Posts with tag: investment

Is it Time to Leave the Buy-to-Let Market for Good?

Published On: September 20, 2017 at 9:38 am

Tags: buy to let market,investment,property investors,rental properties

This year has seen record numbers of landlords selling their rental properties in response to regulatory changes and economic uncertainty post-Brexit. But is it time to leave the buy-to-let market for good?

Is it Time to Leave the Buy-to-Let Market for Good?

A recent survey by the Residential Landlords Association (RLA) shows that this trend is set to continue, with 22% of landlords planning to sell at least one of their rental properties over the next 12 months, while less than a fifth said that they are planning to purchase additional buy-to-let properties.

Many landlords have exited the buy-to-let market for good following the Chancellor’s new taxation rules, which have seen investors charged an additional 3% in Stamp Duty since April last year and a reduction in tax relief on finance costs from April this year.

So, should more landlords be selling up and investing their money in other asset classes? Or should they sit tight and ride out the storm?

According to Peter Armistead, the Managing Director of Armistead Property, landlords should not sell their properties unless they can get a better return elsewhere.

He explains: “It is widely recognised that buy-to-let property is a medium to long-term investment. If we take a long-term view, it is easy to see how property performs so well compared with other asset classes.

“Over the last 35 years, for which accurate house price index information is available, house prices have increased 11% per year on average. The longer landlords can hold onto property, the better.”

He continues: “Investors that acquire property in the best buy-to-let hotspots in the UK can enjoy yields of between 8-12%, excellent capital growth and steady rental income. However, if landlords are experiencing poor leads or they think that the long-term potential of an area is not very good, then it’s best to sell.

“But, before landlords put their property on the market, it is worth investigating if you can remortgage, raise the rent, repurpose the property into a House in Multiple Occupation (HMO) to boost yields, or renovate/refurbish it to attract different tenants. There are plenty of mortgage brokers that can provide refinancing for property portfolios, which may be much more attractive than selling up.”

He adds: “The best time of year to sell buy-to-let property is March-June and September-November. Ideally, landlords should sell when they don’t actually need to i.e. you aren’t being forced into a quick messy sale. It’s best to give the property a makeover with a lick of paint, new carpets and maybe a new kitchen to maximise the selling price.”

Are you planning to leave the buy-to-let market for good?

Industry peer suggests buy-to-let could be a ‘car crash’ next month

Published On: September 15, 2017 at 8:43 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,investment,landlords,private rental sector

The buy-to-let market could become a ‘car crash’ next month, as a result of the alterations to lending rules for portfolio landlords. This is the view of leading industry peer, David Whittaker, Chief Executive of Mortgages for Business.

From 1^st October, new rules, initiated by the Bank of England’s Prudential Regulation Authority, will impact on landlords with four or more investment properties.

Car Crash

A report from Mortgage Strategy suggests that Whittaker told a financial services seminar in London that a mixture of a lack of knowledge from private rental sector members and an absence of leader information would lead to a number of issues.

Mr Whittaker observed: ‘It’s going to be a car crash. Landlords don’t know about it and they’re going to say to advisers, ‘I don’t like what you’re asking me to supply and I’ll go somewhere else. Four days later they’ll come back to you the adviser and admit you were right.’

Industry peer suggests buy-to-let could be a ‘car crash’ next month

‘It’s a bit late in the day for lenders to be saying we’ll announce shortly,” he said. “I wish advisers all the best of luck on October 2 because there’s going to be a lot of white noise around the market.’[1]

In the last few weeks, a number of lenders have outlined new criteria in order to meet tighter regulations, which take into account a wide range of personal and financial information regarding the borrower.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/9/buy-to-let-could-become-a-car-crash-next-month

New property investment platform launches

Published On: September 8, 2017 at 11:54 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,Homegrown,investment,residential investment

A new FCA authorised residential property investment platform has been launched today – focusing solely on the construction of new homes.

