Search Results For: buy to rent sector

Number of UK buy-to-let businesses increases 2.1%

Published On: April 24, 2023 at 3:54 pm

Market analysis by debt advisory specialists Sirius Property Finance shows that the number of VAT and/or PAYE enterprises operating within the UK residential and commercial rental sectors has climbed by 2.1% in the past year, despite the government’s best efforts to deter investment into the industry.

Sirius has analysed UK government data on the number of VAT and/or PAYE-based enterprises classed under renting and operating of owned or leased real estate, and how this market has grown in recent years.

The analysis shows that there are currently 60,000 businesses operating in the sector, marking an annual increase of 2.1% and five-year growth of 12.8%.

London continues to be the rental investment capital of the nation with 12,160 rental businesses accounting for one fifth of the UK total.

The South East (13.2%) and North West (10.5%) are also among the most prominent regional markets.

The North East is home to the lowest proportion of buy-to-let enterprises, accounting for just 2.1% of the national whole.

In the past 12 months, Wales has seen the biggest increase in businesses (3.5%), while the North West leads the way in terms of five-year growth at 15.4%.

Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates, comments: “The UK’s buy-to-let ecosystem continues to grow and grow despite the increasing number of deterrents put in place by central government, the most prominent of which are probably recent changes to Capital Gains and Tax Allowance rules.

“However, demand for rental homes is not going to diminish, so the rental sector remains a profitable one to be part of. As such, many landlords have decided to set up their own businesses in order to improve the profitability of their enterprises and this is likely driving the increasing number of companies operating in the sector.

“It would be bold to predict anything other than continued growth in the buy-to-let ecosystem over the coming months and years, especially in densely populated urban areas, because as long as homeownership continues to be so incredibly expensive, rental demand will always be strong.”

Landlords show support for private rented sector Decent Homes Standard

Published On: April 12, 2023 at 10:00 am

Author: Em Morley

Categories: Landlord News,Lettings News

Landlords show support for private rented sector Decent Homes Standard

Six in ten landlords support the introduction of a minimum set of property standards for the private rented sector, Paragon Bank research has found.

The survey of over 500 landlords revealed 34% strongly support the measure, with 28% expressing general support. A further 8% weren’t aware of plans to introduce minimum standards to the sector.

The Government has pledged to introduce a Decent Homes Standard for privately rented property as part of its Renters Reform Bill. It has consulted on measures that could be introduced and the sector awaits the next steps.

Additionally, landlords expressed frustration at a lack of action to drive out rogue elements of the sector. Nearly three quarters (74%) said they felt frustrated that Local Authorities don’t act against landlords who let sub-standard homes.

The private rented sector has experienced a significant improvement in the standard of homes over the past 15 years, correlating with the growth of buy-to-let finance, which Paragon’s new report, Raising the standard of privately rented property, examines.

In 2008, 44% of homes in the sector were defined as non-decent according to the Government’s English Housing Survey. Today, that figure stands at 23%.

The addition of good quality homes has diluted the presence of poorer stock; In 2008, 1.8 million privately rented homes were classed as decent, rising to 3.3 million in 2021 – an 83% increase.

There has also been a reduction in the number of properties classed as non-decent – falling from 1.4 million to 990,000, a 29% reduction.

A Decent Homes Standard was introduced for the social housing sector in 2001, with the proportion of homes that do not meet the Standard reducing from 39% in 2001 to 13% in 2020.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “The vast majority of landlords have nothing to fear from a Decent Homes Standard as they are providing a good quality home to their tenants already. It’s the minority of landlords who don’t meet these standards that are tarnishing the wider reputation of the sector.

“At Paragon, we employ our own in-house team of surveyors, who assess a rental property to a stringent standard, so we act as a natural barrier to poor quality homes entering the sector. Landlords have made great strides in improving the standards of rental property over the past 15 years and they should be celebrated.”

Landlords seek capital and rental value gain with property upgrades

Published On: March 23, 2023 at 4:03 pm

Author: Em Morley

Categories: Landlord News,Property News

Landlords seek capital and rental value gain with property upgrades

Acquisitive landlords have helped drive an improvement in standards in privately rented property, with four in five upgrading each rental home they purchase.

Paragon Bank, the FTSE 250-listed buy-to-let mortgage specialist, found that 81% of landlords make improvements on every property they add to their portfolio.

