Posts with tag: Buy-to-Let

Consumer group slams stamp duty proposals

Published On: February 2, 2016 at 12:52 pm

Author:

Categories: Finance News

Tags: ,,,

A consumer group which supports the notion of a stamp duty charge of second homes and buy-to-let accommodation has moved to brand the Government’s upcoming proposals as ‘dangerously flawed.’

The HomOwners Alliance has said it is open to policy on second homes, but that the forthcoming changes in legislation are, ‘so flawed that the Government must go back to the drawing board.’

Assistance

In principle, the group said it welcomes the Government’s ambition to assist home owners and recognition of home ownership in the stamp duty system.

However, in its submission to the Treasury consultation regarding the surcharge, the HomeOwners Alliance said that the way the plans have been introduced as over-complicated and flawed. As a result, the group claims that there will be huge consequences.

Consumer group slams stamp duty proposals

Consumer group slams stamp duty proposals

Ridiculous

Chief executive of the HomeOwners Alliance, Paula Higgins, said that the scheme envisaged by Chancellor Osborne is, ‘ridiculously complex,’ and may damage the people it is intended to assist.

Higgins said, ‘we are already being contacted by distressed homeowners who have worked out they will be caught by it and not be able to buy the home they want to. Rather than push ahead with a well-intentioned but dangerously flawed scheme, it should go back to the drawing board and put it right.’[1]

As means of a consultation response, the HomeOwners Alliance called on a simpler system than the one proposed by the Government.

‘It is really simple-no one should pay the stamp duty surcharge if they are going to buy a home to live in and homeowners need confidence that will be the case. However, if you are buying a residential property for any other purpose, you should pay the surcharge,’ Higgins concluded.[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2016/1/consumer-group-hits-out-at-dangerously-flawed-stamp-duty-surcharge

 

 

 

Residential Rents In UK Rise By 2.5% in 2015

Published On: February 1, 2016 at 12:51 pm

Author:

Categories: Property News

Tags: ,,,,,,

The latest data released by the Office of National Statistics indicates that private rental prices paid by tenants in the UK increased by 2.5% in the year to December 2015.

Prices increased by 2.7% in England, 0.7% in Wales and in 0.9% in Scotland. In London, prices increased by 3.9%.

English Increase

More detailed figures from the report show that since January 2011, rental prices in England have risen more than those in both Wales and Scotland. Indeed, the annual rate changes recorded in Wales continue to be less than the average for Great Britain.

Since the start of 2012, English rental prices have shown yearly increases of between 1.4% and 3%. In the 12 months to December 2015, rental prices rose in each of the nine regions of England. Unsurprisingly, the largest rises were in London, followed by the East and South East with 2.8%. Rental prices in the capital have been stronger than those recorded in the rest of England since 2010.

Overall, the rental market in the country showed signs of continued strength in the final quarter of 2015, with prices increasing 2.5% in the year to December. However, this was a slowdown of 0.2% in comparison to figures released at the end of quarter three.

Residential Rents In UK Rise By 2.5% in 2015

Residential Rents In UK Rise By 2.5% in 2015

Slows

This slowdown can be attributed in part to Scotland, where prices increased just 0.9% in the year to December 2015, a fall of 0.7% compared to the annual growth rate in September.

Additionally, conditions in the housing market in general may have had an effect on the rental market. House price growth has typically been greater than rental rises for a number of years.

Demand however remains high, with statistics released by RICS indicating that those interested in renting accommodation rose again in the three months to December. However, new landlord instructions fell.

Mortgage Approvals Up In December

Published On: February 1, 2016 at 11:58 am

Author:

Categories: Finance News

Tags: ,,,,

The latest Bank of England Money and Credit report has indicated that mortgage approvals were up in December.

Mortgage approvals totalled 70,837 during the month, slightly higher than the 70,410 recorded during November. In addition, this figure was higher than the average of 69,462 over the last six months.

Improving

Further data from the investigation indicates that net mortgage lending fell from £3.9bn in November to £3.2bn during December.

