Search Results For: buy to rent sector

Buy-to-Let Mortgage Choice Hits Post-Financial Crisis High

Published On: February 26, 2019 at 10:56 am

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The number of buy-to-let mortgage products on the market has hit a post-financial crisis high, according to analysis by Moneyfacts.co.uk.

While the tax and legislative changes imposed on the buy-to-let sector over the past few years have increased the pressure felt by landlords, and even forced some out of the market altogether, the research shows that the amount of buy-to-let mortgage products currently available is at a post-financial crisis peak.

Today, landlords have the choice of 2,162 buy-to-let mortgage products, meaning that the number of deals has not been higher since October 2007, when 3,305 products were available.

Moneyfacts’ study also found that the average rate on a two-year fix increased from 2.96% in March 2017 to 3.12% today, while a typical five-year fixed rate deal dropped from 3.77% to 3.61% over the same period.

Darren Cook, the Finance Expert at Moneyfacts, says: “It is encouraging that buy-to-let landlords have more mortgage choice than they have had at any time in almost 12 years. Total product numbers have increased by 397 over the past year and by 706 over the past two years to stand at 2,162 products today.

“Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy-to-let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector. Indeed, the average two-year fixed buy-to-let mortgage rate has increased by 0.20% to 3.12% since September 2018 and the average five-year fixed rate has increased by 0.15% over the same period.”

He continues: “As there appears to have been no sustained increases in interest SWAP rates since September 2018, a strong argument can be made that the recent increases to buy-to-let mortgages interest rates have been a result of buy-to-let mortgage providers attributing a little more to risk into their product rates, due to uncertainty over future economic conditions.

“The disparity in the direction of movement between buy-to-let and residential interest rates may be due to the way these two types of lending are primarily assessed. Buy-to-let mortgage providers generally consider the potential rental income and affordability during assessment, whereas residential mortgage providers typically look back at income earned by the borrower and affordability.”

Rent Rises for Tenants Increases, Reports ARLA Propertymark

Published On: February 26, 2019 at 9:00 am

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The number of private tenants experiencing rent rises at the hands of their landlords increased in January, according to the latest Private Rented Sector Report from ARLA Propertymark (the Association of Residential Letting Agents).

Rent rises

The amount of tenants experiencing rent rises increased in January, with 26% of ARLA Propertymark member agents witnessing their landlords putting prices up, compared to 18% in the previous month.

This is the highest figure recorded since September 2018, when 31% of tenants saw rent rises.

Year-on-year, the number of tenants experiencing rent rises is up by 7% on January last year.

Supply and demand

The supply of properties available to rent rose to an average of 197 per ARLA Propertymark member branch in January, which is up from 193 in December. 

Demand from prospective tenants also increased in January, with the number of home hunters registered per letting agent branch rising to an average of 73, compared to just 50 in the previous month.

David Cox, the Chief Executive of ARLA Propertymark, comments: “This month’s results are another huge blow for tenants. With demand increasing by 46% from December, and rents starting to rise in response to all of the cost increases landlords have experienced over the last few years, tenants are in for a rough ride. Last month, there were three landlords selling their buy-to-let properties per branch, and, as landlords continue to exit the market, rent prices will only continue to rise.

“With the Tenant Fees Actpassing its final hurdle in the House of Commons and receiving royal assent this month, tenants will continue bearing the brunt, as agents and landlords start preparing for a post-tenant fees world.”

Landlords, how are you preparing for a world without tenant fees? Perhaps you are one of the investors that have put rent prices up for tenants in anticipation? 

Number of First Time Buyers Hits 12-Year High

Published On: February 21, 2019 at 9:00 am

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The number of first time buyers getting onto the housing ladder hit the highest level in 12 years in 2018, according to the latest Mortgage Trends report from UK Finance.

During 2018, 370,000 new first time buyer mortgages completed, which is 1.9% more than in the previous year. This is the highest number of first time buyer mortgages since 2006, when 402,800 completed. The £62 billion of new lending in 2018 was up by 4.9% on 2017.

In December last year, 30,900 new first time buyer mortgages completed – up by 1.6% on the same month of the previous year. This £5.2 billion of new lending was 4% higher on an annual basis.

30,000 new home mover mortgages were completed in December, which has dropped by 1.3% year-on-year. The £6.5 billion of new lending was unchanged. In 2018 in total, 367,800 new home mover mortgages completed – 1.9% fewer than in 2017. This £80 billion of new lending was also the same as in the previous year.

