Posts with tag: Buy-to-Let

New property listings in UK almost doubled in January

Published On: February 14, 2017 at 9:47 am

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New property listings rose by more than double in 27% of UK towns and cities during January in comparison to December, according to the latest data released by online estate agent House Simple.

This growth was led by Lichfield, Edinburgh and Hastings, with growth in these regions totalling 268%, 173% and 169% respectively.

New Listings

Overall, the number of new properties listed across the UK in January was up by 93.3% month-on-month. More than twice as many properties came onto the market in London in January in comparison to December, with supply in the capital rising by 121.7%.

House Simple’s data was compiled from over 500,000 listed properties, with the number of new properties coming onto the market each month tracked in over 100 major towns and cities in Britain-including all London boroughs.

Other regions recording strong growth were Rochdale, Huntingdon, Eastbourne and Rugby, seeing rises of 167.5%, 156.5%, 147.3% and 141.5%

In the capital, while supply increased by 121.7%, the boroughs of Redbridge and Bromley saw the most prominent increases, of 216.5% and 184.5%.

New property listings in UK almost doubled in January

New property listings in UK almost doubled in January

Relief

Alex Gosling, chief executive officer of HouseSimple said: ‘We expected to see property supply rise in January and it will be a relief that numbers have jumped because there were concerns that sellers jaded by Brexit talk, might be slow to market in January.’[1]

‘Although the numbers of new properties listed wasn’t through the roof, they were higher than November and only a little lower than October, so supply returned to pre-Christmas levels.’ [1]

Concluding, Gosling observed: ‘If the market’s response to the Brexit vote is anything to go by, the urge or need to move will mean it’s very much business as usual.’[1]

[1] http://www.propertywire.com/news/uk/new-property-listings-key-uk-towns-cities-almost-doubled-january/

 

Where are the best regions for buy-to-let yields?

Published On: February 13, 2017 at 12:56 pm

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Categories: Landlord News

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New research from property peer-to-peer lender Kuflink has looked at the average rental yield in 50 major UK towns and cities to determine where the best locations are for investors.

The data shows that properties in Manchester and Salford led the way, with typical yields of 6.7% and 6.6% respectively. Hull, Luton and Rotherham saw the most prominent increases in average rental yields during the final quarter of 2016.

Returns

Despite the large rents available in southern England, yields in the North are normally greater, reflecting the varying property values in the two regions.

Cambridge for example, gives an average rental yield of just 2.7%.

The top-ten towns and cities in the UK in terms of rental yields were found to be:

Town Region Average rental yield (%)
Manchester North West 6.73%
Salford North West 6.68%
Portsmouth South East 5.75%
Leeds Yorkshire 5.67%
Cardiff Wales 5.59%
Coventry West Midlands 5.37%
Southampton South West 5.19%
Nottingham East Midlands 4.90%
Birmingham West Midlands 4.73%
Stockport North West 4.65%

At the other end of the scale, the ten towns and cities with the lowest average rental yields were:

Town Region Average rental yield (%)
Cambridge East 2.73%
Chester North West 3.04%
Chelmsford East 3.07%
London South East 3.25%
Wolverhampton West Midlands 3.27%
Carlisle North West England 3.29%
Doncaster Yorkshire & the Humber 3.39%
Wakefield Yorkshire & the Humber 3.41%
Rotherham South Yorkshire 3.54%
Northampton East Midlands 3.57%
Where are the best regions for buy-to-let yields?

Where are the best regions for buy-to-let yields?

For rental yields, the top-ten towns and cities seeing an increase in average yields were:

Town Region Average rental yield (%) Dec 2016 Average rental yield change (%) Oct-Dec 2016
Hull Yorkshire & the Humber 3.78% 0.31%
Luton East 3.91% 0.30%
Rotherham South Yorkshire 3.54% 0.28%
Swansea Wales 4.14% 0.26%
Dudley West Midlands 3.72% 0.25%
Cambridge East 2.73% 0.23%
London South East 3.25% 0.23%
Aberdeenshire Scotland 4.31% 0.23%
Edinburgh Scotland 4.09% 0.22%
Doncaster Yorkshire & the Humber 3.39% 0.20%


Available Properties

In addition, the research shows that there are now fewer than 41,000 homes under £250,000 in the UK, down from 58,000 in October.