The survey of over 500 landlords found 22% of landlords spend over £25,000 on upgrading a new portfolio property, with 18% spending between £10,000 and £20,000.

On average, landlords expect to see a 19.8% increase in the property’s value after completing upgrade work, with a 16.5% increase in expected rental income.

The research found that 40% of landlords prefer to purchase property in need of refurbishment, with 21% opting for properties that are ready for tenants to move into.

In 2008, 44% of homes in the sector were defined as non-decent according to the Government’s English Housing Survey. Today, that figure stands at 23%.

The addition of good quality homes has diluted the presence of poorer stock; In 2008, 1.8 million privately rented homes were classed as decent, rising to 3.3 million in 2021 – an 83% increase. There has also been a reduction in the number of properties classed as non-decent – falling from 1.4 million to 990,000, a 29% reduction.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, comments: “Landlords have helped improve standards across the private rented sector over the past 15 years and the upgrading of stock they purchase is central to that.

“The vast majority of landlords will look to upgrade each new property to boost the capital value and the potential rental income. However, they also do this out of a genuine desire to provide a good quality home to their tenants.”

Asked why landlords make improvements to property, 83% of landlords said they did so to ensure they are providing a good quality home to tenants, with 82% doing so to make the property more attractive to tenants. Two thirds (66%) upgrade property to improve rental income and 57% look to increase the capital value. Meanwhile, nearly half (47%) upgrade property for energy efficiency reasons.

Painting and decorating is the most common improvement that landlords typically make (95%) followed by installation of a new bathroom or kitchen (78%) and boiler (also 78%). Six in 10 (60%) also add new windows, whilst a third of landlords (36%) also make improvements to gardens.

One in ten landlords plan to exit the sector following spring statement

Published On: March 22, 2023 at 11:03 am

Author: Em Morley

Categories: Landlord News

One in ten landlords plan to exit the sector following spring statement

Following a disappointing spring statement for the buy-to-let sector, lettings and estate agent Benham and Reeves has found that not only were half disappointed that a reintroduction of mortgage tax relief didn’t come to fruition, but one in ten now plan to exit the sector as a result.

The survey of UK landlords commissioned by Benham and Reeves found that 49% were disappointed that whisperings of a potential reintroduction of mortgage relief were unfortunately just that and the Government didn’t decide to u-turn on the subject in last week’s spring statement.

It was hoped that the Government would throw the buy-to-let sector a bone following a string of legislative changes that have caused many to exit the sector and 71% of those surveyed by Benham and Reeves stated that they would have also liked to have seen some other form of incentive announced.

12% of landlords also revealed that they had planned to increase the size of their portfolio but will not refrain, while a further 6% will still push on with their plans to expand their investment.

However, 10% stated that they will now reduce the size of their portfolio due to a lack of support from the Government, with an additional 8% already having planned to do so.

What’s more, one in ten also stated that they plan to exit the sector due to a lack of government incentives to remain, while 7%, again, had already planned to exit prior to the spring statement.

So where are those who exit planning to place their money?

Stocks and shares ranked as the most prominent buy-to-let alternative, with premium bonds, bonds, commodities and classic cars also rank amongst the most popular alternative investment avenues.

Marc von Grundherr, Director of Benham and Reeves, comments: “The Government has been waging war on buy-to-let investors for quite some time now and many within the sector were hoping that the spring statement would finally see them thrown a sugar lump, rather than shown the stick.

“Unfortunately this failed to materialise, but while disappointing, the majority of landlords remain unfazed and, let’s face it, unsurprised. Although they have no plans to increase the size of their portfolio, they also won’t be reducing it.

“However, one in ten have had enough and with the Government failing to incentivise them in any way, they are reducing their portfolios and exiting the sector. With some 2.74m landlords currently operating within the sector with around two properties per landlord, that’s a potential reduction of over half a million rental homes.

“This is, of course, bad news for the nation’s tenants, who will be left with even less choice when it comes to quality accommodation and an even higher commitment when it comes to the cost of renting.”

Average UK buy-to-let portfolio rental return up 18% annually, Ocasa research shows

Published On: October 26, 2022 at 8:58 am

Author: Em Morley

Categories: Landlord News

Tags: Ocasa

Scrapping mortgage tax relief hike would ease rental supply crisis says new research

The average UK landlord has increased the size of their portfolio on an annual basis and also seen a 18% increase in estimated total rental income, says Ocasa.