In December, 34,000 new homeowner remortgages completed, which is up by 9.3% on the same month of 2017. The £6.1 billion of remortgaging was 13% more on an annual basis. 476,900 new homeowner remortgages completed in 2018, some 10.8% more than in the previous year. This £85 billion of new lending was up by 13% on 2017.

5,100 new buy-to-let home purchase mortgages were completed in December, which has fallen by 5.6% on the same month of the previous year. By value, this £0.7 billion of lending dropped by 12.5% year-on-year. In 2018, 66,400 new buy-to-let home purchases completed – down by 11.5% on 2017. The £9 billion of new lending was 15% less annually.

During December, 12,400 new buy-to-let remortgages completed, which is up by 25.3% on the same month of the previous year. This £2 billion of lending was up by 25% yearly. In 2018, 169,100 new buy-to-let remortgages were completed – 11.2% more than in 2017. By value, this £27 billion was up by 11.6% year-on-year.

Number of First Time Buyers Hits 12-Year High

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Jackie Bennett, the Director of Mortgages at UK Finance, says: “The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and Government schemes such as Help to Buy continue to boost the market.

“Homeowner remortgaging also saw strong growth, driven by customers locking into attractive rates, a trend we expect to continue in 2019, as more fixed rate mortgages come to an end.

“Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.”

Matt Andrews, the Managing Director of Mortgages at Masthaven Bank, also comments: “Despite the looming Brexit deadline, today’s figures show that first time buyers aren’t put off as the property sector increasingly becomes a buyers’ market. Thanks to a combination of Stamp Duty reliefand Government initiatives such as Help to Buy, the future is looking particularly bright for this segment of buyers. Remortgaging figures are likely to remain steady, with little threat of impending rate rises – at least for the time being, anyway.

“It is interesting to note the continued downturn of buy-to-let activity across the market. From tax alterations to regulatory updates, it seems the sector is really feeling the effects of these changes. In order to keep the market attractive to buy-to-let investors and to avoid further market uncertainty, greater incentives and lending products will be paramount.”

Shaun Church, the Director of mortgage broker Private Finance, reacts to the findings: “The first time buyer market is booming as the UK finally welcomes a new generation of homeowners. While the rest of the UK property market suffers from sluggishness, those who had dismissed the notion of homeownership as a property pipedream are suddenly finding themselves in a position to buy, as a result of more favourable economic and market conditions.

“The upfront cost of purchasing a property has been gradually eased by falling house price growth and Government initiatives such as Help to Buy and Stamp Duty exemption. Lenders are also giving first time buyers a considerable helping hand through the relaxation of lending criteria, a surge in products at higher loan-to-values and near record low mortgage rates, making mortgages both more attainable and affordable.

“It’s tempting to be swayed by headline rates and cashback deals in this ultra-competitive market, but before rushing into a mortgage, we would urge first time buyers to shop around. It’s vital to understand the total cost of a mortgage over the full-term, when all fees and costs are taken into account. This ensures borrowers secure the most competitive deal that will suit them both for today but also in the long-run. Using an independent mortgage broker is the best way of getting the full picture of the products currently on the market.”

Rental Decline Slowing Down in Prime London

Published On: February 19, 2019 at 10:57 am

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Rental Decline is Slowing Down in Prime London

Rental values in prime locations across London have seen some signs of a slowdown in decline, as initial signs of a bottoming out have appeared.

International property consultants, Savills, have reported that rental prices in London have declined by 0.8% in 2018, with cheaper properties significantly outperforming more expensive ones.

Properties with rental prices of up to £500 per week have seen a five-year price growth of 6.6%, but properties with rents of up to £3,000 have dropped by 19.5%.

What are the predictions for rental prices over the next few years?

Savills predicts that rents will rise going forward, over the next five years they predict an increase of 11.5% on average, with a 12.6% increase in the prime commuter zone. However, growth is expected to be slow or non-existent in the short term, as the political and economic uncertainty surrounding Brexit continues. Rents fell by an average of 9.6% across London’s prime areas since the referendum in June 2016.

What’s the demand for properties likely to be?

London’s commuter belt, the prime rental market of London, has seen a steady demand for smaller properties. This matches the need of younger tenants commuting to the city for work, and rents for one or two bedroom properties have seen double digit growth over the past five years.

The outlook for rental prices seems to be largely reliant on stock levels, and if the sales market improves, it could see many accidental landlords exiting the private rental sector. Similarly with recent restricted tax relief on interest payments and other changes recently, such as the stamp duty levy on buy-to-let properties, there are uncertainties regarding the availability of rental properties.

Head of Residential Research at Savills, Lucian Cook, said: “We are seeing footloose, cost-conscious tenants drawn to prime areas that offer greater value, rather than confining their search to premium addresses, and there’s a deeper seam of demand for smaller properties driven by needs-based younger tenants.

