Posts with tag: Buy-to-Let

New Bank of England powers target BTL lenders

Published On: March 29, 2016 at 10:56 am

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Today has seen the Prudential Regulation Authority publish a report regarding underwriting standards for buy-to-let mortgage lenders. This report addresses potential ways to control the volatile buy-to-let market, in a bid to negate the chances of another crash.

Clampdown

As expected, The Bank of England has said it is to implement new, tougher quality assessments on buy-to-let lenders. The Prudential Regulation Authority is to put a, ‘guardrail,’ in place to stop banks from giving risky loans, noting that as many as one in five lenders does not carry out the sufficient checks.

This clampdown comes as concern grows over the notion that there is a bubble in the buy-to-let market, which could ultimately cause the wider property market to slow.

Following the Chancellor’s perceived attacks on the sector, including the 3% additional stamp duty charges on buy-to-let purchases, the Bank has now also weighed in.

Affordability

The Bank believes that lenders should impose affordability checks on all buy-to-let landlords. It said that borrowers should consider how much money borrowers had to cover their interest payments, should costs rise up to 5.5%.

New Bank of England powers target BTL lenders

New Bank of England powers target BTL lenders

Presently, five of the twenty lenders under scrutiny from the Bank do not impose these standards. The Bank is hopeful that these measures will cut the predicted growth of buy-to-let mortgage lending from around 20% a year to 17%.

Though less severe than first feared, the measures could be reviewed later in the year, according to the Chancellor.

In his address to the Treasury committee, Mr Osborne said, ‘the Bank of England and the financial policy committee have identified potential systematic risks in the large increase in the buy-to-let market. It is highly likely we will give the FPC powers over the buy-to-let market. It is possible we can do that later this year.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-to-be-reined-in-by-new-boe-powers.html

 

 

Buy-to-let investors surge ahead of SDLT changes

Published On: March 29, 2016 at 9:50 am

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Data from a new report by the National Association of Estate Agents showed that buy-to-let investors saturated the market during February.

According to the figures, 85% of estate agents saw a rise in the number of investors coming into the market in the last month. This was due to savvy investors looking to beat the additional stamp duty charges on buy-to-let and second homes, which come into force this Friday (April 1st).

Changes

The Chancellor made the announcement for stamp duty on additional homes and buy-to-let purchases in last year’s Autumn Statement. As a result, 72% and 85% of agents respectively recorded an increase in activity during January and February.

This surge from buy-to-let investors saw housing demand rise to its highest level for 12 years in the last month. On average, there were 463 house hunters registered per member branch, a rise from the 453 recorded in January.

Encouragingly, the number of properties available per branch increased from 33 in January to 35 in February.

Buy-to-let investors surge ahead of SDLT changes

Buy-to-let investors surge ahead of SDLT changes

 

Urgency

Mark Hayward, managing director at the National Association of Estate Agents, notes that, ‘it is evident from February’s report findings that we’ve seen a real sense of urgency from landlords trying to complete on sales ahead of the stamp duty reforms-which now come into force next week. However, the mounting pressure and increased demand for housing has meant that first time buyers have had to compete with landlords for property and as a result they have lost out.’[1]

‘The number of properties available per branch increased marginally from 33 in January to 35 in February, as the number of sales agreed per branch in February increased too. There were an average nine sales completed in February, back to the level seen in October 2015 and a rise from eight sales agreed per branch in January,’ Hayward added.[1]

[1] http://www.propertyreporter.co.uk/landlords/housing-market-erupts-with-flood-of-btl-investors.html

More deposit disputes going way of landlords

Published On: March 24, 2016 at 12:04 pm

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Categories: Landlord News

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New data has indicated that more landlords and agents are being awarded 100% of disputed amounts at adjudications than tenants. This is the first time this has happened since the inception of the tenant deposit schemes in 2007.

Pay-outs

Figures from the TDS show that last year, 19.8% of all disputes raised by landlords or letting agents resulted in a 100% pay-out to them. 19.2% of all disputes made by tenants resulted in them receiving a full pay-out. The remaining 61% of cases saw the disputed money shared between the parties.

