Posts with tag: Buy-to-Let

First-time buyers losing out to investors

Published On: August 4, 2015 at 12:31 pm

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First-time buyers are at risk of losing out due to mortgage market regulation, according to an independent broker.

Private Finance argue that changes in the Mortgage Market Review has made today’s lending climate more favourable to buy-to-let investors over home buyers.

Lack of support

The Mortgage Market Review was introduced in April 2014, but applies only to the owner-occupier market. Private Finance believe that the new affordability regulations are not supporting home ownership. On the other hand, buy-to-let lending is still unregulated, with lenders allowed to advance up to 85% interest-only mortgages to property buyers.

‘We are calling on regulators and policy makers to consider the effects of MMR on residential lending levels,’ said Simon Checkley, managing director of Private Finance. ‘If maintained at their current level, they could potentially exclude an entire generation of home buyers from the property market and force them into the private rental sector for years to come.’[1]

Checkley went on to say, ‘stifling activity in the housing market increases house prices by reducing supply.’ He believes by, ‘not allowing first-time buyers access to mortgage products similar to those available to buy-to-let investors snapping up the same properties that first-time buyers would buy if they could, is unfair.’[1]

First-time buyers losing out to investors

First-time buyers losing out to investors

Working together

Offering an alternative method, Checkley said, ‘our view is that the Government and the regulator should work together to encourage lenders to accommodate all home movers with more innovative and flexible products.’ He pointed out that, ‘one example of this would be to offer the first two years of the mortgage on an interest-only basis, progressing to graduated capital and interest payments afterwards.’[1]

Mr Checkley feels that this would be, ‘exactly the kind of product that would offer the long term stability that residential borrowers require.’[1]

Concluding, he conceded that, ‘our fear is that if the authorities do not collaborate further on this, we will simply continue to lock a generation of home buyers out of the market and face the inevitable consequences in years to come.’[1]

[1] http://www.propertyindustryeye.com/first-time-buyers-losing-out-to-investors-because-of-mortgage-rules/

 

 

Budget changes lead to BTL product rise

Published On: July 31, 2015 at 4:28 pm

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According to the latest Buy-to-Let Mortgage Costs Index from Mortgages for Business, there are already 122 buy-to-let products for limited companies.

This figure comes shortly after the Chancellor announced in his summer Budget that buy-to-let interest relief for private landlords was to be abolished. However, landlords can still claim full interest relief by taking out a buy-to-let mortgage as a limited company. Interest payments would then qualify as a business expense and would therefore qualify for tax relief.

Premium

Landlords that opt to mortgage through a limited company however must bear in mind that they will have to pay a premium in comparison to the market average. The typical cost of a mortgage product for a limited company was 5.4% per annum at the beginning of July but the average yearly rate for the buy-to-let market as a whole was 4.6%.[1]

‘The mortgage market was certainly well prepared for the Chancellor’s grab on landlord’s tax relief,’ said David Whittaker, managing director of Mortgages for Business. ‘Mortgages which allow limited companies to be borrowers comprise 13% of all products on the buy to let market.’[1]

Budget changes lead to BTL product rise

Budget changes lead to BTL product rise

Outfox

Continuing, Whittaker said, ‘It means that a good number of landlords and investors will have the opportunity to outfox the Summer Budget by taking advantage of the tax benefits associated with registering as a limited company. However, limited company mortgage products may not be for everyone. Registering as a limited company takes time, money and can be quite complex. The average interest rate for limited company mortgages is also greater than the average rates available in the wider market.’[1] 

‘That said, even if the mortgage costs for limited companies are above the rest of the market, this could come down as demand grows and lending to companies becomes more competitive. And, for once, prospective tax changes will work in favour of investors as the rate of Corporation Tax is due to fall from 20% to 19% from April 2017 and to 18% from April 2020 – which, if profits are to be retained within the company, would represent a significant tax saving for a higher rate tax payer,’ he concluded.[1]

 

 

 

[1] http://www.propertyreporter.co.uk/landlords/budget-clampdown-prompts-rise-in-btl-products-for-limited-companies.html

 

 

 

 

Latest buy-to-let hotspots revealed

Published On: July 27, 2015 at 3:04 pm

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This year’s UK buy-to-let hotspots have been revealed, with several new towns and cities moving into the top ten.