London has just 2,000 properties for sale under £250,000, with prices continuing to soar. Birmingham saw the largest drop in properties available under £250,000-showing a decrease of 1,373 homes between October and December 2016.

Tarlochan Garcha, CEO at Kuflink, noted: ‘The rift between north and south continues, but this time the attention is turning north. Buy-to-let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle.’[1]

‘Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy-to-let spot,’ Garcha continued.[1]

Concluding, Garcha noted: ‘It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/britains-highest-yields-the-best-areas-for-buy-to-let

Lending to property developers falls post-Brexit

Published On: February 13, 2017 at 10:59 am

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A new report from peer-to-peer lending platform Saving Stream has revealed that amount lent by banks to property developers slipped in the month leading to the Brexit vote.

What’s more, it appears that this has also struggled to recover as banks cut lending to the sector as a whole.

Lending Falls

Data from the investigation shows that the amount lent by banks to developers has slipped by 7% year-on-year, from £16bn outstanding in December 2015 to £14.8bn in December last year.

Saving Stream said that the value of loans outstanding in the sector fell substantially in the run up to the Brexit vote. Values fell from £16bn in December 2015 to £14.8bn in June, with figures not recovering in the last seven months.

This fall in lending to developers is reflective of the on-going uncertainty around the Brexit decision and its subsequent impact on the UK property market.

Some economists have forecasted that consumer spending will fall later this later, with business confidence also waning. As a result, the willingness of banks to lend to developers has slipped.

Lending to property developers falls post-Brexit

Lending to property developers falls post-Brexit

Opportunities

The reluctance of traditional banks to lend is subsequently leading to more opportunities for alternative lenders, such as peer-to-peer platforms. This alternative platform is allowing investors and developers to invest in new asset purchases through liquidity.

Liam Brooke, Co-Founder of Saving Stream, noted: ‘Brexit uncertainty has hit property developers hard over the last year as traditional sources of funding tighten their belts.’[1]

‘There is a wealth of good investment opportunities out there and although banks may be paring down lending in the sector, it’s business as usual for alternative finance providers. Despite Brexit, the advantages of investing in UK property remain in place. Interest rates are likely to stay low, whilst the UK’s housing shortage is unlikely to be resolved any time soon,’ Brooke added.[1]

 

 

 

[1] http://www.propertyreporter.co.uk/finance/lending-to-property-developers-struggles-to-recover-post-brexit.htm

Number of cash landlords at highest level for 10 years

Published On: February 13, 2017 at 10:02 am

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The proportion of landlords using cash to pay for a property hit 61% in January 2017, which was the highest since records began in 2007.

Investors choosing to purchase since the introduction of the 3% Stamp Duty surcharge in April 2016 have used more cash transactions to fund their buys.

Cash Increases

In the last decade, the proportion of landlords purchasing with cash has increased steadily. In 2007, only 41% of landlords purchased a home without a mortgage.

By region, landlords in the North of England were most likely to use cash in order to fund their purchases. 70% of those investors in the North West used cash to fund their transactions-the greatest proportion seen in the country.

London landlords however are more likely to use mortgage finance. With property prices in the capital rising, there has been a considerable fall in the number of landlords not using a mortgage.

In fact cash purchases drive both the top and bottom of the rental market, with the most and least expensive properties more likely to be purchased with cash. In the last year, 65% of homes with a value of less than £125,000 were paid for using cash. 64% of landlords paid in cash for properties totalling £1m or more.

Costs

During January 2017, the cost of a new let was 2.6% greater than in the same month last year-the quickest January increase for two years. 36% of landlords increased rent when signing a new tenancy, a rise from the 27% seen last year.

Rental growth has been driven by regions outside of London-rents in the capital being 2.7% lower than last year.

Number of cash landlords at highest level for 10 years

Number of cash landlords at highest level for 10 years

The three regions seeing the quickest growing rents were Wales (8.8%), the South East (8.2%) and the East of England (7.8%).

