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Em Morley

Buy-to-let activity up in Q4 of 2016 at Octopus Property

Published On: January 17, 2017 at 10:51 am

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Categories: Finance News

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There was a significant rise in Agreements In Principle for two to five year buy-to-let products at Octopus Property during the last quarter of 2016.

During the last three months of the year, Octopus Property issued 233 Agreements In Principle, in comparison to 108 at the same period in 2015. This was a rise of 115%.

Requirements

On the 1st January 2017, the Prudential Regulation Authority’s new affordability regulations brought increased stress-testing and alterations to underwriting requirements.

As such, this has introduced more difficulties for non-standard borrowers, such as accidental landlords, foreign nationals and company applications. Octopus Property specialises in these regions and has therefore seen a rise in business.

The increase in buy-to-let products assisted a rise in Agreements in Principle as a whole in 2016. The firm issued 2405 Agreements in Principle in 2016, compared to 1656 in 2015.

Buy-to-let activity up last year at Octopus Property

Buy-to-let activity up last year at Octopus Property

Mario Berti, CEO of Octopus Property, observed: ‘The buy-to-let sector has changed fundamentally over the past year or two. Alongside the raft of tax changes, financing for landlords has become considerably more challenging. This is almost certainly the reason for the surge in demand for our buy-to-let products in the latter stages of 2016 and early days of 2017. We cater for buy-to-let borrowers with less conventional circumstances that need more bespoke underwriting and for whom the high street has become a more difficult place to borrow, all the more so since the new regulations came into force on 1 January. It’s in this type of conservative lending climate that specialist lenders like ourselves can outperform.’[1]

 

[1] http://www.propertyreporter.co.uk/property/new-regulations-spark-surge-in-btl-demand.html

 

 

House Price Inflation Continues Strong Growth Seen Since 2013

Published On: January 17, 2017 at 10:02 am

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Categories: Property News

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House price inflation across the UK continued the strong growth seen since 2013 at the end of last year, according to the most recent index from the Office for National Statistics (ONS)/Land Registry.

Average house price inflation stood at 6.7% in the year to November 2016, up from 6.4% in the previous month.

House Price Inflation Continues Strong Growth Seen Since 2013

House Price Inflation Continues Strong Growth Seen Since 2013

This takes the average property value across the UK to £218,000, up by £14,000 on the previous year and £2,000 higher than October.

The main contribution to November’s house price inflation was England, where values rose by an average of 7.2% over the year, to reach £234,000. Wales saw house prices increase by 4.1%, to stand at £147,000, while the average value in Scotland was up by 3.3% to £143,000. In Northern Ireland, the average price was £124,000 in November.

Regional house price inflation

London continued to boast the highest average house price of any region across the UK, at £482,000, followed by the South East and East of England, at £313,000 and £278,000 respectively. The lowest average price continued to be found in the North East, at £127,000.

The East of England showed the highest annual house price inflation, with values up by 10.5% in the year to November. Growth in the South East was second highest, at 8.6%, followed by London, at 8.1%. The lowest annual increase was recorded in the North East, at just 3.2%.

Local authority house price growth

The largest annual growth in property values in the 12 months to November was in Rutland, where prices rose by a whopping 20.7% to reach an average of £307,000. The lowest annual increase was seen in the City of Aberdeen, where prices dropped by 7.8% to an average of £172,000.

In November, the most expensive borough to buy a property was Kensington and Chelsea, where the average home cost a huge £1.3m. In contrast, the cheapest place to buy was Burnley, at just £75,000.

The CIO and co-founder of LendInvest, Ian Thomas, comments on the latest figures: “Despite some knocks, the property market will remain fundamentally strong throughout 2017, with a sustained drive by Government to increase the supply of new homes.

“The Housing White Paper, expected later this month, will add detail to the commitments already made by the Housing Minister to tackle the housing crisis. Industry will be watching with hopes that these announcements will reinvigorate the market.”

The ONS/Land Registry index follows reports from both Your Move and Rightmove yesterday, which claim that house prices ended 2016 almost at the peak recorded back in March last year.

So will values start to come down as they reach a potential affordability ceiling?

Buy-to-let activity down by 26% year-on-year

Published On: January 17, 2017 at 9:59 am

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Categories: Landlord News

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The latest research from Connells Survey & Valuation suggests that the buy-to-let sector is struggling.