The total number of approvals for remortgaging also went up from 39,161 to 41,708 in the last month of 2015. This was higher than the average of 39,540 recorded over the latter half of 2015.

Total lending to individuals went up by £4.4bn in December, in comparison to £5.3bn in November and £4.6bn over the six month period.

‘Mortgage lending in December reflected some of the rejuvenated confidence radiating from buyers,’ noted Peter Rollings. ‘After the Autumn Statement extensions to Help to Buy and the rock-bottom base rate lasting out the year, first-time buyers were feeling decisive and this was mirrored by a clear upswing in house purchase approvals from November to December. This energy has definitely been carried over into 2016 and January has already seen an impressive influx of motivated buyers, eager to progress up the property ladder.’[1]

Mortgage Approvals Up In December

Mortgage Approvals Up In December

Momentum

Mr Rollings feels that, ‘2015 was also the year of remortgaging for many existing homeowners-and his momentum is showing no signs of dissipating while cheaper fixed-rate mortgages remain available.’ He notes that, ‘in coming months, we can expect strong buy-to-let lending, as the April introduction of higher stamp duty for second homes gives a new sense of urgency for those looking to invest in property or expand their existing portfolio.’[1]

Brian Murphy, Head of Lending at Mortgage Advice Bureau also said, ‘mortgage approvals reached a near two-year high in December, rounding off a successful year for borrowers. Existing homeowners were the frontrunners in this growth, with the number of remortgage approvals rising by more than a quarter since December 2014.’[1]

Murphy also noted that, ‘borrowers benefited from rock-bottom mortgage rates throughout 2015 and our data shows that rates continued to fall across all fixed-rate products in December. Growing numbers of homeowners are wising up to the fact that it pays to remortgage, particularly if moving from a poor value standard of variable rate. Borrowers who are comfortable with a long-term commitment can take advantage of today’s rates by locking into a fixed product, avoiding higher mortgage bills when an interest rate rise eventually kicks in.’[1]

[1] http://www.propertyreporter.co.uk/finance/mortgage-approvals-up-in-december-says-boe.html

Buy-to-let remains attractive, according to broker

Published On: January 30, 2016 at 11:48 am

Author:

Categories: Landlord News

Tags: ,,,

A leading mortgage broker has recently performed a detailed analysis of the buy-to-let sector and has concluded that investment in the market is still an attractive proposition.

Private Finance also noted that accessing necessary finance will prove to be the greatest challenge for amateur landlords looking to enter the sector.

Changes

The firm’s analysis accounted for the upcoming changes to the market, such as the reduction of higher rate tax relief and hikes in stamp duty, alongside the impact on house prices and yields.

In addition, the broker looked at the impact of the European Mortgage Credit Derivative and found that whilst these factors might have a negative impact, they are most unlikely to harm to market as a whole.

As part of its analysis model, Private Finance used an average buy-to-let situation in a typical town. The findings show that a potential 62% return on capital could well be an achievable goal. This is on the basis that the investment is held for at least five years, utilising a fixed-rate mortgage at 3.6% for the duration.

Buy-to-let remains attractive, according to broker

Buy-to-let remains attractive, according to broker

Conservative

A number of industry commentators have noted that annual capital appreciation of up to 5% is achievable in some areas. However, Simon Checkley, managing director of Private Finance believes that a buy-to-let investment remains viable at a smaller rate of appreciation.

Checkley said that, ‘of course, these figures assume the full extent of the tax relief reduction and stamp duty hike so the short term returns could look more attractive if you are able to take immediate action and complete a purchase before 1 April 2016 when the increased stamp duty will appear.’[1]

‘We are not underestimating the impact of the loss of higher rate tax relief of the increase of stamp duty on the market. What we are saying is that they are not necessarily deal brokers. There have been many protestations in recent weeks from concerned landlords as a result of the planned tax changes. What is less commonly recognised is that are still opportunities in this market if an investor makes a sound purchase subject to other underlying economic factors, ‘he continued.[1]

Concluding, Checkley said that, ‘understandably, many landlords are claiming they will lose considerable sums of money as a result of these changes. However this does beg the question of the true viability of their original investment.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/1/buy-to-let-still-attractive-according-to-broker

 

£1.4bn in Build to Rent investment this week

Published On: January 29, 2016 at 10:21 am

Author:

Categories: Property News

Tags: ,,,

The upcoming Build to Rent scheme has received a staggering £1.45bn worth of investment in this week alone.

