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Buy-to-Let Mortgage Rates Drift Upwards Following Rate Rise

Published On: September 13, 2018 at 10:00 am

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Categories: Finance News

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August’s 0.25% increase in the Bank of England’s base rate has begun to feed through to buy-to-let mortgage rates, according to research carried out by online mortgage broker Property Master.

The news comes as the Bank’s Monetary Policy Committee (MPC) prepares to meet again today.

The average standard variable rate for a buy-to-let mortgage unsurprisingly saw the greatest month-on-month increase, with the cost on an interest-only loan of £150,000 jumping from £603 per month to £620.

For average five-year fixed rate loans, which are increasingly popular with private landlords looking to manage their outgoings over time, the cost of a similar loan rose from £348 per month to £350 if the customer was looking to borrow 65% of the value of the property, and from £423 to £425 if 75% of the property’s value was required.

The Mortgage Tracker from Property Master follows a range of buy-to-let mortgages for an interest-only loan of £150,000. The rates and costs recorded include product and application fees. Deals from 18 of some of the biggest lenders in the buy-to-let sector were tracked, including: Barclays, BM Solutions, RBS, The Mortgage Works, Godiva and Precise.

Angus Stewart, the Chief Executive of Property Master, comments: “The move by the Bank of England to normalise borrowing rates following the last market crash seems to be truly underway, and it is beginning to feed through to buy-to-let mortgage rates, which, up until now, have been relatively stable. The MPC meets again [today], but market commentators are not yet expecting another rate rise quite so soon.

“However, private landlords, especially those on standard variable rates that have seen a big jump in cost month-on-month, should really be carefully evaluating their finance requirements. Whilst increased competition has helped to keep costs down to some extent, the trend is now upwards, and we would expect keenly priced fixed rates to be snapped up.”

Remortgaging Market Strongest for Decade, but Buy-to-Let Plummets

Published On: September 13, 2018 at 9:27 am

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The latest Mortgage Trends Update from UK Finance indicates that the residential remortgaging market saw the strongest July for a decade, while the buy-to-let sector has plummeted.

In July, 46,900 new homeowner remortgages were completed, which is up by a substantial 23.1% on the same month last year. The £8.7 billion of remortgaging recorded in July was 26.1% higher on an annual basis.

At the same time, 32,600 new home mover mortgages were completed, some 3.8% fewer than in July 2017. This £7.3 billion of new lending was the same as last year. UK Finance found that the average home mover is 39-years-old and has a gross household income of £57,000.

31,400 new first time buyer mortgages were completed in July – 1% more year-on-year. By value, this £5.4 billion of new lending was 5.9% higher compared to last July. The average first time buyer is 30-years-old, with a gross household income of £42,000.

For buy-to-let, 5,500 new home purchase mortgages were completed in the month, which is down by a significant 14.1% on the same month in 2017. This £0.8 billion of lending was down by 11.1% on an annual basis.

14,700 new buy-to-let remortgages were completed in July – up by 7.3% yearly. By value, this £2.4 billion of new lending was up by 9.1% on July last year.

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Jackie Bennett, the Director of Mortgages at UK Finance, comments on the data: “The residential remortgaging market saw its strongest July in over a decade, as homeowners pre-empted the latest Bank of England rate rise by locking into attractive fixed rate deals.

“There was also considerable growth in remortgaging in the buy-to-let sector, showing that, while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market.”

She adds: “The number of first time buyers has returned to modest year-on-year growth. However, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy.”

The Director of mortgage broker Private Finance, Shaun Church, also responds: “Homeowners have been quick off the mark in responding to the threat of rising interest rates, with remortgage activity surging in July. Locking into a fixed rate deal is the only way of guaranteeing immunity against rate rises and, while many expected lenders to start upping their fixed rates once the Bank of England’s decision was announced, they have remained mostly flat. This means there are plenty of competitive deals still available in the market for buyers to snap up.