Barclays Mortgage’s latest data reveals that England’s two primary cities lead the way for the number of buy-to-let homes brought this year, with Bristol holding on to third position.

Increases

With the buy-to-let market continuing to thrive, a number of regions have seen a substantial increase in activity over the last year. Birmingham for example, has risen from seventh to second position in the list. Popular University locations such as Nottingham, Manchester and Leeds have also continued to perform well.

The greatest rise in buy-to-let property purchases was recorded in Plymouth, which rose from 212th position in 2014 to 16th this year. Peterborough and Swindon also saw large rises in buy-to-let interest.

The top-twenty most popular regions for buy-to-let properties based on Barclays Mortgages report were:

Rank (by volume of Barclays completed buy-to-let properties) Q1-Q2 Town Average rent (of Barclays Mortgages completed buy-to-let properties) Q1-Q2 2015
2015 2014
1 1 LONDON £1,900
2 7 BIRMINGHAM £766
3 3 BRISTOL £877
4 17 NOTTINGHAM £639
5 18 MANCHESTER £693
6 13 READING £1,169
7 47 LEEDS £703
8 6 SOUTHAMPTON £1,067
9 50 PETERBOROUGH £649
10 19 SLOUGH £1,045
11 48 GLASGOW £601
12 5 ILFORD £1,252
13 4 HARROW £1,402
14 35 EDINBURGH £923
15 8 CROYDON £1,262
16 212 PLYMOUTH £808
17 12 ENFIELD £1,268
18 79 SWINDON £681
19 62 LUTON £754
20 28 MILTON KEYNES £873

[1]

 

Latest buy-to-let hotspots revealed

Latest buy-to-let hotspots revealed

Encouragement

Andy Gray, Barclays Managing Director of Mortgaging said, ‘it’s encouraging to see home owners are still feeling confident about the rental market and view buy-to-let as a valuable way to support their finances. Whilst London still leads all things buy-to-let, areas like Plymouth and Peterborough show there are some great value hot spots outside the capital city that are worth investment as the economy grows.’[1]

‘For those considering buy-to-let, we encourage you to speak to your mortgage advisor on what are the best options for your situation,’ Gray added.[1]

[1] http://www.propertyreporter.co.uk/landlords/where-are-the-latest-uk-buy-to-let-hotspots.html

 

 

Is London turning into rental capital of world?

Published On: July 10, 2015 at 10:37 am

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A new survey has revealed that a quarter of homes in the capital are privately rented and has led some industry experts to suggest that the make-up of parts of London could be changed forever.

Research from property data company Lonres and analysts Dataloft show that 40% of properties in Westminster are being let in the private rented sector, the largest figure in the capital. Kensington and Chelsea came in second with 36% of homes being privately rented.

Costly

Carmen Champney of Hathways estate agents, believes that renters in the Victoria and Westminster area are spending aroiund £500-£650 per week for single-bed flats in the region. Purchasing a property here would set back buyers in excess of £900,000.

Champney is concerned that the rising number of renters are creating a large turnover, which in turn is detrimental to the feel of the region. ‘I think you lose a bit of the heart of the community with so much change going on all the time,’ she commented.[1]

Is London turning into rental capital of world?

Is London turning into rental capital of world?

Findings from a separate report by Hamptons International shows that the average cost of a rental property in London has increased by 6% during the last twelve months, to stand at £316 per week. Even in the cheapest London boroughs of Bexley and Havering, the average rental cost of a one-bedroom flat is £170 per week. For two bedrooms, costs are around £225 per week.

 

[1] http://www.homesandproperty.co.uk/property-news/news/london-new-renting-capital-world

 

 

Record low times recorded for re-letting homes

Published On: June 26, 2015 at 2:27 pm

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Encouraging figures released today indicate that landlords are able to let their property in record time.

