Search Results For: buy to rent sector

Will buy-to-let business pick up in the next 12 months?

Published On: July 15, 2020 at 8:31 am

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According to Paragon Bank, four out of 10 brokers expect to write more buy-to-let business in the next 12 months. This information comes from the bank’s Financial Adviser Confidence Tracker (FACT) Index.

This index contains the results of a survey that included over 200 intermediaries. It shows that 41% of advisors said they expect more buy-to-let business, which is a slight dip on the 43% recorded in the first quarter of 2020. However, it is up from the 38% recorded from the final quarter of last year.

28% of intermediaries expect buy-to-let mortgage levels to remain stable.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “Despite the buffeting that coronavirus has caused to the mortgage market, and housing sector more broadly, there is clearly still strong and stable demand for buy-to-let via intermediaries, which is reflected in the results of this survey.

“We have seen a solid rebound in buy-to-let business since the housing market reopened in mid-May and landlords have been unlocking capital to invest and grow their portfolios further. 

“We expect to see increased demand for rented property underpinning growth in the coming months as people delay house purchase or cannot obtain a mortgage with the removal of higher loan to value products in the residential market.”

Of those intermediaries forecasting an increase in buy-to-let business, confidence was stronger amongst directly authorised firms (46%) than appointed representatives (36%). Confidence was also firmer in sole adviser organisations (47%) than firms with between two to three advisers (34%) and four or more advisers (37%).

Richard Rowntree added: “Coronavirus has had a clear and damaging impact on the economy and the UK as a whole, but the long-term fundamentals underpinning demand for buy-to-let remain unchanged. The UK has a growing population with increasing numbers of households and the private rented sector will provide a good quality home for many of them.”

One-beds offer the best rental yields, research from Howsy shows

Published On: June 29, 2020 at 8:29 am

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One-bed properties are now providing the best financial investment when it comes to buy-to-let rental yields, according to lettings management platform Howsy.

Looking at figures for major cities across the UK, it found that one-beds now average a rental yield of 6.2%.

Previously, three-beds held the top spot, with a rental yield of 4.3%. Despite this increasing to 5% in this latest research, one-beds have rocketed ahead.

The highest performing areas for one-bed rental yields included in this analysis are:

  1. Newcastle (7.9%)
  2. Glasgow (7.7%)
  3. Liverpool (7.1%)
  4. Plymouth (7%)

The research also looked at two-bed buy-to-let investments, revealing that Newcastle, Glasgow and Belfast all have the highest average rental yields of 6.9%. This is followed by Sheffield (6.7%) and Leeds (6.4%).

The top of the table for three-bed rental yields is Glasgow again, at 6.9%.

Founder and CEO of Howsy, Calum Brannan, commented: “We’re seeing a lot of changes to traditional property trends across the sector and the latest seems to be the profitability of the three-bed buy-to-let. 

While still a good investment, on the whole, tenants demand is growing for one and two-bed homes that provide them with a space of their own.

This growing demand is leading to one and two-bed properties climbing the ranks of profitability due to their lower investment price point and higher demand pushing up rental prices. 

As the threat of the Coronavirus reduces, we will no doubt see this trend reverse as people begin to again feel comfortable about shared living and the better social lifestyle this brings.”  

This latest research from Howsy is based on the average house price and rent for each location, as provided by Home.co.uk.

Rental yields – 1-bed 
Location1 Bedroom
Newcastle7.9%
Glasgow7.7%
Liverpool7.1%
Plymouth7.0%
Sheffield6.7%
Leeds6.6%
Leicester6.6%
Nottingham6.6%
Swansea6.6%
Portsmouth6.4%
Aberdeen6.3%
Newport6.2%
Manchester6.0%
Cardiff6.0%
Oxford5.8%
Belfast5.6%
Bournemouth5.5%
Southampton5.4%
Cambridge5.4%
Birmingham5.4%
Bristol5.3%
Edinburgh5.2%
London4.7%
  
