Posts with tag: Buy-to-Let

BTL lending at Paragon up 80% in Q4 of 2015

Published On: January 28, 2016 at 10:24 am

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New figures released by Paragon Mortgages suggests that investors are looking to purchase property before the tax changes in April.

The lender said in the final quarter of 2015, its lending to buy-to-let landlords nearly doubled. Mortgages for rental accommodation reached £401m, a rise of 80.6% on the same period in 2014.

What’s more, Paragon’s pipeline of future loans rose by 43% to hit £595.7m.

Profitable

This fantastic quarterly performance was a key feature in Paragon Group making a profit of £35.2m during the period. This was a rise of 14% on the year before.

John Heron, Director of Mortgages at Paragon, said, ‘our buy-to-let business has continued to grow and perform exceptionally well. Whilst over time recent policy developments may cause some softening in the rate of growth of buy-to-let at a market level, demand for private rented housing continues to remain strong and all indications suggest this is only likely to increase in the coming years.’[1]

BTL lending at Paragon up 80% in Q4 of 2015

BTL lending at Paragon up 80% in Q4 of 2015

Sensible

Despite the sudden surge in lending during Q4 of 2015, experts believe that Paragon’s buy-to-let growth will slow at a similar rate. However, Justin Bates, analyst at Liberum, believes the lender has not taken unhealthy risks to aid its quick expansion.

‘I’ve always considered Paragon to be a cautious, sensible lender at that is borne out in the credit quality statistics which are way ahead of industry averages,’ he noted. [2]

‘We see comments on the eye-catching growth rate of 80%, but that is not all new lending on new properties-around 60% of Paragon’s lending is remortgaging activity,’ Bates added.[2]

[1] http://www.propertyreporter.co.uk/landlords/btl-lending-up-80-according-to-paragon.html

[2] http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12125251/Paragon-Bank-booms-with-80pc-growth-in-buy-to-let.html

 

Average House Purchase Deposits Pass £80,000

Published On: January 28, 2016 at 9:00 am

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Categories: Property News

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The latest report from the Mortgage Advice Bureau indicates that the average house purchase deposit increased to over £80,000 during December. This is the highest figure recorded by MAB’s Mortgage Index since it started in January 2009.

Rises

A typical purchase deposit rose by 15% yearly to reach £81,721 in December. Similarly, the average purchase price for a property in December increased to £252,990 from £231,487 a year previously. This represented an increase of 9.3% annually.

Borrower traits also played a key role in rising deposits. The average buyers LTV dipped to 68.2% in December, an annual decline of 1.1% and the lowest level seen since 2010.

‘An inevitable repercussion of rising house prices is that higher deposits are required,’ observed Brian Murphy, head of lending at Mortgage Advice Bureau. ‘Those who cannot afford to put up more may find their choice of properties limited. However, those who were able to make a house purchase in December opted to pay a larger amount upfront by taking out a loan with a lower LTV. There are significant benefits to borrowing a smaller proportion of the purchase price, as rates and monthly repayments will be lower.’[1]

‘Demand in the housing market is yet to come off the boil, despite the current dearth in property supply. As a result house prices are likely to continue rising this year, bringing about affordability concerns which will particularly affect first-time buyers.  A significant boost to the construction of new homes is needed to prevent some buyers being priced out of the property market,’ he added.[1]

Average House Price Passes £80,000 barrier

Average House Price Passes £80,000 barrier

Worsening affordability

With deposit sizes rising, December was the third consecutive month of lesser affordability based on a typical purchase buyer’s income as a percentage of property prices.

This proportion stood at 15.3% in December, after a 2% yearly decline from the 17.3% seen in December 2014, with house prices overtaking salary increases.

In addition, the Mortgage Advice Bureau recorded a 2.9% slip in the average salary of homebuyers, from £39,983 in December 2014 to £38,820 in the last month. On the flip side, house values rocketed by 9.3% from £231,487 to £252,990 over the same period.