The specialist rental platform analysed data on current gross rental incomes, the average number of buy-to-let properties in a portfolio and the total rental income per portfolio, as well as how these factors have changed over the last year.

It says that, across the UK, the average buy-to-let investor has an average of 8.2 properties in 2022, a 17% increase on the average portfolio size of 6.9 properties in 2021.

The average gross rental income of the average property has also climbed by a marginal 0.5% to £7,891. As a result, Ocasa says the average buy-to-let investment portfolio is now returning an annual level of rental income to the tune of £63,917 – an 18% increase on 2021.

Largest average portfolios by location

Ocasa says investors in Yorkshire and the Humber currently have the largest portfolios with an average of 15.5 properties, followed by the North East (10.8) and East Midlands (10.5).

Buy-to-let investors in Yorkshire and the Humber have also seen one of the largest increases in portfolio size, up 50% year-on-year. This is second only to the South West, where the average buy-to-let portfolio has increased by 69%.

Central London has seen the third largest boost to buy-to-let portfolio sizes, with a 43% increase. While the average portfolio size in central London is amongst one of the lowest at just 8.3 properties, investors in the area are not only seeing the largest levels of rental income, but they’ve also seen the largest increase in this level of rental income.

Ocasa also says the average buy-to-let portfolio in central London commands an estimated £93,890 in rental income per year, up 42% annually. The South West has also seen a 42% increase in the estimated rental income of the average buy-to-let portfolio, along with the North West (37%).

Jack Godby, Sales and Marketing Director at Ocasa, comments:“It’s great to see that, despite the UK Government’s best efforts, the buy-to-let sector has really hit the ground running in 2022.

“Like any area of the property sector, investment levels, property prices and rental values can vary drastically from one region to the next and this understandably has an impact on the size of a buy-to-let portfolio, the rent achieved per property and the overall return made.

“However, it’s clear that strength is building across the market with respect to an increased level of income. The fact that only two regions have seen the average portfolio size reduce is also testament to the resilience and consistency of bricks and mortar as an investment vehicle.”

Buying is still cheaper than renting, Revolution Brokers’ research finds

Published On: October 21, 2022 at 10:54 am

Author: Em Morley

Categories: Property News,Tenant News

Tags: Revolution Brokers

Buying is still cheaper than renting, Revolution Brokers' research finds

Renting can still be more expensive than buying, despite the increasing cost of borrowing currently hitting homebuyers across the property market, says brokerage service Revolution Brokers.

They looked at the current cost of buying, both with respect to a full mortgage repayment and an interest only repayment plan, and how this cost compares to those renting in the private rental sector.

The research shows that the average tenant across the UK is currently paying £1,143 per month to rent within the private rental sector.

It also shows that for the average homebuyer looking to buy with a variable rate mortgage at a 75% loan to value and an average rate of 4.45%, the cost of a full mortgage repayment comes in at £1,223 per month, marginally more than the cost of renting.

However, those who are only making interest-only payments on their mortgage each month are currently paying an average of £829 per month – 27.5% less than the current cost of renting.

The same homebuyer opting for a three- and two-year fixed rate product would be facing a full monthly repayment of £1,075 and £1,098 respectively, meaning that even when repaying a mortgage in full, it’s still less than renting at £1,143 per month.

For those repaying their mortgage on an interest only basis, a three-year fixed rate would see them paying £604 per month, while a two-year fixed rate climbs to £641 per month. This is 47.1% and 43.9% lower than the cost of renting within the private rental market.

Almas Uddin, Founding Director of Revolution Brokers, comments: “The fact that it still works out cheaper to repay a mortgage on an interest only basis versus the cost of renting, probably says more about the inflated state of the private rental market than it does current mortgage affordability.

“Even if mortgage rates do climb to a lofty 6%, the interest only payments when borrowing to buy would still be less than the cost of renting and while you won’t be chipping away at your outstanding mortgage balance, you will own your own home rather than lining the pockets of a landlord.

“Of course, while the scenario of an interest only mortgage payment versus paying rent is a similar one, the cost of securing a rental property via a rental deposit is a far easier task financially when compared to the cost of a mortgage deposit.

“However, for those that can manage to overcome this initial hurdle, it remains far more worthwhile to buy versus renting, even in current market conditions.”