“In today’s environment of gradually rising rates, longer-term fixes, such as ten-year deals, may well start to become more popular, particularly among cautious homeowners who wants to ensure their monthly outgoings hold steady for as long as possible.”

He concludes: “Remortgage activity appears to be the main thing keeping the buy-to-let market afloat. Though punitive regulatory changes have dissuaded new entrants to the market, today’s data suggests many existing landlords are staying put. With mortgage costs often being one of landlords’ biggest expenses, swapping to a lower-rate deal is a sensible strategy for making a rental property more profitable.”

5 Things You May Not Know about Renting a Property

Published On: September 13, 2018 at 8:57 am

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With more and more people renting a property across the UK, ARLA Propertymark (the Association of Residential Letting Agents) is helping tenants understand the complexities of renting in this day and age.

According to ARLA Propertymark’s latest Private Rented Sector Report, the number of tenants looking for a new home has increased every month since May this year.

With more people looking for guidance on renting a property, the organisation has compiled a list of the five things that tenants might not know about being a renter…

Switch and save 

If you’re paying the energy bills in your property, you have the power to switch suppliers. You can often find a cheaper fixed tariff if you shop around, so it’s worth putting in the time to do so.

Double-check your tenancy agreement, however, as some contracts include a clause that means you must inform the landlord.

Redecorating

5 Things You May Not Know about Renting a Property

5 Things You May Not Know about Renting a Property

Landlords usually aren’t happy for their tenants to start redecorating their properties, but there’s no harm in asking. You need to seek permission to install extra shelving, hang things on the walls, or anything that could potentially damage the property. You’d also need to ask if you’d like to paint anything, or replace the units, etc.

There are, however, lots of things that you can do to make a rental property feel like a home without your landlord’s permission. An eye-catching floor lamp, for instance, can instantly perk up a drab living room, while laying down rugs helps you personalise your space. You could also buy cushions and throws, and make sure that you always have a vase full of fresh flowers on the kitchen table.

Letting with a pet

If you have a pet, it’s really important to be upfront about it when you’re looking for a property. Some landlords won’t allow them at all, but many will be fine with pets if you pay a higher deposit to cover any potential damage – just make sure that this is clearly stated in your contract if you agree to it.

If you find a property and the landlord won’t allow pets at all, your letting agent can help you find another suitable one.

Illegal activities 

Cannabis is illegal in the UK, and there will likely be consequences if you’re caught smoking it behind closed doors. There is usually a specific clause in tenancy agreements that says tenants must not consume illegal substances at the property, and, subject to the landlord’s consent, most contracts prohibit any smoking at all.

Running a business

Although it is legal to run a business from a residential property, you must ask your landlord for permission if you want to do so, but, remember, there are various things that they will need to consider before agreeing. They would probably have to inform their mortgage provider, as well as getting permission from the freeholder if the property is in a block of flats. They would also need to update their insurance and make sure that they are not breaking any licensing conditions that the local authority has placed on the property.

General wear and tear could also be an issue if the business wasn’t just desk-based, and the landlord must ensure that the business wouldn’t disturb the neighbours if people are coming and going throughout the day.

Peter Savage, the President of ARLA Propertymark, says: “Finding a rental property can be a stressful task, especially if you’re unfamiliar with all the clauses in your tenancy agreement, but it can also be really exciting.

“The most important thing to remember is that, once you sign the tenancy agreement and move in, you’re still bound by it. While most landlords are very willing to negotiate, these discussions do need to take place and you should never assume your landlord won’t mind without some sort of commitment in writing. Letting agents can help you both with understanding the small print in your contract and by helping you negotiate directly with the landlord.”

Ask the Landlord Platform Launched for Tenants

Published On: September 13, 2018 at 8:04 am

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Categories: Tenant News

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A new platform, Ask the Landlord, has been launched to help the country’s rising number of tenants get the advice and expertise they need on renting.

Ideal Flatmate, a flatmate matching site, will use its extensive base of landlords – who have agreed to offer their time – to answer questions any renter may have on a prospective or current tenancy.