Data from the report indicates valuations were down by 26% over the course of the last year, following a year full of significant legislative alterations.

Rises

Despite the slowdown seen in the buy-to-let sector, overall housing market activity during December 2016 was up by 8% on December 2015. What’s more, activity was 40% up from December 2014.

John Bagshaw, corporate services director of Connells Survey & Valuation, observed: ‘Looking back over the year, the market has regained a great deal of its strength with consumers’ confidence on the mend.’[1]

‘Rates are low and employment is high-that’s a great recipe for a healthy housing market. And the buy-to-let market’s loss has been owner-occupiers gain as those looking to get on the ladder or trade-up have been left facing less competition for the properties they want to buy,’ he added.[1]

Selling

Valuations for those selling property rose by 25% between December 2015 and December 2016. During the same period, valuation activity for those looking to remortgage rose by 19%.

Continuing, Bagshaw said: ‘The housing market has been recovering since September and had a great December. Compared to 2015 it looks good. Compared to December 2014 it looks exceptional. First-time buyers and people selling property have regained much of the confidence they lost in the wake of the Brexit vote.’[1]

Buy-to-let activity down by 26% year-on-year

Buy-to-let activity down by 26% year-on-year

‘With interest rates still at record lows, many buyers are taking the opportunity to buy property that would have been regarded as a bargain at that price just of a couple of years ago.’[1]

According to the report, the number of property sellers was up by 32% over the course of the year. In addition, remortgage activity was up by 68% as consumers have taken advantage of some very cheap mortgage deals.

Concluding, Mr Bagshaw noted: ‘Looking back over the year, the market has regained a great deal of its strength with consumers’ confidence on the mend. Rates are low and employment is high –that’s a great recipe for a healthy housing market.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/buy-to-let-markets-loss-has-been-owner-occupiers-gain

 

The DPS’ Top Tips for Managing Deposit Disputes

Published On: January 17, 2017 at 9:17 am

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Categories: Landlord News

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Most tenancies end without any dispute. In fact, only around 2% of those registered with The Deposit Protection Service (The DPS) need the involvement of the free, impartial Alternative Dispute Resolution (ADR) that it provides. Sadly, though, it is sometimes necessary, and the service focuses on coming to a decision that is fair to both parties. As a result, landlords need to understand how the system works and how best to make sure their view is fully heard. We asked Alexandra Coghlan-Forbes, The DPS’ Head of Adjudication, for their ten top tips for approaching disputes with tenants.

  1. Prepare in advance

Preparing for disputes starts with the inventory. We also recommend keeping records of repairs and communications with your tenants, as this can all contribute to your supporting evidence. You can find our guidance on how to create strong check-in and check-out reports on www.depositprotection.com. 

  1. Only claim for what you’re owed

Many landlords claim for the full amount of the deposit, instead of asking for a deduction that is fair to both themselves and the tenant. Our adjudicators will only award what they think is a reasonable amount to landlords.

  1. Read the guidance we send you
The DPS' Top Tips for Managing Deposit Disputes

The DPS’ Top Tips for Managing Deposit Disputes

We’ll send you information as part of the dispute process that’s crucial to understanding the procedure and what’s expected of you and your tenant. Make sure you read it so you know what you need to do. 

  1. Consider your evidence

Think carefully about the types of evidence you provide. We’ll need to see the tenancy agreement, but good quality photographic or video evidence, combined with invoices and witness statements, help adjudicators build a picture of the condition of the property at the start and end of the tenancy.

  1. Don’t miss deadlines

Dispute resolution operates to set timescales, so make sure you respond in the time required. Check your spam folder regularly, and if you’re going away, don’t forget to check your inbox, as not seeing an email isn’t a valid reason for missed deadlines.

6 .Don’t put off completing your paperwork!

Your paperwork is a key part of your evidence, so don’t leave it to the last minute to complete it, as this increases the chances you’ll make a mistake or omit something important.

  1. Make sure your documents are delivered on time

If you’re sending important documents, be sure to use a service that confirms they’ve reached us, such as recorded or special delivery. Don’t forget, dispute deadlines are for arrival of documents, not sending, so allow enough time for delivery. If you’re unsure if something has reached us, you can always call us to find out.