Access

Mr Murphy added that, ‘the fall in average salaries over the past year suggests those with slightly lower incomes are still able to access the housing market, despite the significant rise in house prices. This has been helped by rock bottom mortgage rates, which have fallen steadily over the past year. However, these low rates won’t last forever and if prices continue to rise faster than wages those with lower incomes may find it more of a challenge to become homeowners.’[1]

‘Government initiatives such as more affordable housing and the Help to Buy schemes go some way in helping those who are finding it difficult to fund a house purchase. However, income and house price growth needs to be more aligned to make homeownership a more realistic dream,’ Murphy concluded.[1]

[1] http://www.propertyreporter.co.uk/hero/average-house-deposit-passes-%C3%A3%C3%A2%C2%A280k.html

 

Mark Carney Expresses Yet More Buy-to-Let Concerns

Published On: January 27, 2016 at 9:24 am

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The Governor of the Bank of England (BoE), Mark Carney, has yet again expressed concern over the boom in the buy-to-let market.

Mark Carney Expresses Yet More Buy-to-Let Concerns

Mark Carney Expresses Yet More Buy-to-Let Concerns

He reports that further analysis of the sector has begun, in response to the growth in loans to private landlords.

Responding to questions from MPs about possible risks to the economy, Carney said: “We think developments in the buy-to-let market have warranted heightened scrutiny and have done so for some time.

“As a general rule, any time you see a very sharp and sustained increase in activity in one area… it at least bears heightened scrutiny.”

Data from the BoE reveals that lending to landlords has surged from 8.8% of all new loans eight years ago to 14.5% last year.

In its December financial stability report, the Bank warned that its Financial Policy Committee (FPC) “stands ready to take action if necessary”.

Carney then told the Treasury Select Committee that the Bank would study the impact of changes to landlord taxes proposed by George Osborne.

“We want to assess the implications of those in assessing the overall implications for stability of developments in buy-to-let,”1 he stated.

From 1st April, landlords will see a reduction in mortgage interest tax relief, a change to the Wear and Tear Allowance, and a 3% extra Stamp Duty charge on investment properties. Find out more about the financial changes here: /landlords-and-agents-warned-that-buy-to-let-mortgages-could-crash/

An external member of the FPC, Martin Taylor, reinforced Carney’s statement: “We are expressing mild concern about buy-to-let.”1

Carney also told MPs that he will decide by the end of this year whether to extend his time as the Bank’s Governor.

1 http://www.standard.co.uk/news/uk/bank-boss-alarm-at-buy-to-let-housing-boom-a3165351.html

 

Tenants’ dream features revealed in new survey

Published On: January 25, 2016 at 12:54 pm

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Categories: Landlord News

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A good-sized garden. A garage or a driveway to park the car on. The waft of seaside air in the lungs.

These three things have been identified as some of the key features representing tenants’ dream characteristics when renting a home.

Setting

A report by Property Let By Us.com shows that one-third of tenants would like to live in rented accommodation by the sea. 25% wanted a rural setting, with 18% preferring a cul-de-sac. 7% said they wanted a nice housing estate, with 5% wanting to live in a suburban location.

When asked about domestic features, nearly two-third of respondents said that off-road parking was their main desire. However, this feature was beaten by the number of tenants wanting a property with a garage (72%). A good-sized garden (41%), shed (35%), a big kitchen (30%) and superfast broadband (28%) came next in the list of desirable amenities.

Tenants' dream features revealed in new survey

Tenants’ dream features revealed in new survey

Surprising

Jane Morris, Managing Director of PropertyLetByUS.com, noted that the survey provided some, ‘interesting findings that might surprise landlords. A property by the sea, or in a rural location, is a dream for many home owners and tenants. Landlords that own properties in these locations, or provide some of these most desired domestic appliances, will be spoilt for choice when finding new tenants.’[1]

Clearly, landlords have the opportunity to enhance their properties and boost their rental income by adding some of these dream domestic features. Superfast broadband for example is becoming widely available and many rural locations are being connected over the next two years. Storage such as sheds and garages is high on the wanted list, especially for families,’ Morris added.[1]

[1] http://www.propertyreporter.co.uk/landlords/what-would-make-a-dream-home-for-a-tenant.html

Seasonal lull in BTL ahead of expected surge

Published On: January 25, 2016 at 11:46 am

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Categories: Landlord News

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A typical, seasonal lull occurred in the rental market during the last month, with the supply of properties falling alongside demand.

