Posts with tag: Buy-to-Let

Stamp Duty cited for increased April transactions

Published On: May 23, 2017 at 2:05 pm

Tags: Buy-to-Let,HMRC,property transactions,Stamp Duty

The most recent analysis from HMRC has revealed that property transactions dipped slightly during April – dropping by 3.2% in comparison to March.

HMRC’s data reveals that the provisionally seasonally adjusted UK property transaction count for April 2017 was:

99,910 residential
9, 980 non-residential

These figures were 20.3% higher than in the same month of last year.

Stamp Duty

However, HMRC have quickly moved to state that direct comparisons of residential transactions between April 2017 and April 2016 should be avoided for one specific reason. This was due to the introduction of the 3% Stamp Duty surcharge being introduced in April 2016.

Stephen Wasserman, Managing Director at West One Loans, observed: ‘The property market will take a while to fully recover from the jitters caused by stamp duty hikes and economic uncertainty. On top of this, the result of the upcoming General Election is likely to have an impact over the coming months. Nevertheless, we’re confident the sector will bounce back. Although the market is resilient, during times of prolonged economic uncertainty it is important that borrowers are aware of the range of financing available. Flexible borrowing options, such as bridging loans, can help to speed up the transaction, enabling buyers to move faster and capitalise on opportunities in this uncertain environment.’[1]

Shaun Church, Director at Private Finance, also noted: ‘While residential transaction levels are significantly higher than a year ago, the changes to stamp duty for second homebuyers in March 2016 render an annual comparison pointless. Homeowners and investors rushed to beat the deadline last year, which led to an explosive March followed by a quiet April for the residential market. Today’s market remains slightly sluggish, with the number of seasonally adjusted transactions dipping between March and April.’[1]

Stamp Duty cited for increased April transactions

‘The upcoming election is unlikely to be having a significant effect on property transactions, particularly as the residential market took last year’s Brexit vote in its stride. The main reason behind weaker transaction figures remains the changes to stamp duty, which have particularly limited activity towards the upper end of the housing market.’[1]

Steady Progress

Jeremy Leaf, former RICS residential chairman, commented: ‘At first glance one might think these figures are hugely disappointing but when you consider what was happening this time last year and what has happened to property transactions in the past few months, they represent steady progress for the housing market. Transaction numbers are really key to what is going on in the market – how many people are actually getting on with the business of moving – and these numbers suggest some resilience.’[1]

‘What the HMRC figures do show is the huge impact that changes to stamp duty can have, not just on property transactions but the wider economy bearing in mind how many people are dependent in other trades on people moving home.’[1]

[1] http://www.propertyreporter.co.uk/finance/stamp-duty-cited-as-cause-of-slow-april-transactions.html

BTL deals for LTD companies doubles in last year

Published On: May 23, 2017 at 9:48 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let landlords,limited companies,tax,tax changes

It is certainly a challenging period for buy-to-let landlords, with a host of recent Government-implemented changes threatening to cause long-lasting harm to the sector.

The phasing out of mortgage interest tax relief, the introduction of the 3% Stamp Duty surcharge on buy-to-let and second homes and the Right to Rent scheme, amongst others, have led a number of landlords to leave the market.

Those that remain will be left with increased tax bills moving forwards, with many left with little alternative but to increase rents. Many will also be thinking how best to conduct their commercial and business duties.

Limited Companies

To avoid being badly hit by the changes to mortgage interest tax relief, a number of investors are looking to set up company structures in order to manage their rental assets.

This has been highlighted by the substantial rise in mortgage lending to buy-to-let landlords via limited companies. Now, this number looks set to increase further, thanks to a rise in the number of mortgage products being aimed at limited companies.

The most recent research from Moneyfacts indicates that the proportion of buy-to-let deals available to limited companies has doubled during the last year.

BTL deals for LTD companies doubles in last year

Shift in Focus

Charlotte Nelson, finance expert at Moneyfacts.co.uk, noted: ‘It feels like the BTL market has been hit from all angles recently, and this has left landlords feeling vulnerable and wondering whether it is still worth continuing in the BTL sector. This has resulted in a shift in focus to limited companies, away from individual ownership, which is influencing not just landlords but also providers offering BTL mortgages.’[1]

‘As the reality of April’s tax changes starts to bite, the proportion of deals available to limited companies has grown dramatically, having increased by 7% in just six months. With the extra pressure in the BTL market and the added interest in limited companies, it is no surprise that lenders have leapt into action and started offering more deals to limited companies,’ she continued.[1]

Concluding, Nelson observed: ‘Despite the boost in product numbers, borrowers considering this type of mortgage should be aware that they could find themselves on a more expensive deal compared to the rest of the BTL market. For example, the average two-year fixed rate BTL mortgage for those applying as a limited company stands at 4.22% today, whereas the average two-year fixed rate for the rest of the market is significantly less at 2.97%. With all the extra legwork a limited company option entails, any borrowers considering it should consult a financial adviser to ensure it is the right route for them.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/btl-deals-available-to-limited-companies-double-in-a-year

Where are the top university locations for buy-to-let investment?

