Posts with tag: Buy-to-Let

Auction House still enjoying record sales

Published On: April 19, 2016 at 10:34 am

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Sales at Auction House were positive in the latest auction on 14th April, with properties sold totalling £15,567,480

This total was very encouraging, with many onlookers predicting that the introduction of the 3% additional Stamp Duty would slow the market.

In total, 79% of lots were sold, many above their guide price.

Performance

During the first quarter of this year, Auction House recorded its strongest performance in its nine-year history. Between January and March, this auctioneer sold 729 lots from 939 offered. This figure was up 14.3% on the same period in 2015 and raised £92.2 million.

This underlines how residential landlords rushed to invest before additional stamp duty surcharges came into play.

Auction House London Director, Jamie Royston, noted, ‘we really didn’t know what to expect at the first auction since the Stamp Duty rises were brought in at the start of April. But with realistic prices agreed from vendors the auction market is still proving to be buoyant-although fears over Brexit are dampening the enthusiasm of some investors.’[1]

Auction House still enjoying record sales

Auction House still enjoying record sales

Finding the norm

Founding Director of Auction House, Roger Lake, noted, ‘the auction market will quickly find the new norm, with investor buyers factoring in the new rates of Stamp Duty. There is still a real shortage of housing stock in the UK and population numbers are rising. Rents are pushing up too and first time buyer numbers are increasing aided by the many favourable government initiatives. However, the bigger influence for buyer sentiment during the second quarter this year will no doubt be the debate over Brexit.’[2]

‘The property market never likes uncertainty-and the reduced demand means that more bargains could be found around the country in our auctions during April, May and early June. Our view is that the time is right for prudent investors to dip in rather than duck out, ‘Lake added.[2]

[1] http://www.propertyreporter.co.uk/auctions/auction-market-still-buoyant-post-stamp-duty-rises.html

[2] http://www.propertyreporter.co.uk/auctions/auction-house-announces-record-q1-figures.html

Government’s buy-to-let policies attacked again

Published On: April 18, 2016 at 11:56 am

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Another journalist has voiced their disagreement towards the government’s perceived attack on the buy-to-let sector.

Paul Thomas, editor of Mortgage Strategy, labelled the string of policies as, ‘political short-termism,’ and, ‘a vote winner to disguise the fact that this administration lacks a clear, joined-up plan for housing.’[1]

War

Writing on the Spectator website, Mr Thomas believes talk of a ‘buy-to-let war,’ is wrong-as war involves two sides and in his mind, only the Government has gone on the attack!

Thomas said mortgage lenders are starting to panic and as such have reduced buy-to-let mortgage prices to record lows. Although this could support the market in short-term, Thomas believes, ‘the truth of the matter is the buy to let sector is likely to stagnate and even shrink in the long term.’[1]

In addition, Thomas said that there is a, ‘damaging double-whammy’ for buy-to-let landlords. These are the mortgage interest tax relief cuts, coupled with the Prudential Regulation Authority proposing stricter lending criteria on mortgage lenders.

Government's buy-to-let policies attacked again

Government’s buy-to-let policies attacked again

Intentions

Continuing, Thomas stated, ‘the Government’s policy intention is clear: it wants to wrestle back housing stock from wealthy landlords so first-time buyers can get on the housing ladder. This is political short-termism in its purest form; a vote winner to disguise the fact that this administration lacks a clear, joined-up plan for housing.’[1]

‘There is an acute lack of social housing and, while it is now easier to get a mortgage than it was a few years ago, house prices have increased to such an extent that raising a deposit has become an impossible task for some. Moreover, some people simply do not want to own their own home, given the flexibility renting offers,’ he added.[1]

In conclusion, Mr Thomas warned, ‘things could get very painful for millions of tenants up and down the country should renewed attacks force landlords to find new homes for their money.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/scathing-attack-on-governments-anti-buy-to-let-short-termism

 

BTL mortgage rates cut to boost market

Published On: April 15, 2016 at 11:35 am

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Mortgage lenders are cutting rates on products intended for buy-to-let landlords in a bid to give the market a boost in the wake of the stamp duty deadline passing.