Homegrown is to enable retail investors to access residential development projects alongside institutional investors and is targeting average net returns of 15% per annum. The minimum investment permitted is £500 per project.

Developments

The platform is only to invest in pre-vetted and fully underwritten residential developments that have already received planning permission and bank finance.

Then, Homegrown is to add its own layer of due diligence , which will include analysing financial assumptions and reports, undertaking sensitivity analysis and investing in projects with developers with a strong track record.

The firm’s aim is to raise funds available to mid-size developers and to ‘democratise property investment, which historically has been restricted to high net worth and institutional investors.’

Homegrown is to focus its activities on urban areas when there is heightened demand – most predominantly in London and the South East.

New property investment platform launches

Everyday Investors

Anthony Rushworth, CEO of Homegrown, commented: ‘Homegrown is about giving everyday investors access to the often superior development returns that are typically only available to professionals and institutions. It also helps them to do their bit in solving the housing crisis by providing property developers with much needed equity finance.’

‘We also like to think we’re filling a major hole for many UK investors left by the buy-to-let exodus. With the raft of tax changes imposed on it, buy-to-let is no longer the investment it was and investors are increasingly looking for alternatives. Homegrown, by contrast, does away with the reliance on rental yields and long term property market growth.’

‘Crucially, the developments we put on our platform have already been underwritten and approved by some of the sharpest minds in the business, and we take the cream of that crop.’

‘There are clearly risks involved with property investment but we work hard to de-risk our investments as much as we can. The platform also provides investors with an opportunity to easily diversify their risk by spreading their investment across a number of developments which are being added to our platform all the time.’[1]

[1] http://www.propertyreporter.co.uk/business/new-residential-property-investment-platform-launches.html

What causes landlords’ biggest anxieties?

Published On: September 4, 2017 at 9:26 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let landlords,investment,landlords

New research from Upad his discovered what features of buy-to-let investment make landlords most anxious.

Many would-be landlords continue to see buy-to-let as an attractive form of investment, in a period of record low interest rates and stock market volatility.

Issues

Data from the report indicates that higher rates of Stamp Duty Land Tax, scrapping of wear and tear allowance and the phasing out of landlords’ mortgage interest tax relief are some of the main issues impacting on landlords.

In addition, the study from the online letting agent found that around of fifth of landlords citing client demand as their main concern.

More positively, despite these concerns, 66% of landlords said they had no intention of slashing their portfolios during the next two-five years.

Void Periods

Of those planning to carry on in the buy-to-let sector, a significant majority said they felt managing and mitigating void periods would be the factor most likely to give them sleepless nights.

13% said this was quite important, while 74% said it was a very important consideration moving forwards.

What causes landlords’ biggest anxieties?

James Davis, founder of Upad.co.uk, observed: ‘It’s easy to assume that landlords are most troubled by the big issues of the day, those topics which the industry and media become all-consumed by.’

‘Whilst these issues clearly do concern landlords, it is often the more mundane aspects of renting a property that have an impact on how a landlord chooses to manage his or her portfolio to reduce the stress-levels associated with doing so. We work closely with our landlords to ensure that we provide them with the tools to make the management of their property portfolio easier.’

Concluding, Davis noted: ‘We can’t change the tax regime, but we can deliver market-leading technology that allows landlords to quickly identify the right tenant and successful let their property – we believe this research demonstrates just how vital this is.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/what-really-keep-landlords-awake-at-night

Professionals and families more likely to see rent rises

Published On: August 17, 2017 at 11:42 am

Author: Em Morley

Categories: Property News

Tags: investment,legislation,rent,rents

Another report has suggested that rents are likely to increase in the third quarter of the year, as less rental properties are coming onto the market.

This is due to more landlords beginning to sell more properties as a direct result of the raft of legislation changes aimed at deterring investment, according to Belvoir.

Spiralling?

Despite the forecasted rent rises, the property franchise insists that rents across Britain are not spiralling out of control.