Published On: May 22, 2017 at 9:29 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,rental yields,student accommodation,student property yields,University

The top university cities for buy-to-let investment have been revealed in a new report from StudentTenant.com.

It indicates that landlords can earn substantial returns when purchasing near a university, with shrewd investors able to enjoy the best yields.

Northern Delights

A mixture of low property prices and spiralling demand for rental accommodation in prominent student cities in the North of England is seeing some landlords enjoying double-digit returns.

This said, data from the report suggests that the typical rental yield in the student buy-to-let market across Britain is substantially lower.

Durham came top of the class, offering the best buy-to-let of the top-ten ranked universities in the list. This was followed by Warwick and Loughborough.

Landlords purchasing near Durham University can look forward to average yields of 5.22%. Warwick and Loughborough offer typical returns of 5.11% and 5% respectively.

Capital Pains

On the other hand, London was found to be the worst performing region for buy-to-let student landlords. All three of the top ten ranked universities here saw the lowest rental yields.

Here, landlords can expect rental yields of 3.46%, with property prices here amongst the highest in the UK.

The table below shows the top-ten ranked university locations for buy-to-let investment in the UK:

Rental Yield Rank	Location	University	League Table Rank	Student Population	Avg. Property Price	Avg. Rental Yield
1	Durham	Durham University	6	17,927	£151,465	5.22%
2	Warwick	University of Warwick	8	25,615	£338,220	5.11%
3	Loughborough	Loughborough University	10	16,500	£237,005	4.93%
4	Fife	University of St Andrews	3	8,790	£158,113	4.60%
5	Lancaster	Lancaster University	9	13,336	£148,268	4.46%
6	Oxford	University of Oxford	2	22,602	£497,603	4.12%
7	Cambridge	University of Cambridge	1	19,672	£465,588	3.64%
8	London	Imperial College London	5	14,700+	£717,217	4.53%
9	London	London School of Economics	4	8,895	£1,125,671	3.46%
10	London	University College London	7	38,000+	£1,125,671	3.46%

Where are the top university locations for buy-to-let investment?

Rental Yields

Danielle Cullen, managing director at StudentTenant.com, observed: ‘For anyone looking to invest in a student property, it’s always advised to assess the potential rental yields in the area to see if it’s a sound investment. However, I must stress that rental yields aren’t everything and there are many things to consider before purchasing a student rental property.’[1]

‘Is the property located near the university? Does the property have parking spaces? What is the current condition of the property? It’s important to collect as much information before taking the plunge, to ensure you get the best possible deal,’ she continued.[1]

Moving on, Cullen said: ‘Looking just at rental yields for the top ten ranking universities, it might seem attractive to invest in a student property in an area like Warwick or Loughborough where yields are around 5%. However, when you account for the higher property prices, it might not be the best option available for investors.’[1]

‘Durham could well be an up and coming investment location for the student sector. It’s typically not what I would consider a ‘hotspot’ for private landlords looking to increase their portfolio, but could well be one to watch.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/top-university-towns-for-buy-to-let-revealed

Industry expert suggests buy-to-let lending will fall

Published On: May 18, 2017 at 9:13 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,buy-to-let mortgage lending,landlords,lenders,Mortgage lending

A leading industry peer has revealed that he believes gross buy-to-let mortgage lending is likely to fall in the next two years.

However, David Whittaker, of Mortgages for Business, feels the share of lending through limited companies should increase.

Reduction

Speaking at yesterday’s FSE Manchester event, Mr Whittaker said that 2017 would see a reduction in the £40bn worth of buy-to-let lending completed during 2016.

He predicted that this would also slip further in 2018.

In addition, he forecasted that 8/9% of this lending would be for limited company buy-to-let in 2017- with this anticipated to rise to 20% during 2018.

Mr Whittaker highlighted data from two lenders- Keystone and Paragon- which both indicate an increase in buy-to-let purchase applications from limited companies. In fact, Keystone’s data indicates that during Q4 of 2016, 3 in 4 applications were through a limited company.