Cuts

Comparison website Moneyfacts says that the average two-year fixed buy-to-let mortgage rate currently stands at 3.32%. This is down on the 3.59% recorded at the same time last year and substantially lower than the 4.03% average shown in April 2014.

The average five-year fixed rate deal for buy-to-let landlords is presently 4.0%, in comparison to 4.37% in April 2015 and 4.76% two years ago.

Charlotte Nelson, a spokeswoman for Moneyfacts, said, ‘while the new tax rules and stamp duty changes could potentially take the shine off buy-to-let investment, property is often seen as a safe bet and with rental properties in demand and rent high, buy-to-let remains an attractive proposition.’[1]

‘A year on from pension freedoms, almost £3bn has been paid out in cash lump sum withdrawals, so it’s highly likely that some of this money has been accessed with buy-to-let in mind,’ she added.[1]

BTL mortgage rates cut to boost market

BTL mortgage rates cut to boost market

Downwards

Analysts from Moneyfacts have noted that savings rates are so low that many retirees investing in buy-to-let following changes to pension rules are starting to look elsewhere. A separate investigation underlines how the majority of retiree landlords are dependent on their rental income.

Lenders are keen to avoid this group of investors to consider their options, therefore are offering some of the best rates the sector has witnessed. What’s more, rates were already low in the run up to the stamp duty changes, which has further aided the downward spiral of rents.

Concluding, Nelson said, ‘while the current pressures on the market are not yet causing rates to rise, borrowers should remember that they will now be facing tighter lending rules, including stricter affordability checks, so it is even more important for potential to seek financial advice to see if buy to let really is the right option for them.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/lenders-try-to-bolster-flagging-buy-to-let-market

Many retiree landlords dependant on rental income

Published On: April 15, 2016 at 10:37 am

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A new survey conducted by Responsible Equity Release reveals that a majority of buy-to-let investors of retirement age are reliant on their rental income.

Almost three-quarters of buy-to-let investors over 65 said they would struggle to make ends meet if they did not have their rental income to cover them.

Boosts

According to the survey, 81% of landlords of retiree age stated their rental property provided a much needed boost to their retirement income. Low interest rates are thought to be hitting a lot of retiree landlords hard.

The survey quizzed over 1,000 retirees about their experiences of owning a buy-to-let property. An overwhelming majority of 92% said that they were concerned about changes to mortgage interest tax relief and the potential impact this would have on their rental yields.

In fact, the buy-to-let tax alterations have left a number of landlords considering their future in the sector. 41% said though their buy-to-let investment was a positive source of income, they are seriously thinking about selling up.

Many retiree landlords dependant on rental income

Many retiree landlords dependant on rental income

Life saver

Steve Wilkie, managing director at Responsible Equity Release, said, ‘for many pensioners, having a buy-to-let property has been a life saver in this low interest environment. While their savings have languished, earning very little interest and pension income has been hit hard by falling share prices, property income has remained strong.’[1]

‘Without the income boost from their buy-to-let, many would really be struggling to make ends meet. But the Chancellor has yet again ignored UK’s retirees when he announced changes to the way buy-to-let would be taxed,’ Wilkie continued.[1]

Mr Wilkie went on to say, ‘George Osborne was so focused on taxing the rich, he forgot that a new tax on buy-to-let won’t just hit the wealthy, it will also hit those honest, hard-working people, who may have a single buy-to-let property and were just hoping it would earn them a little extra income in retirement.’[1]

[1] http://www.propertyreporter.co.uk/landlords/majority-of-pensioner-landlords-reliant-on-btl-income.html

Property sales in nine year high in March

Published On: April 14, 2016 at 9:22 am

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Sales of property in England and Wales saw their highest monthly performance for more than nine years in March, with transactions rising by 30%, amounting to 800,000 more deals.

Data from the latest Your Move house price index also shows house price growth rose by 6.9% year on year and by 0.6% month on month. This took the average price of a property in the UK to £291,650.