Average6.2%
______________________
Rental yields – 2-bed 
Location2 Bedroom
Belfast6.9%
Glasgow6.9%
Newcastle6.9%
Sheffield6.7%
Leeds6.4%
Liverpool6.3%
Nottingham6.0%
Swansea5.9%
Portsmouth5.8%
Aberdeen5.5%
Manchester5.5%
Birmingham5.4%
Newport5.4%
Leicester5.3%
Cambridge5.1%
Cardiff5.1%
Plymouth5.1%
Edinburgh5.1%
Oxford5.0%
Southampton4.9%
Bristol4.8%
London4.2%
Bournemouth4.0%
  
Average5.6%
______________________
Rental yields – 3-bed 
Location3 Bedroom
Glasgow6.9%
Newcastle6.4%
Belfast6.0%
Leeds5.9%
Liverpool5.7%
Aberdeen5.6%
Manchester5.5%
Swansea5.3%
Edinburgh5.0%
Nottingham5.0%
Birmingham5.0%
Sheffield5.0%
Portsmouth4.9%
Bristol4.6%
Oxford4.5%
Southampton4.5%
Cardiff4.5%
Newport4.4%
Plymouth4.3%
Leicester4.1%
Cambridge3.9%
London3.9%
Bournemouth3.0%
  
Average5.0%
______________________
Rental yields – 4-bed 
Location4 Bedroom
Glasgow6.9%
Edinburgh6.4%
Leeds4.8%
Newcastle4.7%
Bristol4.7%
Belfast4.4%
Aberdeen4.4%
Liverpool4.4%
Birmingham4.3%
Manchester4.3%
Nottingham4.0%
Southampton3.9%
Portsmouth3.9%
London3.8%
Leicester3.7%
Cardiff3.7%
Sheffield3.6%
Newport3.6%
Oxford3.5%
Cambridge3.5%
Plymouth3.4%
Swansea2.9%
Bournemouth1.8%
  
Average4.1%
______________________
Rental yields – 5-bed+ 
Location5 Bedroom
Glasgow5.5%
Edinburgh5.1%
Southampton4.3%
Birmingham4.2%
Nottingham3.9%
Aberdeen3.9%
Liverpool3.8%
Manchester3.5%
Bristol3.4%
Newcastle3.2%
Portsmouth3.2%
Leeds3.2%
Leicester3.1%
Cambridge3.1%
Sheffield3.0%
Swansea3.0%
Belfast3.0%
Cardiff3.0%
London3.0%
Plymouth2.6%
Newport2.5%
Oxford2.1%
Bournemouth1.6%
  
Average3.4%

Landlords heavily exposed to young renters most at risk of losing their job

Published On: June 3, 2020 at 8:15 am

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Categories: Landlord News,Tenant News

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With nearly one in two renters in the UK aged between 16 to 34, residential landlords are heavily exposed to younger people falling into financial distress, according to research by payment technology firm flatfair and real estate investor Rowan Asset Management. 

This research shows that a high proportion of young people work in retail or the gig economy. For example, nearly one in two of the over 2.8 million retail workers in the UK are aged between 16 to 34, with one in four aged 25 to 34. Restaurant workers are even more likely to be young, with six in ten of those working in food and beverage aged between 16 to 34.

More than one in three 18 to 24-year-olds are earning less than before the outbreak, research by the Resolution Foundation recently found. Two million renters told charity Shelter that losing their job will leave them unable to pay rent. Research from the housing charity also found 1.7 million renters ( one in five) in England expect to lose their job in the next three months.

Buy-to-let landlords who rely on rental income for their livelihood may struggle to meet their own obligations if their tenants fall behind on the rent while housing associations may also find their tenants are falling behind on rents.

Franz Doerr, CEO and founder of flatfair said: “As more firms start to furlough staff and others cease trading due to the economic impact of the virus, swathes of young renters up and down the country will see their incomes plummet and may not be able to pay their rent. Rising rent arrears are likely to mount over the year as a consequence.