Industry expert suggests buy-to-let lending will fall

Underwriting Changes

Whittaker has urged both advisers and clients to be ready for the second part of the PRA buy-to-let underwriting changes, which lenders must introduce by the start of October.

‘We will all have to be prepared for much more paperwork,’ Whittaker noted.[1]

There was also a call for an industry debate regarding the appropriate level of reward for advisers, taking into account the increase in work required for buy-to-let transactions.

Mr Whittaker feels that 15% of all vanilla buy-to-let businesses will have moved into the specialist portfolio and complex sectors, where procuration fees are greater.

‘A seismic change is going on and we need a propert debate on this. If they (the lenders) pay us property, they’ll get the work as they want it,’ he stated.[1]

[1] http://www.propertyreporter.co.uk/finance/btl-lending-predicted-to-fall.html

Landlords reminded to comply with Rent Smart Wales

Published On: May 17, 2017 at 9:52 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,Rent Smart Wales,Wales

Landlords and letting agents across Britain with rental properties in Wales have once again been reminded on their legal responsibilities regarding Rent Smart Wales.

Many investors have been warned that they could be unwillingly breaking the law due to non-compliance with these rules.

Rent Smart Wales

Powers of enforcement are now active for Rent Smart Wales. This legislation came into force last year as part of the Housing Act (Wales) 2014 and requires all landlords with properties in the country to register both themselves and their accommodation.

What’s more, self-managing landlords and agents must obtain a licence after the completion of a training course and after having passed a fit and proper person assessment.

As the powers are now active, all landlords that are not compliant face a number of sanctions, including fixed-penalty notices, rent repayment orders and even prosecution. Landlords could also not be able to obtain possession of their property using a Section 21, should they be found to be operating outside of the law.

A register is now available on the Rent Smart Wales website, which allows tenants and the public to check if landlords and agents are breaking the law.

Once landlord is registered, this licence lasts for 5 years.

Landlords reminded to comply with Rent Smart Wales

Better Place

Bethan Jones, Operational Manager of Rent Smart Wales, stated: ‘I would urge any landlords or agents with properties in Wales and who have not yet registered or become licensed, to contact us immediately to avoid legal action. We are still keen to assist those who willingly want to comply.’[1]

‘We’ve worked closely with industry experts to develop the Rent Smart Wales scheme, which we firmly believe will help make the private rental sector in Wales a better place for tenants, landlords and agents,’ she added.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-could-you-be-breaking-the-law-after-recent-changes.html

Government facing legal action over Right-to-Rent

Published On: May 17, 2017 at 8:54 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,immigration checks,landlords,rental market,Right to Rent

The Government is now facing a legal challenge over the controversial Right-to-Rent scheme, which permits buy-to-let landlords to check the immigration status of would-be tenants.

Introduced in February 2016 across England, while Prime Minister Theresa May was Home Secretary, the scheme has seen landlords forced to check legal documents of possible renters before allowing them to rent their property. This is to ensure their tenants are legally allowed to rent in the UK.

Struggles

However, these checks have less foreign nationals (and Britons) without a passport struggling to rent, according to a new survey.

This report by the Joint Council for the Welfare of Immigrants (JCWI) claims that many would-be renters from ethnic minorities are being discriminated against in the rental market. This, the investigation claims, is a direct result of the Right-to-Rent scheme, designed to clamp down on regular immigration.

Government facing legal action over Right-to-Rent

51% of landlords questioned said that the scheme would make them less likely to think about letting to foreign nationals. 42% of landlords stated they were less likely to rent to someone without a UK passport.

Mystery Shopping

A real cause for concern was highlighted through an enquiry from a British Black Minority Ethnic tenant without a passport. This tenant was turned down by 58% of landlords during a mystery shopping exercise, following the introduction of the Right-to-Rent scheme.

Existing legislation states that landlords who fail to check a potential tenant’s immigration status will face fines of up to £3,000 per tenant, with a maximum five years behind bars.

Yesterday, the JCWI wrote to the Home Office in order to call for a stop to the rollout of the scheme and for a reassessment of its effects.

Saira Grant, chief executive of the JCWI, stated: ‘In the face of clear evidence of discrimination under Right to Rent, the government must show it is not acting illegally before it presses ahead with a rollout to the rest of the UK.’[1]

‘This is a scheme that not only discriminates against BME Britons, foreign nationals and British nationals without passports- it imposes costs on landlords, agents and tenants too. In the absence of any clear plan to monitor its effects the Government must carry out a thorough review-until then, any extension to other parts of the UK would be premature, dangerous and potentially illegal,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/government-threatened-with-legal-challenge-over-landlord-immigration-checks