Written By Em

Em Morley

Rents outside of the capital hit average of £750pcm

Published On: January 10, 2017 at 9:46 am

Tags: average UK rents,Buy-to-Let,London rents,rents,tenants

The most recent rental index from Landbay has revealed that the average cost of renting a property outside of the capital rose during 2016.

Rents paid increased by 2% in the 12 month period and now account for 53% of the average take-home pay for people outside of London.

Capital Pains

In the capital, typical rents remain more than double the average for the rest of the UK at £1,882. This is despite a fall of 0.13% during December. Worryingly, with take-home pay averaging £1,967 per months, many on typical incomes will spent nearly all of their money on rent, unless they split the cost.

Taking London out of the equation, average rents across all properties rose by 2.13% in England, 1.42% in Scotland and 1.43% in Wales. This took average costs to £755pcm, £721pcm and £634 pcm respectively.

Wage growth has not been able to keep pace with rising rents, with disposable income dropping by 2.3% in the first quarter of 2016.

With inflation predicted to increase by 2.7% during 2017 and low interest rates hindering those looking to save for a deposit, there are real concerns for would-be homeowners.

Rents outside of the capital hit average of £750pcm

Robust Demand

John Goodall, CEO and founder of Landbay, observed: ‘Outside the capital, rents continued to grow across the country in 2016, a trend we expect to continue into the coming year. Demand for rented accommodation will remain robust, as the myriad threats of rising house prices, falling real incomes and rising inflation affect the ability of aspiring homeowners to get their foot on the housing ladder and save for a deposit.’[1]

‘The government may have just committed £7bn to building an additional 200,000 affordable starter homes, but supply across all tenures is still too low. The buy to let market has become a ‘catch all’ for a forgotten generation of house hunters, for those who cannot, or choose not to, buy a property outright. All eyes will now be on the upcoming Housing White Paper, which may be the best opportunity we’ve had in recent years for significant change,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/rents-outside-of-london-hit-average-of-750-a-month

RLA Wales Warns of Forthcoming 3% Surcharge in New Property Tax

Published On: January 10, 2017 at 9:36 am

Author: Em Morley

Categories: Property News

Tags: Land Transaction Tax,Stamp Duty,Wales,Welsh landlords

The Residential Landlords Association (RLA) of Wales has warned its government against forthcoming legislation changes that will include a 3% surcharge on additional properties.

RLA Wales Warns of Forthcoming 3% Surcharge in New Property Tax

From April 2018, Land Transaction Tax (LTT) will replace the UK’s Stamp Duty Land Tax (SDLT) in Wales. Like Stamp Duty, LTT will be payable when someone buys or leases a building or land over a certain price.

Following a consultation carried out across Wales between July and August 2016, the higher rate of tax for additional property purchases that was introduced in the UK last year will also apply in Wales as part of LTT legislation.

The RLA Wales is concerned that the 3% surcharge will threaten the supply of rental properties in the country, which could make it more difficult for families and the homeless to access rental accommodation, at a time when it is increasingly required.

Government statistics show that in 2015-16, a total of 6,891 households were classed as homeless and entitled to help securing accommodation in Wales. Of this figure, 3,534 households were found accommodation, with almost half (1,722) housed in the private rental sector.

Additionally, of 3,108 households that were threatened with homelessness, 35% (1,077) were living in the private rental sector.

The RLA is calling on the Welsh Assembly to scrap the 3% surcharge when landlords invest in housing that will add to the net supply of homes, for example, new build properties or bringing empty homes back into use.

Wales’ LLT legislation will be broadly consistent with Stamp Duty, using the underlying structure and mirroring key elements, in order to provide stability and reassurance to businesses and the property market.

Decisions on tax rates will be made closer to April 2018, the Assembly reports, in order to reflect economic conditions at the time.

The bill was introduced to the National Assembly on 12^th September 2016. It is believed that the bill will receive royal assent by spring this year.

Number of buy-to-let products at lowest for 8 years

Published On: January 9, 2017 at 3:04 pm

Author: Em Morley

Categories: Finance News

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

Data released by Moneyfacts has revealed that there has been a substantial fall in buy-to-let product numbers. According to the report, there have been 74 deals taken from the market in the last month.