“This may, in turn, see many landlords struggling to meet their own obligations such as mortgage repayments.”

George Jackman, chief investment analyst at Rowan Asset Management said: “It’s clear that there is going to be a sharp, short-term impact on many young people’s income due to the economic distress caused by the virus. 

“But the more worrying aspect of this whole crisis is how this young cohort of workers will be able to find stable employment over the long-term, with sectors like retail looking set to change fundamentally. It’s really hard to see retail being able to employ 2.8 million again any time soon, and right now there aren’t any emerging industries in this country that will be able to step in and fill this gap.”

Spring Budget 2020: Changes for homebuyers and renters in the UK

Published On: March 12, 2020 at 9:25 am

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Categories: Tenant News

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As well as changes to Stamp Duty, the following were discussed in yesterday’s Spring Budget announcement:

Government’s commitment to extend the Affordable Homes Programme

Tom Slingsby, chief executive of property developer Southern Grove, says: “This cash boost for affordable homes will underpin building for many years to come and is a declaration of war on a housing crisis that isn’t going away.

“Only sufficient provision of affordable homes in the right areas can prevent the sort of social inconsistencies that appear when high property prices put key areas of UK cities off-limits to younger workers and their families.

“We know from conversations we have constantly with housing associations that the appetite is there to keep building through economic cycles and this fund will ensure that will happen.”

Henry Verrill, Head of Valuations at estate agent Nested comments: “Today’s budget contains welcome announcements for the housing market. The interest rate cut, though principally in response to COVID-19, stands to benefit those on variable rate mortgages and buyers looking for fixed-rate deals.

“And the £12bn set aside for the affordable homes programme – combined with a further £1.1bn for the building of up to 170,000 new homes – is good news for those planning to take their first steps onto the housing ladder in a market where the cost and level of supply is a well-known issue.

“We’re particularly pleased to see £1bn designated to the new building safety fund – a fund which will help ensure the removal of unsafe cladding from apartment blocks.

“This continues to be an important issue for Nested’s clients and this measure will provide a degree of reassurance to buyers and sellers of flats across the country. Whilst it’s too early to tell whether the sums allocated will be enough, it’s certainly a step in the right direction.”

Renters’ Reform Bill

Neil Cobbold, Chief Sales Officer at PayProp, comments: “The lettings sector would have been relieved to hear further details of this legislation, along with a clearer timetable for property professionals to work to. 

“Removing Section 21 from the Housing Act 1988 is a huge change to the evictions process. It’s vital that input from the industry is considered when this measure is debated in Parliament in order to get the best outcome for all parties.

“Lettings professionals will also want to see how the court system will be reformed to oversee the new system.

“The introduction of lifetime deposits could have a range of advantages for the rental sector – and particularly for renters. However, it will be important for politicians to consider input from the sector when deciding how a new deposit system could work.”

Building Safety Fund to remove unsafe cladding from all UK buildings above 18m

David Westgate, Group Chief Executive at Andrews Property Group, comments: “The announcement of a £1bn Building Safety Fund will be welcomed by leaseholders living in high rise blocks around the UK.

“The key issue, as ever, is how quickly the funds can be called upon and if there are any specific criteria that must be met for developments to be eligible.

“The funds have officially been made available but the logistics have yet to emerge. In the meantime, many people’s lives have been put on hold as they cannot secure mortgage finance and they cannot sell their homes.

“What’s also vital is that the new fund covers rendered insulation as well as combustible cladding.

“In our experience, the cladding issues we are seeing around the UK could soon be surpassed by the problem of rendered insulation.“If we are to genuinely make every apartment and housing block in this country safe then the newly announced fund needs to cover all materials that are deemed to be unsafe, not just cladding.”

Lack of investment to help the issue of homelessness and boost homeownership

Jon Sparkes, chief executive of Crisis, said: “Missing from today’s Budget is bold action to prevent people from being forced on the streets in the first place, such as clear targets for increasing the supply of social housing and restoring housing benefit to cover the cost of rent.