Build to Rent, where institutions both fund and manage specifically built rental accommodation, is seen by many observers as a government-backed scheme to improve the standards of British lettings.

However, many within the industry are concerned that this will reduce the importance of buy-to-let investors.

Worries

Grainger PLC, Britain’s largest listed residential landlord, is the latest investor in the scheme and says it is going to spend around £850m on Build to Rent by 2020.

Helen Gordon, the new chief executive of Grainger Plc, said, ‘it is clear that swift and decisive action is required to capitalise on the compelling market opportunity and to enable Grainger to realise its potential of being the UK’s leading private landlord.’[1]

The firm’s latest trading statement to the City seems to suggest a restructuring of Grainger, to make sure it can obtain a share of the ever expanding Build to Rent Market.

Additionally, the company says it will, ‘re-allocate development team resources to deliver new PRS stock,’ and, ‘refocus the acquisitions team to improve access and conversion of PRS opportunities.’[1]

£1.4bn in Build to Rent investment this week

£1.4bn in Build to Rent investment this week

Statement Of Intent

Grainger’s trading statement also says, ‘as we look out to 2020, our PRS- led strategic targets are:’

  • invest over £850m into PRS assets to drive rental income growth
  • net rents and income to more than cover overheads, expenses and financing costs;
  • net rental income to exceed profit from sales
  • dividend will increase, reflecting the greater proportion of rental income

Just last weekend, Gordon said that Grainger’s Build To Rent offer would include tenancies ranging from six months to three years In length.

[1]https://www.lettingagenttoday.co.uk/breaking-news/2016/1/build-to-rent-is-coming–1-4-billion-in-investment-this-week

Evicted tenants should be compensated-Generation Rent

Published On: January 28, 2016 at 11:47 am

Author:

Categories: Landlord News

Tags: ,,,,

Generation Rent, the campaign group, has called for another controversial legislation to be added to the sector.

The group is asking for tenants who have been served notice to leave a property to be fully compensated by their landlord or letting agent.

Faultless

A lack of stability in privately rented housing means that more than one quarter of tenants could expect to lose their homes, through no fault of their own.

An investigation by BMG research found that 27% of current and previous tenants had been evicted by a landlord who wanted to either sell, refurbish or change the usage of a property. Another reason for eviction was found to be an unaffordable rent increase.

The most common reason for tenants losing a home was the landlord deciding to sell up (14%.) This was followed by 7% who said that soaring rents had forced them out.

However, 51% of respondents said that they were not aware that private landlords can evict tenants without giving a reason. 63% of people questioned said that private tenants, who had not broken the terms of their agreement, should be allowed to stay in their property.

Evicted tenants should be compensated-Generation Rent

Evicted tenants should be compensated-Generation Rent

Compensation

66% feel that abiding tenants forced out of their home should be compensated for the cost of moving to their new property, including 80% of private renters. 75% believe private landlords should be banned from raising their rents by more than the rate of inflation.

With the Housing Bill slowly passing through Parliament, Generation Rent has called on the Government to adapt the eviction law in order to prevent honest tenants who face losing their property a right to compensation. This, the group feels, will also deter landlords from evicting tenants in the first place.

‘Every time a renter moves home they spin the roulette wheel,’ notes Betsy Dillner, director of Generation Rent. ‘They might well get a good landlord who values long-term tenants, but this poll suggests that one in four of us will end up with a bad one sooner or later.’[1]

‘With increasing numbers of us facing a lifetime of renting, we need to be able to call the place we live a home and we can’t until the Government ends unfair evictions,’ she added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/1/generation-rent-calling-for-compensation-for-evicted-tenants