need flexibility and is a good solution for people who do not wish to commit to purchasing a property.” 

He insists that the private rental sector should no longer be expected to bridge the “immense gap”1 between demand for social housing and its low supply.

1 http://www.propertyindustryeye.com/stop-meddling-in-private-rented-sector-belvoir-boss-tells-government/

 

New Range of Buy-to-Let Mortgages from Leeds Building Society

Published On: December 27, 2015 at 10:44 am

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New Range of Buy-to-Let Mortgages from Leeds Building Society

New Range of Buy-to-Let Mortgages from Leeds Building Society

Leeds Building Society has launched a new range of mortgages with cashback for existing buy-to-let borrowers.

Existing buy-to-let landlords hoping to add to their property portfolio or remortgage investments they already own can choose from an exclusive range of competitive products, each with £250 cashback.

They include: a two-year discount buy-to-let mortgage at 2.10%; a two-year fixed rate deal at 2.60%; and a five-year fixed rate product at 3.39%.

All of these deals are available at up to 60% loan-to-value (LTV) and come with a free valuation for properties worth up to £500,000 and fees-assisted legal services. They also have a low fee of £199.

Buy-to-let deals up to 70% LTV are also available through the lender.

Director of Business Development at Leeds Building Society, Martin Richardson, comments: “Adding the cashback benefit for existing buy-to-let borrowers complements some of the other changes we have made to criteria on this type of lending.

“We keep our lending criteria under active review and listen carefully to feedback from borrowers and intermediaries to find ways we can improve our service and develop products which better suit customer need.”1

The building society made changes to criteria on its buy-to-let mortgages earlier this year, including increasing the maximum number of properties an investor can hold to eight.

Currently, Leeds requires a minimum income of £25,000 for borrowers, but this has been altered slightly to allow joint income earners with less than £25,000 annual income to apply, so long as their joint income is over £40,000.

It requires rental income to cover at least 125% of interest payable on the buy-to-let variable rate.

1 http://www.propertyreporter.co.uk/finance/leeds-announces-btl-range-changes.html

Rental Property Supply to Decline

Published On: December 23, 2015 at 10:18 am

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Two in five letting agents expect rental property supply to decline over the next five years, according to the latest report from the Association of Residential Letting Agents (ARLA).

Rental Property Supply to Decline

Rental Property Supply to Decline

The organisation expects the changes to Stamp Duty for buy-to-let investors – as announced in the Autumn Statement – to hit landlords’ confidence in the sector.

Managing Director of ARLA, David Cox, comments: “This month’s findings are triggered by the Chancellor’s announcements around buy-to-let tax in his Autumn Statement.

“When the rabbit was first pulled out of the hat, we said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country. The new Stamp Duty increases will make owning a buy-to-let unprofitable for a lot of landlords and certainly make new investors think twice about purchasing a buy-to-let property.”

Under the changes, buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty on purchases over £40,000.

The ARLA study also found that tenants are experiencing fewer rent rises, with under one quarter (23%) of agents reporting rent increases for tenants in November, down on October’s figure of 25% and the lowest this year.

Demand for rental homes rose slightly last month, likely a result of renters preparing themselves for Christmas and New Year.

ARLA member agents registered an average of 34 new tenants per branch in November, up from 33 in October.

Supply of rental housing was also on the up last month, a 9% rise from October’s 173 properties per branch to 189. However, tenants in London are continuing to struggle finding properties, with just 121 homes managed per branch – 36% less than the UK average.

Cox continues: “It’s promising to see that the number of agents reporting rent increases is continuing to decline and this should spread some Christmas cheer amongst renewing tenancies or looking for a new property to rent.

“However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016.”1

Do you agree with Cox? Or are the changes to Stamp Duty enough to stop you investing further in the sector, or make you put your rents up?

1 http://www.propertyreporter.co.uk/landlords/btl-stamp-duty-causing-gloominess-among-letting-agents.html

 

 

Basel Committee Joins Crackdown on Buy-to-Let Sector

Published On: December 15, 2015 at 3:28 pm

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The buy-to-let sector could be hit by further restrictions, as the Basel Committee looks set to join the crackdown on property investment.

Basel Committee Joins Crackdown on Buy-to-Let Sector

Basel Committee Joins Crackdown on Buy-to-Let Sector

Mortgage experts have already warned that Chancellor George Osborne’s plans to attack buy-to-let taxes could destroy the market.

The Bank of England (BoE) is also joining the fight, after it called for new powers over the interest cover ratio on buy-to-let calculations.

The Basel Committee sets global financial standards. It wants banks to hold twice as much capital against mortgages when repayments are dependent on rental income. It fears that landlords will struggle to meet their repayments if they cannot find tenants for their properties.

This measure would double the amount of capital lenders must hold against a loan from 35% to 70%, pushing up the cost of buy-to-let mortgages and reducing supply.

The BoE’s Financial Policy Committee (FPC), managed by Mark Carney, warns that buy-to-let mortgages are twice as likely to break down than loans for owner-occupiers.

The FPC has requested powers from the Treasury to restrict lending to landlords, which could include limits on loan-to-value and loan-to-income ratios.

The buy-to-let sector is still growing strongly, despite activity dropping by 4% in November, according to a recent study by Connells Survey & Valuation.

John Bagshaw, of Connells, says buy-to-let remains an attractive venture for prospective investors.

He comments: “Much of the energy is being fuelled by a desire to out-manoeuvre the Treasury’s attempts to take more money from buy-to-let business.

“With the Chancellor imposing more fees and regulations on landlords in his most recent Autumn Statement, many would-be landlords are hurrying to get into the market before these changes kick in from April next year.”1

Buy-to-let investors and second home buyers will be charged an extra 3% in Stamp Duty from April.

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/basel-committee-joins-assault-on-buy-to-let