Ask the Landlord will be based on monthly ask-me-anything sessions, in which one of Ideal Flatmate’s top landlords will answer questions live online and across the firm’s social media platforms.

Whether a renter has a question on what to do if they have lost their keys, concern about a party that got out of hand, or how to renew a contract, Ask the Landlord aims to help all tenants navigate the often confusing world of renting.

Ask the Landlord Platform Launched for Tenants

Ask the Landlord Platform Launched for Tenants

Tom Gatzen, the Co-Founder of Ideal Flatmate, says: “As an organisation that bridges the gap between renters and landlords, we’ve witnessed so many landlords genuinely take a great care and interest over who is in their property and how they can support them.

“We wanted to provide a platform for renters to take advantage of some of these great landlords and ask for any help or advice. It’s important we do as much as we can to help the rising number of renters who are often unsure about the confusing and complex elements to rental living.”

The platform also aims to promote the often forgotten beneficial and supportive role that landlords play in the property market. There has been a long-standing misconception that most landlords are looking to take advantage of and profiteer from the rising number of tenants, fuelled by unrepresentative media reports.

Ideal Flatmate wants to promote the countless number of decent landlords it works with who are willing to go the extra mile for their tenants and genuinely take an interest in their wellbeing.

Leading the campaign is The Landlord, an all-knowing investor that every tenant can look to for advice and support. The Landlord will feature in a series of tongue-in-cheek, but informative, short films on common issues that tenants have and how best to go about handling them.

Chris Norris, the Director of Policy and Practice at the National Landlords Association (NLA), comments: “The majority of landlords are good at what they do and provide decent homes for their tenants. However, they’re not the ones you normally hear about. We’re extremely pleased to support Ideal Flatmate’s launch of Ask The Landlord and look forward to seeing it showcase the large number of decent landlords in the market.”

Vanessa Warwick, the Co-Founder of PropertyTribes.com, also responds to the launch: “I was delighted to learn of Ideal Flatmate’s initiative to engage with tenants and landlords, and assist them in making wiser choices when renting. The vast majority of landlords are decent and honest people who want to provide a safe, ethical, and compliant service for their tenants, so anything that assists in connecting good tenants with professionally minded landlords is a very positive thing.

“This campaign comes at a time when the spotlight is very firmly on the private rented sector and it is very clear that the Government is intent on raising standards. Property Tribes whole-heartedly supports education of both tenants and landlords, as it makes the private rented sector a better experience for everyone involved.”

RLA Marks 20th Anniversary with Parliamentary Event

Published On: September 12, 2018 at 10:00 am

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The Residential Landlords Association (RLA) has marked its 20th anniversary by holding a Parliamentary event attended by the Secretary of State for Housing.

As part of the event, a collection of essays looking at the future of the private rental sector has been launched.

The essays have been provided by organisations such as Shelter, the Chartered Institute of Housing, the Institute for Public Policy Research and Crisis. They represent tenants, landlords, enforcing bodies and think tanks.

The documents look ahead to where these organisations feel the sector should be heading in the next 20 years.

Coordinated by the RLA, the essays have been launched at an event in the House of Commons to mark the firm’s 20th anniversary.

Speaking at the event was the Housing Secretary, James Brokenshire MP, and the Shadow Housing Secretary, John Healey MP.

All of the essays recognise the importance of a thriving private rental sector that works for both landlords and tenants, with calls made for reforms to improve the ability to secure swift and effective justice in the minority of cases where things go wrong between the landlord and their tenant.

Alan Ward, the Chair of the RLA, says: “The RLA’s 20th anniversary provides an opportunity to take stock of where the private rented sector now is, and where we all want it to go.

“All the contributors recognise the importance of the sector in providing homes to many millions of people. As we go forward, we need to ensure the sector works for tenants and good landlords alike, whilst rooting out the criminals who have no place in a modern rental market.”