These were the findings of the latest report by ARLA, whose agents registered an average of 29 prospective new tenants in December. This was down on the 34 recorded in November, a fall of 15%.

Supply also dipped in the last month, with an average of 182 properties managed per branch, as opposed to 189 in the previous month. Potential renters in the capital however were not spoilt for choice, with an average of only 108 properties managed per branch, 43 less than the overall national average.

Rent relief

In addition to falling supply and demand, rents also slid in December, with the number of tenants experiencing rental increases dropping. Just 18% of ARLA letting agents reported an increase in rents, a drop of 5% since November. Additionally, this was the lowest total recorded in the whole of 2015.

‘As we’d expect in December, the UK saw a lull in activity, with people putting off any moves until January,’ noted David Cox, ARLA managing director. ‘It’s reassuring to see the number of agents reporting rent increases is still on the decline-some encouraging news for tenants as we start 2016’.[1]

A change is coming

Unsurprisingly, the views of ARLA members on the upcoming tax hikes mirror those of the wider sector. 62% believe that the changes will push up rents, while 65% believe the alterations will lead to some landlords leaving the sector, thus lowering supply still further.

The upcoming changes in legislation seem to be having an immediate impact on investors, with ARLA agents recording a 24% increase in investors looking to purchase before the changes come into play in April.

‘With supply, demand and the number of agents reporting rent increases all declining in December, this could well be the calm before the buy-to-let storm,’ Cox continued. ‘Buy-to-let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant.’[1]

Seasonal lull in BTL ahead of expected surge

Seasonal lull in BTL ahead of expected surge

‘Subsequently, after April, we’re very likely to see the number of buy-to-let properties on the market begin to decrease and this will most certainly have a detrimental effect on renters across the country,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/is-this-the-calm-before-the-buy-to-let-storm.html

 

 

Landlords campaigning against tax hike to contact Government

Published On: January 25, 2016 at 10:14 am

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Categories: Landlord News

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An attempt by two buy-to-let investors to seek a judicial review of the Chancellor’s mortgage interest tax relief alterations is beginning to gather pace.

Steve Bolton and Chris Cooper have taken advice from a number of legal aids, including Cherie Blair QC, on the prospect of getting a review of section 24 of the Finance (No.2) Act 2015. They have been informed that they have a, ‘reasonable chance of success.’

Challenge

Messrs Bolton and Cooper launched their challenge shortly before Christmas and had little trouble securing £50,000 through crowdfunding to first secure legal advice and then launch the campaign.

Mr Bolton is head of Platinum Property Partners, which has £200m of residential property in its portfolio. He has teamed up with fellow buy-to-let landlord Cooper in order to launch a challenge, on behalf of nearly 250 investors in the Platinum Property Partners network.

Landlords campaigning against tax hike to contact Government

Landlords campaigning against tax hike to contact Government

On their Facebook page, the pair state, ‘the Finance Act 2015 includes Clause 24, which overturns a fundamental financial business principle, where INCOME less COSTS equals PROFIT. The current government sees fit to change this trend, tested and proven commercial formula. In simple terms, the government believe that it makes complete sense to tax property owners on that part of the rent that has been paid to the lender as mortgage interest, as that money was still in the property owners’ bank account!’[1]

‘The next step is for our lawyers, Omnia Strategy LLP, to send a letter outlining our case to the government with a view to commencing judicial review proceedings,’ the post adds.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/1/lawyers-for-anti-osborne-buy-to-let-tax-changes-to-contact-government-this-week