“Rough sleeping is the most brutal and devastating form of homelessness and while the additional funding announced to tackle this is much needed, a dark cloud remains over the Government’s ability to end rough sleeping within this Parliament without tackling its root causes.  

“The lack of investment in housing benefit is a complete missed opportunity for the Chancellor to free some of the most vulnerable people from the grip of poverty. 

“The upcoming Spending Review must restore housing benefit to cover at least the lowest third of rents – the Government cannot continue to look the other way while people are forced into homelessness under the constant pressure of rising rents and low incomes.”  

In a joint statement, the Residential Landlords Association and the National Landlords Association said: “The Government is undermining its own efforts to boost homeownership through its attacks on the private rented sector. By choking-off supply and making renting more expensive it is tenants who are hardest hit. 

“Ministers need to wake up to the reality of the damage their tax measures are doing to the private rented sector and support landlords to provide the new homes for private rent we desperately need.”

Nearly Half of Buy-to-Let Investors Are Now Women

Published On: March 3, 2020 at 12:03 pm

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The gender gap in the property investment industry is slowly closing, with women making up 47% of investors, up from 46% in the previous year.

An extra 100,000 women have invested in property between the 2015/16 and 2016/17 tax year, bringing the total to 1.2 million according to London estate agent, ludlowthompson.

They put this increasing popularity down to the perception of property investment being a lower risk option for investment when compared to more volatile bets such as equities. Women supposedly have less tolerance for risk than men, so the relatively transparent business model, regular pay-outs and low price volatility associated with buy-to-let property has helped make the asset class increasingly popular amongst women.

To back this up, ludlowthompson points to data from eToro and HMRC that shows that other investment classes have a much less equal gender split, that weighs more heavily towards men as the risk increases. They say that women account for only 43% of stocks and shares ISAs, owning 957,000 shares ISAs compared to 1.2 million men, and at the furthest extreme, women represent just 8.5% of cryptocurrency investments.

Stephen Ludlow, Chairman at ludlowthompson, says: “The buy-to-let sector has a reputation of providing stable, long-term returns. Whilst some investors have become distracted by more speculative investments, buy-to-let continues to build increasing interest amongst investors who value income and long-term growth.”

“It may not be long before we see a 50/50 gender split amongst buy-to-let investors which is significant given the much wider gaps in other asset classes, such as equities.”

“Buy-to-let property is popular across investors of all different risk appetites. It is a sensible way to diversify an investment portfolio and does not require in-depth knowledge of accounting rules that you might need for investing in shares.”

“There have been some naysayers suggesting that the property market is risky. However, even throughout years of Brexit uncertainty, house price growth has been relatively stable – unlike other areas of financial markets where price swings have been enormous.”

Number of female buy-to-let investors increases 4.8%*

*HMRC 2016/17, latest data available

Fastest Growing Rental Yields Found in the North

Published On: February 11, 2020 at 9:59 am

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The North of England was the best region for rental yields in the final quarter of last year, as demand continued to outpace supply. 

According to data provided by Fleet Mortgages’ new buy-to-let index, rent as a percentage of property value rose by 2.6% in Q4 last year, rising to an average of 9.1% across the region. This is up from 6.5% in Q4 of 2018. 

In the south, Greater London yields edged up by 0.3% from 4.8% to 5.1%, whilst in the South West, yields held fast at 5.5%.

Across the country, average yields in England and Wales rose 0.7%. There was only one region to see a drop in rental yields compared to last year, and that was the North West, where they took a slight dip from 7.5% to 7.4%. 

Steve Cox,  distribution director at Fleet Mortgages, said: “Clearly, the market has shifted over the past 18-24 months as landlords get to grips with the increased costs that come with private rental sector activity, in particular the phased-in changes to mortgage interest tax relief for individual landlords.

Fastest Growing Rental Yields Found in the North“Landlords now tend to look differently at their properties, with many converting single-tenancy properties into multi-tenant ones in order to secure better yields. These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation. Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.”