“But that doesn’t mean we can anticipate falling rental supply. Instead, we expect cash investors to become increasingly dominant, especially in central London, while history suggests international investors will become more active as uncertainty clears, particularly if they can play the currency card. Stock levels also look set to rise as the number of new build homes completing increases.”

A Quarter of Young Adults Live with their Parents, Study Reveals

Published On: February 11, 2019 at 10:58 am

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A quarter of young adults in the UK are still living at home with their parents, according to a study by Civitas. 

The think tank found that a million more young adults in the UK are living with their parents than were two decades ago, with a quarter of 20-34-year-olds unable to buy their own homes.

This rises to 41% in London, where housing is the most expensive, but falls where homes are the cheapest – in the North East (14%), and Yorkshire and the Humber (17%).

As for 23-year-olds in the UK, the proportion living with their parents has soared from 37% in 1998 to half (49%) in 2017.

The Editorial Director of Civitas, Daniel Bentley, says: “As owner-occupation and social housing have each become more difficult to enter, hundreds of thousands of young adults have taken one look at the high rents in the private rented sector and decided to stay with their parents a bit longer instead.”

He adds that it is essential for the Government to take this into account when forecasting future housing need.

The study also suggests that young adults who do move out of their parents’ homes are much less likely to live on their own than they were in the late 1990s.

Single-person households have dropped to 30% in recent years, it found.

This is in stark contrast to most of northern and western Europe, where single-person living has been increasing rapidly.

In France and the Netherlands, for example, 35% of households are single-person, while this rises to over 40% in Germany and Denmark.

While the report highlights the difficulty in getting onto the housing ladder, it also indicates that even renting from a private landlord is too expensive for young adults today.

Have you experienced an adult child living at home due to high rent and house prices? 

Rents Continued to Rise in Regions since Brexit Vote

Published On: February 8, 2019 at 10:28 am

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Rent prices across UK regions have continued to rise since the Brexit vote in 2016, but a slowdown is looming, according to the latest Landbay Rental Index.

Annual rent price growth in the UK (excluding London) is at its lowest point in almost six years, at an average of 1.16%, compared to 1.13% in February 2013, the report shows.

However, since the vote to leave the European Union in June 2016, total rent price growth across the English regions has been seven times that of London, at an average of 3.69%, compared to the capital’s 0.52%. Including London, England’s rent price growth stood at 2.5%.

London’s property market, which has suffered disproportionately from Brexit uncertainty, saw annual rent price growth drop from an average of 1.26% in June 2016 to a low of -0.31% in June 2017, before starting a slow recovery to 0.67% in January 2019. In total, cumulative rent price growth in the capital since the Brexit vote has been just 0.52%.

The only other region to see cumulative rent price growth since the Brexit vote below 1% is the North East, which saw rents increase by an average of 0.71%.

Rents Continued to Rise in Regions since Brexit Vote

In contrast, the East Midlands leads the way, with significant growth of 6.28% since June 2016, followed by the West Midlands, at 4.75%. 

However, rent price growth is slowing. England (excluding London) has recorded the lowest annual growth in six years (1.11% in January 2019 compared to 1.07% in January 2013). Wales is currently at its lowest since April 2014 (1.39%), while Northern Ireland’s growth of 0.54% is the slowest since Landbay’s first Rental Index in January 2012.

Scotland, on the other hand, recorded annual rent price growth of 1.66%, having steadily grown over the last six months. The average rent price north of the border is now £746 per month, which is higher than Northern Ireland (£573) and Wales (£656), and is creeping up to the English average (excluding London), of £776. 

This Scottish growth is led by high annual growth in Edinburgh City (5.88%), Inverclyde (3.56%), and Glasgow City (2.49%), while Aberdeen City (-6.62%) and Aberdeenshire (-5.42%) are weighing down on faster national average growth.

John Goodall, the CEO and Founder of Landbay, comments: “Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown. This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.

“Without a radical housebuilding plan for both first time buyers and purpose-built rental properties, there is no way supply will ever be able to catch up with demand. The Government needs to take action fast, especially in times of economic and political uncertainty, the private rental sector is more important than ever.”

He continues: “Rental growth may be slowing, but the pace of change varies wildly between regions. Landlords and brokers alike need to be tuned into these variations, in order to maximise their profits, using variations in rental growth and yields over the past year to pick out some of the most promising regions for buy-to-let. Consistent rental demand will obviously drive returns in the long-term, but by selecting the right location yields will be even greater.”