Home hikes

The average price of a home in Britain is now £18,745 more per than at the same period one year ago. When London and the South East are excluded from the calculations, prices were still up by 5.1%, which suggests that market is still thriving outside of these two predominantly strong growth regions.

London’s property market saw the fastest growth of any area in the UK, with house prices climbing by 8.2% or £44,548 per year. Bath and North East Somerset saw the highest price rise in March, with property values up by 5.3% or £18,603 month on month.

Stamp Duty surge

Adrian Gill, director of Reeds Rains and Your Move estate agents, noted that the impending stamp duty rises for additional properties introduced at the beginning of April was a key factor in the price hikes.

Gill said, ‘the surge was widespread across England and Wales. This goes beyond any normal seasonality, with second home and buy-to-let investors rushing to beat a bigger tax bill.’[1]

Figures from the report show that 73% of local authorities in England and Wales have seen an increase in property values since July 2014.

Mr Gill believes this is, ‘welcome news for homeowners, who now have a fantastic opportunity in the current sellers’ market. The pervasive shortage of homes on the market is still driving up values, as buyers have to compete for each available property.’[1]

Continuing, Gill said, ‘if they are going to make it easier to get a foot on the property, the Government will have to double down on its help to first time buyers, or let up on landlords.’[1]

Property sales in nine year high in March

Property sales in nine year high in March

Capital gains

Mr Gill also noted that after a slight Winter slump, the London property market is on the rise again. Prices are 8.2% greater than twelve months ago. Gill observes, ‘the lift in London’s house prices seems steep. But we’re actually in a much calmer position than previous years, with the current rise still well below London’s record 20.6% year on year growth, established in July 2014.’[1]

This growth in London’s property prices is once again seeing the capital start to pull away from the rest of the country. In fact, London and the South East are driving house prices up by 1.8%, more than double the rate seen at the end of last year.

‘As a result, we’ve returned to a two speed housing market, as growth in the rest of the country is easily outpaced by London and the South East. But it’s not all about London, as house prices are still advancing in the Northern cities, with the average property price in Manchester hitting a record high of £174,448, up 3.5% annually,’ Gill concluded.[1]

[1] http://www.propertywire.com/news/europe/england-wales-property-ndex-2016041411792.html

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

Published On: April 13, 2016 at 11:22 am

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The Government is not trying to kill off investment in the buy-to-let sector, insists the Housing Minister, Brandon Lewis.

Responding to claims from ex-Conservative MP Michael Portillo during the Association of Residential Letting Agents (ARLA) conference, Lewis said that the Government’s intention is to create a more professional private rental sector and eliminate rogue landlords.

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

The Government is Not Trying to Kill Off Buy-to-Let, Says Housing Minister

Landlords have recently been hit by changes to their finances, notably the 3% Stamp Duty surcharge and the change in the Wear and Tear Allowance.

From April next year, landlords will also see a reduction in the amount of tax relief they can claim on their buy-to-let mortgage interest payments. Finance expert Paul Mahoney, of Nova Financial, explains how these changes will affect landlords’ lettings businesses.

However, Lewis told agents at the conference that the Government is still backing the private rental sector through schemes such as Build to Rent.

He insisted: “Our primary focus is increasing supply and homeownership. Most people – 86% – want to own their own home, but we also want a private rented sector. We want more institutional money and more professionally managed property.

“Buy-to-let is still an area with capital security and revenue returns, so there is still an attractive revenue model.”1 

Lewis added that schemes such as Right to Rent would crack down on rogue landlords.

Answering questions from the audience, Lewis also said that he would look into introducing electrical safety rules, similar to those already enforced in Scotland.

He was also interested in measures to make it easier to avoid court proceedings in tenant evictions.

For all of the changes affecting the buy-to-let sector and property market, remember to check your landlord updates at LandlordNews.co.uk and on social media.

1 http://www.propertyindustryeye.com/housing-minister-denies-government-is-trying-to/