In 2014, 20.25% of total disputes raised by tenants saw them received a full pay-out, in comparison to 18.21% to landlords and agents. In previous years, tenants have been awarded the total deposit more often the landlords and letting agents.

Jax Kneppers, Founder and CEO of Imfuna, suggests that these results are a sign that landlords and letting agents are giving more documented information at adjudications. He notes that, ‘for the first time, landlords and agents are now more successful than tenants at winning 100% of deposits. This is a significant achievement-an 8.5% increase year on year.’[1]

Digital age

Mr Kneppers went on to say, ‘more and more landlords and agents are recognising the power of digital professional inventories and mid-term inspections and this is why the balance is starting to shift. Many landlords and agents are ensuring that the condition of the property is fully recorded at the start of the tenancy, with a comprehensive inventory, along with a thorough check-in and check-out report.’[1]

‘Historically, many tenant disputes have gone in favour of tenants, as there was simply not enough evidence to support the landlord or agent’s damage claim.  The most common mistake in most inventories is the lack of detail.  Often there is not enough appropriate photographs and any accompanying description to show the condition of the property and its contents. For example, many landlords and agents fail to record the condition of sinks and bathroom fittings, as well skirting, doors, floor coverings and kitchen units.  If an inventory is not a professional and thorough report on the property, then it is not worth the paper it is written on,’ he continued.[1]

More deposit disputes going way of landlords

More deposit disputes going way of landlords

Importance of inventories

Inventories are a crucial part of the dispute process and provide information for landlords and tenants about the condition of a property. As Knepper notes, ‘inventory reports should contain a full description of the condition of the property, noting detail on every aspect of damage and its location at the start of a tenancy. Good photographs provide vital evidence and should be of a high quality when printed up to A4 or A3 size, so that any damage can be clearly seen.’[1]

Concluding, Knepper warns, ‘Unless landlords and agents have a water-tight inventory, they are at risk of disputes and expensive repair bills. Our research shows that landlords and agents who have switched from analogue to digital inventories, have seen their tenant deposit disputes drop by more than 300% and their success rate at adjudications improve by an average of 75%.’

[1] http://www.propertyreporter.co.uk/landlords/landlords-are-finally-winning-the-dispute-war.html

CML lambasts Government for out of date information

Published On: March 24, 2016 at 10:23 am

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The Council of Mortgage Lenders (CML) has lambasted the Government for failing to update its Private Landlords’ Survey for the past six years.

If it had done so, the CML believe it may have had a ‘better understanding’ of the requirements of the private rental sector.

Resist reforms

Communications manager at the Council of Mortgage Lenders Bernard Clarke feels that the Government needs to resist with further reforms affecting the buy-to-let market.

Writing in a blog on the CML website, Mr Clarke said that landlords have yet to fully take in the series of tax changes that come into force next Friday-the 1st of April.

In addition, Clarke believes that buy-to-let lenders are extremely diverse, so will not be suited to the Government’s ‘one-size fits-all’ regulatory regime.

CML lambasts Government for out of date information

CML lambasts Government for out of date information

Limits

Mr Clarke went on to say that proposed legislation will allow the Bank of England’s Financial Policy Committee to put limits on buy-to-let loan LTV ratios. He also said that the Committee would be able to impose limits on interest cover ratios, which assess rental income relative to the total overall cost of the mortgage.

‘We believe that (tools to control buy to let lending) should only ever be used with great sensitivity and preferably only after consultation and the publication of analysis and assessment of the likely effects,’ Clarke observed.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/mortgage-lenders-tick-off-government-for-out-of-date-lettings-info

 

 

Mortgage sales in February at 8 year high

Published On: March 23, 2016 at 4:40 pm

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Fresh research from Equifax Touchstone has shown that mortgage sales surpassed expectation in February.

Residential and buy-to-let sales reached 16.6bn in the last month, an increase of 39% from January.