Johnny Morris, Research Director at Countrywide, noted: ‘On average landlords sell a home once every 17 years meaning as prices have increased, a significant amount of wealth has built up in the sector. This is now fuelling cash purchases.  With the forthcoming tapering of tax relief on mortgage interest payment, landlords have less of an incentive to borrow, suggesting more cash activity in 2017.[1]

‘Rents are rising at twice the pace of last January and there are signs that rental growth is starting to pick up in much of the country.  Ten months after the introduction of the stamp duty surcharge the number of homes on the rental market is showing signs of coming down.  If this fall continues over the next few months, it is likely to support rental price growth,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/cash-landlords-at-highest-levels-in-10-years.html

 

Buy-to-Let and the UK Housing Crisis

Published On: February 13, 2017 at 9:21 am

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Categories: Landlord News

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We are now within a few months of tax changes within the buy-to-let scheme pricing a lot of potential investors out of the property market. Thanks to a rise in Stamp Duty and an ill-advised reduction in mortgage interest relief, private landlords are set to be getting squeezed more and more. When the market opened up in the mid-90s, it was hailed as being a great opportunity for those who wanted to build a pension pot out with the savings accounts being offered by banks.

Buy-to-Let and the UK Housing Crisis

Buy-to-Let and the UK Housing Crisis

This became especially pertinent in the financial world after the global market crash, when a combination of sustained low interest rates and a lack of trust with financial institutions, led people to put their money elsewhere. The buy-to-let scheme made a lot of sense for the people who felt they’d been bitten by the banks and wanted to have a greater amount of ownership with their money, rather than leave it in a low interest account.

As the market grew, the pool of experience grew deeper. Thanks to online communities such as Landlord News, and resources from the banks themselves there was a point where, with enough research and financial security, most people could consider getting into the property letting business. Now, with the new tax year looming, and the Government sticking to plans to change regulations originally set out by the former chancellor, George Osbourne, we are likely to see the end of the era whereby investors with less disposable income will bet met with more barriers to the market.

The planned changes were almost met symbolically by one of the country’s biggest private landlords, Fergus Wilson, announced plans to sell 1,000 of his properties as he is of the opinion that the cost of running a buy-to-let property is not worth the potential profits. When that kind of outlook is coming from the country’s biggest property investor, one can only imagine what it might mean for those who have much smaller ambitions within the market.

Another compounding factor within these changes to taxation is what this could mean for the so-called housing crisis, which Britain is currently in the midst of. It has been reported that consumer demand for rental property is on the rise, in part due to the fact that many young people are not at the stage where they have enough money saved to be able to buy their own property. Looking at London, the worst affected area in terms of the housing crisis, experts have predicted that rent is set to rise by 25% over the next five years, as the supply of property continues to be outstripped by demand.

In terms of addressing the lack of housing, the Government’s recently announced white paper has a number of different tactics designed to ease the pressure on the demand for affordable housing. A great number of proposals and concepts are covered, including the use of public land for housing developments whilst still protecting greenbelt areas. Critics have said that the White Paper isn’t going into enough detail, so the Government will have to think about how they plan on tackling this problem, especially when landlords are being discouraged from entering the market.

Many tenants and councils unaware of new Section 21 rules

Published On: February 10, 2017 at 2:11 pm

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A concerning new BBC survey claims that powers to tackle so-called ‘revenge evictions’ are not being utilised by the majority of councils in England.

Since October 2015, it has been law that a Section 21 notice can no longer be served during the first four months of a tenancy agreement.

In addition, a further piece of legislation now prevents agents or landlords from ending a tenancy with a Section 21 notice, should they fail to address a complaint about the state of repair in a property made by their tenant to a local authority.

Unaware

However, research conducted by BBC Radio 1 Newsbeat, which used Freedom of Information requests, shows that over half of local councils in England have not taken advantage of these powers.

This suggests that tenants either did not know about the new provisions, or that councils were unaware of their responsibilities after being informed.

At the time of the amendments to the law, a separate report from the National Landlords Association found that 90% of tenants had no clue of these changes.

Many tenants and councils unaware of new Section 21 rules

Many tenants and councils unaware of new Section 21 rules

Labour MP, Clive Betts, chair of the Communities and Local Government select committee, told the BBC: ‘I can’t believe there are that many local authorities where no-one has been the subject to a revenge eviction. We’re talking about landlords here who are trying to avoid carrying out their responsibilities.’[1]

‘They’re the landlords we’ve got to get at – and they’re going to be in the worst properties, with people living in the worst conditions. That’s the biggest challenge for everybody,’ Mr Betts added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/section-21-few-tenants-and-councils-use-new-powers–claim