The report indicates that the total number of live buy-to-let products stood at 1,482 in December, but has slipped to 1,408 this month. Particularly affected was the 75% LTV sector, which saw the total number of products fall from 606 to 540 during the same period.

This said, the number of products is still higher than the 1,256 seen in January.

Number of buy-to-let products at lowest for 8 years

Hit

Charlotte Nelson, Finance Expert at Moneyfacts, observed: ‘The BTL mortgage market took a hit last month, seeing the largest reduction in product numbers since March 2009. Usually, the month of December is quiet, with providers gearing up for the holidays. This time, however, the BTL market has seen a surge of activity, with the number of BTL products falling back to July 2016’s levels. Withdrawals have not been limited to just a few providers, either, with the reductions having been spread across the board.’[1]

‘Alongside tougher affordability, major changes to the way in which income from property rentals is taxed will be coming in April. Lenders are perhaps withdrawing products to get back to just their ‘core’ range in an attempt to wait and see what other providers will be doing in the run up to April. 2017 is set to be an uncertain year, which could be a lethal cocktail for landlords, particularly now there are less products on the market. Anyone unsure about their options should seek out a financial adviser,’ she added.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-market-sees-the-largest-fall-in-products-in-8-years.html

Paragon Mortgages Launches New Products for 2017

Published On: January 9, 2017 at 11:22 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let finance,mortgage rates,mortgages,remortgage

Specialist lender Paragon Mortgages has launched new products for 2017, enabling landlords to plan their finances for the coming years.

Paragon Mortgages Launches New Products for 2017

The new products are available for both buy-to-let property purchases and remortgages. They benefit from current low market rates and offer an ideal opportunity for landlords who are looking to refresh and organise their finances in 2017.

The range of new products includes two and five-year fixed rate options.

The new five-year fixed rate products will be of particular interest to landlords looking for payment stability over the long-term, especially in the face of forthcoming changes to tax relief for individual landlords.

Paragon Mortgages will now offer a 3.75% five-year fixed rate option for landlords borrowing up to 75% loan-to-value (LTV).

Importantly, these longer term fixed rate products also feature interest coverage ratios starting at 125% and are graduated to reflect each landlord’s individual tax status.

Other highlights within the range of new products include a two-year fixed rate deal at 3.25% for lending up to 65% LTV, and another at 3.40% for lending up to 75% LTV.

The Managing Director of Paragon Mortgages, John Heron, comments: “The first quarter is an extremely busy time in the buy-to-let market, as landlords review their portfolios and plan for the year ahead.

“The tax changes being introduced in April make it more important than ever for landlords to think ahead and minimise costs where possible. These products offer landlords the opportunity to put in place longer term mortgage finance, whilst taking advantage of the beneficial impact of today’s record low market rates.”

The new products arrive as a leading mortgage broker reports that rates will come down for small-scale landlords this year, but could rise for those with larger property portfolios.

It seems that now could be an ideal time to expand your portfolios or review your finances for the coming years.

What resolutions do landlords want the Government to make in 2017?

Published On: January 9, 2017 at 11:20 am

Author: Em Morley

Categories: Landlord News

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

A new poll from Landlord Voice on behalf of Simple Landlords Insurance has uncovered what landlords want to see from the Government during 2017.

Number one on landlords’ wish lists for the new year is for the Government to re-think their stance on buy-to-let tax relief for mortgage interest payments.

Tax concerns

Data from the report reveals that the planned tax increases are the major concern for buy-to-let landlords in 2017. 47% of respondents cited these changes as their most prominent worry.

Second on landlords’ wish list would be an end to stamp duty changes, while a reduction in capital gains tax came third.

From April, tax relief on mortgage interest will be gradually phased out and will be fully eradicated by 2020. By then, landlords will be taxed on their income-meaning some will be moved into a higher rate tax bracket.

This said, a separate poll from the Council of Mortgage Lenders revealed that half owned their properties outright and will not be impacted by the changes.