Buy-to-let boom

Buy-to-let mortgage agreements surged by 40.3% during February, while residential sales surges by 38.6%. Year-on-year, buy-to-let and residential sales were 52.9% and 30.4% respectively. This information for landlords will come as little shock, with many looking to invest before the stamp duty changes come into force on April 1st.

By area, sales figures increased in every area, with London seeing the biggest rises, up 50.6% on January. The rest of the country followed suit, with mortgage sales in the North West, Scotland and Northern Ireland all increasing by more than 40%.

The total mortgage sales growth by region in February is indicated in the table below:

Regional area Total mortgage sales growth in February
London 50.6%
Scotland 44.5%
North West 43.1%
Northern Ireland 40.2%
North and Yorkshire 39.0%
North East 38.6%
South West 38.2%
Home Counties 37.5%
South Coast 35.4%
Wales 35.0%
Midlands 34.8%
South East 32.1%

[1]

Mortgage sales in February at 8 year high

Mortgage sales in February at 8 year high

Averages

Further data from the report indicates that the average value of a residential mortgage in the last month was £192,568. Average buy-to-let mortgages were lower at £151,491.

Iain Hill, Relationship Manager at Equifax Touchstone, said, ‘with the impending changes in stamp duty on buy-to-let property, we expected buy-to-let sales to jump in February. However, the residential figures have taken many market participants by surprise, also rising sharply and resulting in the highest month for mortgage sales since the 2008 market crash. We expect sales volumes to remain strong in March and it will be interesting to see if the market can cope with the inevitable pressures that come with the increased demand.’[1]

[1] http://www.propertyreporter.co.uk/finance/february-mortgage-sales-at-highest-for-8-years.html

Annual Scottish rent rises slowest in Britain

Published On: March 23, 2016 at 12:10 pm

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Rents north of the border are increasing at only two-thirds the rate of those in England and Wales, according to latest figures.

Data released by Your Move shows that Scottish rents rose by just 2.1% year on year. This was in comparison to 3.3% in England and Wales.

In addition, the figures show that annual rental growth in Scotland has slowed from the 2.1% recorded in January, but has improved from the 1.1% increase shown in February 2015.

Irony

Brian Moran, lettings director at Your Move Scotland, believes it is ironic that Scotland is seeing one the largest Government interventions in the sector when rents are rising at the slowest rate in Britain.

‘Like in any market, affordability is a fundamental check on prices. Rental arrears are a great benchmark in the market and their frequency is falling,’ he noted.[1]

Moran went on to say that the Private Tenancies Bill signed last week indicates a paradigm shift in the sector in Scotland. He feels this will introduce a new artificial influence in the market, alongside territorial supply and demand.

‘Intervention in the market has had negative side effects in the past, noticeably the abolition of tenancy fees in 2012 and it will be interesting to see how landlords recuperate and recover from this regulatory blow,’ Moran continued. ‘Anything that makes buy-to-let investment slightly harder to swallow and managing property portfolios more of a painful process for landlords risks cutting off the inflow of investment. Tenants will ultimately be the ones who feel the effect on their bottom line, if the supply of properties to let dries up.’[1]

Annual Scottish rents rises slowest in Britain

Annual Scottish rents rises slowest in Britain

Regional rises

More figures from the report show that in the twelve months to February 2016, three out of the five regions in Scotland have seen positive yearly growth in rents. Edinburgh and the Lothians led the way, with growth of 7.7% recorded. This has taken typical rents to £644, up from £598 in February last year.

Rents in the South of the country currently stand at £515 per month, a rise from £498 twelve months ago. This 5.3% yearly rise is the second fastest increase seen in the year to February. In the Highlands and Islands, rents are 2.5% greater than one year ago, taking rents here to £554.

However, the East of Scotland has seen rents drop by 2% year-on-year. This is the fourth consecutive month of negative annual growth in the area and has taken rents to £520 per month. Glasgow and Clyde has also seen a drop in yearly rents, which have fallen by 0.8%.

[1] http://www.propertywire.com/news/europe/scotland-buy-let-index-2016032311706.html