Brokenshire speaks out in support of the RLA: “I want to congratulate the RLA on 20 years of hard work helping make the private rented sector better for everyone.

“This is a vision shared by Government and is why we have taken action to raise standards in the sector, and protect tenants from substandard accommodation and unfair charges.”

He adds: “There is much more still to be done to ensure everyone has a decent and safe home, and I look forward to continuing our work alongside the RLA in the months and years to come.”

Labour MP Karen Buck, a Vice Chair of the All Party Group for the Private Rented Sector, also comments: “My work on housing has brought me into increasing contact with the RLA. I have found them to be constructive, engaged, highly professional and a source of excellent information.”

Congratulations to the RLA for 20 years in the industry and for the work they continue to do.

The Landlord is Evolving, Not Going Extinct

Published On: September 12, 2018 at 9:32 am

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By Ian Boden, the Sales Director of LendInvest

It’s no secret that the landlord market has been undergoing a fundamental change of late. Recent years have seen a succession of significant changes to the way property investment is taxed and the way loans for investors are underwritten.

This is an evolution of the market, leading to an adjustment in the make-up of landlords, rather than an end to property investment altogether. Or, at least, that’s how it is to people involved in the industry, who can see how the market is changing in practice.

The trouble is that, if you believed the way some developments are reported in the national press, you’d think the very idea of property investment was on the way out.

Take last month’s research from the National Landlords Association, which found that 380,000 landlords are looking to reduce the size of their portfolios over the coming year.

This isn’t that unexpected, really. The amateur landlords who saw the opportunity to pick up a property or two to supplement their pension planning a decade or so ago are not as well placed today to expand their portfolios, and so may be tempted to sell off.

But this was very unhelpfully portrayed by some in the national press, using terms like “exodus” and warning of a “flood” of properties coming to the market, with others calling it the “great buy-to-let sell off”.

The Landlord is Evolving, Not Going Extinct

The Landlord is Evolving, Not Going Extinct

While it’s true that some landlords are looking to take a step back, it’s equally true that professional landlords – the ones for whom property is the day job, rather than just a nice little earner on the side – are well aware of the opportunity to increase the size of their portfolios.

When Countrywide ran the numbers last year, it found that, while the overall number of landlords had fallen by 154,000 since 2015, the number of rented homes had increased by 171,000 over the same period.

In other words, while the small-time landlords may be looking to sell, there are greater numbers of professional landlords only too happy to increase the size of their portfolio. That’s led to the average portfolio size increasing from 1.24 back in 2010 to 1.44 last year, according to Countrywide.

It’s no coincidence either that the size of the market aimed at landlords buying through a limited company vehicle, rather than individuals, has grown significantly over the same time period.

According to data from Moneyfacts, the number of mortgages available to limited company landlords has tripled in the past two years – there were 235 such deals on the market in April, compared to just 80 in April 2016.

This hasn’t happened by accident. Lenders are designing and launching these products precisely because there is such an appetite for them. A recent study by Precise suggested that two out of every five landlords buying a property this year would do so through a limited company.

It’s something that we have seen first-hand through our own buy-to-let lending since we launched last year. Coming from a bridging background, where we have dealt exclusively with property professionals, we have seen up close just how keen these investors are not only to buy traditional buy-to-let homes, but also to branch out into Houses in Multiple Occupation (HMOs) and semi-commercial properties, too.

That’s why it’s so disappointing to see the landlord market painted in such a misleading light. Yes, the lot of the amateur landlord has got harder, particularly if they want to expand their existing portfolios.

But there is so much more to the private rented sector than those who are dipping their toes into property investment as a hobby.

If the landlord market is predominantly made up by property professionals, that can only be a good thing. We want to see higher standards, we want to see tenants enjoying the best possible experience from the private rented sector, dealing with landlords who rightly see it as a business and treat it as such.

Focusing on the overall number of landlords is a mistake. It’s not about how many there are, but how good they are, how well they understand the needs of the tenant market and how equipped they are to run their portfolio professionally as a business.