What resolutions do landlords want the Government to make in 2017?

Optimism?

Landlords are undoubtedly under pressure but many are still optimistic about the future. 36% of people questioned said that their confidence level for the year ahead is 8 out of 10 or higher.

88% said they plan to continue as landlords in 2017, with one third planning to increase their portfolios.

Jenny Mayes, of Simple Landlords Insurance, said: ‘We strongly urge Chancellor Philip Hammond to listen to landlords’ concerns. Landlords should be supported and recognised for their contributions in providing affordable housing, rather than burdened with unfair tax measures that will see them having to take considerable cuts to their income and being forced to pass some of this to their tenants.’[1]

[1] http://www.propertyreporter.co.uk/landlords/what-new-year%E2%80%99s-resolution-should-the-government-make.html

Annual House Price Growth Increases to 6.5%, Reports Halifax

Published On: January 9, 2017 at 10:22 am

Author: Em Morley

Categories: Property News

Tags: average house price,house price growth,house prices,housing market

Annual house price growth increased to 6.5% in the three months to December 2016, according to the latest House Price Index from Halifax.

This marks the second consecutive increase in the annual rate of growth, from a 2016 low of 5.2% in October and up from 6.0% in November. Despite the rises seen in November and December, however, the annual rate remains significantly below the 10.0% peak reached in March 2016.

At the end of last month, Halifax reported that Luton experienced the strongest annual house price growth of the year, at 19.4%.

On a quarterly basis, prices in the last three months of the year were 2.5% higher than in the previous quarter. This compares to the 0.9% change recorded in November. The quarterly rate of growth seen in December was the highest since March 2016, when it stood at 2.9%.

Following a month-on-month increase of 1.7% between November and December – the fourth consecutive monthly rise – the average house price across the country was £222,484.

Annual house price growth

Annual House Price Growth Increases to 6.5%, Reports Halifax

A Housing Economist at Halifax, Martin Ellis, says: “House prices finished 2016 strongly. Prices in the final quarter of the year were 2.5% higher than in the previous quarter. The annual rate of growth increased, rising for the second consecutive month, from 6.0% in November, to 6.5%.

“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017. UK house prices should, however, continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding and exceptionally low interest rates. Overall, annual house price growth nationally is most likely expected to slow to 1-4% by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”

2016 housing market activity

Total UK home sales for 2016 are expected to be broadly unchanged form 2015 and 2014, at 1.2m. Sales largely stabilised in the second half of the year, with a 1% increase between October and November. Purchases in the three months from September to November were, however, 9% lower than in the same period of the previous year.

Mortgage approvals were 6% higher in the three months to November compared to the preceding three months. The number of mortgage approvals for house purchases – a leading indicator of completed property sales – slightly increased (0.2%) on a monthly basis from October to November, following a 6% rise between September and October. This suggests that home sales could increase over the coming months.

Nevertheless, supply remains incredibly low, and there are no signs that the shortage of stock is easing. The number of new instructions for November was flat, with the amount of unsold stock at a record low.

The CEO of online estate agent eMoov, Russell Quirk, comments on the data: “A late flourish for the UK housing market at the end of 2016 sees price growth remain strong, which will be welcomed by UK homeowners. It would seem positive news on house prices simply will not go away, despite the efforts of some to make us accept that the market will weaken in the wake of EU referendum angst.

“As we have said time and again, the UK housing market is fundamentally robust, bulletproof even, and we do not subscribe to the view of the naysayers that we will see price reductions in 2017. The clever money, given today’s numbers, is yet more positive news, which will serve to underpin the overall economy this year.”

He adds: “Low money costs, a demand led by an aspirational home owning culture and scant supply, will all ensure that property prices remain buoyant, regardless of those using falling prices as a scare tactic for their own personal agenda.”

Ian Thomas, CEO and co-founder of LendInvest, also responds: “While the property market proved resilient towards the end of the year, 2017 will likely see a slowdown in growth, as the impact of last year’s Stamp Duty changes are felt by investors, and the Government begins to negotiate the UK’s withdrawal from the EU.”