  1. Consider using a third party

We all lead busy lives, and if you’re not available while a dispute is taking place, you can authorise a third party to communicate with us on your behalf, nominating them in writing. All payments, decisions and automated notifications will still be sent to you, but you’ll benefit from the convenience of your third party being able to respond in your place.

  1. Got a problem? Let us know

If you’ve a problem with any aspect of the dispute resolution process, get in touch. We can advise you on any part of our processes you’re having an issue with. Our goal is to reach an outcome that’s fair to everyone, so we want you to get things right.

  1. You can still come to an agreement with your tenant

It doesn’t matter what stage you’re at in the dispute resolution process, you and your tenant can still negotiate an agreement between you. We’ll still need both of you to confirm the repayment amount to us, but it’s possible to save time and effort by keeping communication going.

Rightmove sees improved traffic to start the year

Published On: January 16, 2017 at 1:05 pm

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Categories: Property News

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New data has revealed that the traffic to Rightmove’s website between Boxing Day and the end of the last week was up by 5% in comparison to the same period one year ago.

Full results will be provided when the firm reports to shareholders on its full year activity on February 24th.

Optimism

The portal states that the surge in activity from Boxing Day bodes well for 2017 as a whole, with factors such as Brexit to come.

‘This increase in search activity is notable given that a year ago market activity was buoyed by the November announcement that second home stamp duty would apply from April 2016,’ the portal said.[1]

In all, there was a 0.4% rise in the typical asking price of a property coming onto the market during the last month. This is equivalent to a rise of £1,086. Meanwhile, asking prices improved by 3.2% over the whole of 2016.

Rightmove sees improved traffic to start the year

Rightmove sees improved traffic to start the year

Momentum

Miles Shipside, Rightmove Director and housing market analyst, observed that the increases, ‘are indicators of the continued market momentum from the Autumn. Demand for a suitable home is such that visits to the Rightmove website are still up by 5% year-on-year, despite being compared to a period that was boosted by high demand from buy-to-let investors rushing to beat the stamp duty deadline.’[1]

Yearly comparisons for the first three months of 2017, when available, will allow for the distortion caused by April’s stamp duty deadline. Here, transactions were up by 40%, as investors rushed to beat the deadline.

Shipside went on to say: ‘Those planning to buy their first home in 2017 have more choice and less competition from other buyers than their counterparts a year ago. It’s a possible learning point for aspiring first-time buyers that a year ago, buy to let purchasers acted more quickly and closed deals at a faster rate, appearing not to take a Christmas break.’[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2017/1/rightmove-traffic-since-christmas-up-5-on-same-period-last-year

 

More landlords are favouring HMO conversions

Published On: January 16, 2017 at 11:17 am

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Categories: Landlord News

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An interesting new report has revealed that a record number of buy-to-let landlords are converting their properties into HMOs. This is a direct result of the tax changes coming into force from April and has seen landlords try to increase their rental income.

Roma Finance said that they funded more conversion cases of this type during 2016 than in any other year.

Yields

The firm said that the rise in HMO conversions is due to the potential increase of yields from the larger property. In addition, they present a larger opportunity to rent more rooms out to tenants in towns and cities, particularly in areas with a large student and young professional population.

Despite this, the turnover of tenants in is usually higher in HMOs, while they normally require more work than single buy-to-let properties.

More landlords are favouring HMO conversions

More landlords are favouring HMO conversions

Scott Marshall, managing director of Roma Finance, observed: ‘Recent Government policy has put the spotlight on the buy to let market and landlords have acted quickly to mitigate any negative effects on their income. Many want to retain property but maximise income and we have worked with many landlords to fund conversions to HMOs. One landlord we worked with calculated that in one of their properties they could rent out five rooms, vastly increasing income and yield, for just a £30,000 conversion cost. The increased rental income would cover the cost of the loan over twelve months. In this case it made a lot of sense to carry out the conversion.’[1]

‘Converting a single occupancy buy to let to HMO is one option for landlords and we have a number of cases already in the pipeline which will be funded in the coming weeks,’ he added.[1]

 

[1] http://www.propertyreporter.co.uk/landlords/landlords-ditching-buy-to-let-for-hmos.html