Belvoir’s Q2 rental index shows that private rents have risen by an average of 2.75% during the last year. This was an increase of £730pcm in Q2 2016, to £751pcm in the second quarter of this year.

When comparing the Q2 2017 average with the 2016 yearly average of £783pcm, this suggests rental price growth of just below 2% – more or less consistent with ONS statistics and other rental indexes.

Dorian Gonsalves, CEO of Belvoir, said: ‘Sensationalist media reports that rents are spiralling out of control across the country are at odds with what our offices are reporting, and that other letting agents across the country are currently experiencing. However, feedback from our franchisees confirmed that fewer properties were seeing static rents than in the previous quarter, and more offices experienced rent rises of £25 and £50 per month.’[1]

Professionals and families more likely to see rent rises

Rental Rises

The data indicates that rents range from £597pcm in the North West, £665pcm in Yorkshire, £1,048pcm in the South East and £1,446pcm in London.

In fact, the average rent recorded in Q2 2017 in London was £1,454 excluding Central London. This represented an increase of 4.5% year-on-year.

40% of Belvoir offices in the South East saw slight rises in rent during Q2 of 2017, with 40% reporting little falls and 20% remaining static. This pattern was also seen in East Anglia, Yorkshire and the East Midlands.

Looking to the third quarter, Mr Gonsalves observed: ‘Families and professionals are most likely to experience rent rises. Demand from tenants on benefits saw the biggest increase versus Q1 and therefore rents are expected to rise for this sector. Two to three bed properties remain in demand and are in short supply.

Although we are not currently seeing a huge exit of landlords from the market it is apparent that landlords are beginning to sell their properties. Most agents expect investor enquiries to remain the same, or to fall, especially for room rents.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/families-and-professionals-most-likely-to-experience-rent-rises

[2]

Nearly 81,000 Build to Rent units planned or completed in England

Published On: August 4, 2017 at 12:02 pm

Author: Em Morley

Categories: Property News

Tags: build to rent,investment,private rental sector,tenants

Fresh Government figures show that there are 80,855 Build To Rent properties that have either been completed or are planned.

Data shows that investment in this region of the private rental sector could rise to £70bn, which could help to create 15,000 homes to rent each year until the year 2022.

In addition, it has the potential to reach a total of at least 240,000 homes built for the purpose of privately renting by 2030.

‘Unlocking’

These figures were revealed during the announcement of a £65m boost from the Government to ‘help unlock’ more than 7,600 homes in Wembley. At least 6,800 of these properties will be available to rent.

The Build to Rent sector has also received the backing of the Royal Institution of Chartered Surveyors and the British Property Federation.

A joint statement said proposals under consideration with the Government include altering planning rules so councils must initiate greater forward planning of rental needs.

There are also proposals to introduce tenancies of three years or more, with these seen as more family-friendly than the more traditional six months tenancy often seen in buy-to-let.

Nearly 81,000 Build to Rent units planned or completed in England

Longer Tenancies

The British Property Federation says that 35,000 tenants have been offered tenancies of three years or more in recent years, ever since a greater emphasis was put on longer tenancies.

Chief Executive of the BPF Melanie Leech, said: ‘We fully support the introduction of affordable private rent, and the inclusion of build to rent and affordable private rent within the National Planning and Policy Framework and Planning Practice Guidance – a multi-tenure approach where all housing sectors receive the right policy support is critical to fixing the UK’s broken housing market.’[1]

Head of UK external affairs Geoff White also said: ‘The government’s proposals to boost supply across all tenures is a welcome acknowledgement of the extent of the housing challenges and the scale of the response required.’[1]

Housing and Planning Minister Alok Sharma observed: ‘Whether renting or owning all families should have the security they need to be able to plan for the future. That’s why as part of our plan to fix the broken housing market we’ve been taking action to create a bigger and better private rental market, supporting new Build To Rent developments so that tenants can have greater choice.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/8/almost-81-000-build-to-rent-units-in-england-completed-or-planned