New research from Countrywide reveals that landlords are currently able to re-let their property in an average of 32 days. This means that many are able to re-let their property before their existing tenants moves out.

Average lets

The research found that 33% of new lets agreed in 2015 to date were agreed while the property was still occupied, up from 27% last year. Average lets achieved while an existing tenant was still in place represented 105% of the asking rent, equivalent to £35 more a month than the asking price. Landlords that are still receiving rental payments from an existing tenant are able to be more relaxed. On the other hand, tenants moving into an unoccupied property have more room to negotiate a cheaper rate, knocking on average £21 per month off the landlords preferred amount.[1]

In the capital, 51% of new lets are arranged when there is still a live-in tenant in the property, up from 41% in 2014. Where a deal is agreed before the previous tenant moves out, there is an average of just six days before then new one moves in. 10% actually move in on the same day that the previous tenant moves out.[1]

Record low times recorded for re-letting homes

Record low times recorded for re-letting homes

Rents

Findings from the report show that when a property has not been let before a tenant leaves, the first week of advertising is where the landlord is likely to achieve the highest rent. After the first week, the landlord is more unlikely to achieve their preferred asking rent.

Outside of the major cities, the average landlord must wait an extra 15 days to locate a tenant willing to pay their asking rent.

‘In larger rental markets, more new lets are being agreed well in advance of the current tenant leaving. As a result we’ve seen void periods fall, with a growing number of landlords having a new tenant lined up over a month before their existing tenant leaves,’ commented David Fell, research analyst at Countrywide.[1]

‘While leaving some time for maintenance between tenancies is advisable, increasingly there’s just a matter of hours between a tenant moving out and one moving in. The buzz around a new property coming onto the market is usually the landlord’s best chance of securing the tenant willing to pay the most rent,’ he continued. [1]

Concluding, Mr Fell said that, ‘in more competitive markets, the first tenant to view a home is often willing to pay a small premium to ensure the landlord takes the property off the market and that no further viewings take place.’ According to Fell, ‘proactive tenants who are looking to move quickly are frequently willing to pay the most.’[1]

[1] http://www.propertywire.com/news/europe/uk-lettings-tenants-landlords-2015062610675.html

 

 

Supply of rental homes drops in May

Published On: June 25, 2015 at 4:21 pm

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The total number of rental properties available for tenants in Britain fell during May, widening the concern over the gap between supply and demand still further.

Data from a report by the Association of Residential Letting Agents indicates that supply of rental property fell by 7% in comparison to April. This represented 179 properties per branch of letting agents who are members of the organisation.[1]

Capital concerns

Highlighted in the report are concerns for the capital. Surprisingly, London had the least amount of rental properties per branch, with just 134 recorded in May. This was in comparison to 273 properties in Scotland. [1]

More concern came with the news that despite rental properties decreasing, demand remained the same. ARLA said that 36 would-be members registered per branch during May, which was the same as the last two months.

Additionally, the report shows that during last month, 34% of ARLA agents recorded rent rises for tenants. This is in comparison to the 27% recorded in January. Those residing in the South West were most affected by monthly rent hikes, with 49% of agents in the region suggesting an increase.[1]

Supply of rental homes drops in May

Supply of rental homes drops in May

Worrying

‘It is worrying to see that there is such as sharp decrease in supply, when we know there is already a struggle to meet housing needs,’ commented David Cox, managing director of ARLA. Despite agreeing that the months following the General Election were always likely to cause uncertainty, Cox believes that low supply and high demand are issues that will continue to plague the market.[1]

‘We are in desperate need of more housing stock in this country and supply and demand isn’t something that will level out overnight. It’s vital that the new government follows their promise of building more houses, so we can free up rental properties and head on the right path to turning the property market around once and for all,’ Cox added.[1]

[1] http://www.propertywire.com/news/europe/uk-rental-demand-supply-2015062510672.html