Search Results For: buy to rent sector

Moneyfacts Data Shows Increase in Buy-to-Let Mortgage Products

Published On: July 4, 2018 at 10:03 am

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Recent data reveals that there has been a record number of first-time landlord mortgage products entering the market. This is despite worries that such products may begin to dwindle, along with demand, due to the recent exodus of landlords from the rental market.

The latest research from Moneyfacts.co.uk shows that the number of deals to first-time landlords has increased considerably by 13% since the start of this year.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said: “It is great news that first-time landlords have more choice than ever before, increasing by a whopping 339 buy-to-let (BTL) products in just two years. Not only do first-time landlords have more choice, but they have also seen rates fall by 0.36% over the same period.

“Despite market uncertainty, providers are certainly not shying away from offering this risky group deal. Providers know all too well that many borrowers on their mortgage books will be coming to the end of their term and reassessing their deal, so they need to attract new business. As such, they’re enhancing their ranges and offering these extra deals to entice those customers who are new to the market, thereby breathing new life into their mortgage book.

“While multiple regulations and tax changes may have put some borrowers off becoming a landlord, it seems many are undeterred. In fact, it has been reported that Accord has seen the number of applications from aspiring landlords double over the past 12 months.

“This is little surprise when many consider bricks and mortar as a safe bet. With savings rates low, many are looking to get better returns elsewhere. Also, while rents are high and mortgage rates for first-time landlords are still falling, the potential for a decent return is high.

“Potential investors should not get ahead of themselves however. Since September 2017, they face checks and questions about their finances and will need to do their homework to ensure they get the best deal.

“Of course, BTL is not without its risks, and anyone seeking to enter this sector would be wise to seek the advice of a financial adviser to see if this is the best route for them.”

Further Action to Instil Confidence in New Build Sector by Government

Published On: July 4, 2018 at 8:59 am

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According to the Ministry of Housing, Communities and Local Government’s Statistical Release, new build dwelling starts in England were predicted at 39,350 in the most recent quarter. This is a 5% decrease in comparison to the previous three months, in addition to an 8% decrease on a year earlier.

All starts are now 109% above the trough in the March quarter 2009 and 14% below the March quarter 207 peak. All completions are 50% above the trough in the March quarter 2013 and a 9% below the March quarter 2007 increase.

Executive Director of the Intermediary Mortgage Lenders Association (IMLA), Kate Davies, commented:

“The number of new homes still falls short of the volume needed to meet the UK’s chronic housing shortage. Additionally, when looking at the data over an extended period of time – it is clear that quarterly housing starts remain well below pre-financial crash year. The number of housing completions is at its lowest since Q1 2016, despite ongoing policy pledges to mend what the government has itself described as the ‘broken housing market’.

“To have any hope of rebalancing the relationship between housing supply and demand, the government must do more to instil confidence in the new build sector. There has been a commitment to improve access to mortgage finance, and IMLA’s data suggests that first-time buyers are faring better than any other customer group in the market. Nine in ten applicants (90%) via intermediaries secured a mortgage offer in the first quarter of 2018, suggesting that a shortage of products is not the issue.

“However, what is needed are measures to support the full housing spectrum, not just first-time buyers. We’re faced with an increasingly illiquid market, with homeowners now only moving once every 19.2 years, compared with every 7.4 years in 1988, as price inflation and a lack of suitable options mean many ‘steppers’ struggle to find homes to meet their changing needs, such as a growing family or getting older.

“This lack of new homes coming onto the market organically means the new build sector must continue to be supported. As a starting point, we need clarity over the next phase of policies once the current Help to Buy scheme comes to an end in 2021.”

RLA Future Renting Conference to take place in London this September

Published On: July 3, 2018 at 10:12 am

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The Residential Landlords Association (RLA)’s next Future Renting conference will be taking place in London this September.

This will provide a great opportunity to meet with other landlords and agents, as well as sharing experiences. It will also be a great chance to pick up advice, support and offers from a range of exhibitors.

The programme shows a range of expert speakers to be attending the conference, who plan to address delegates on issues such as recent legislation changes, tax, welfare reform, licensing and fire safety.

So far, the list of confirmed speakers include property expert Kate Faulkner, Dr David Smith, partner at Anthony Gold Solicitors and RLA Policy Director, and senior researcher Dr Tom Simcock of RLA research lab PEARL.

The RLA has reported that its past conferences have had positive feedback from hundreds of landlords and property professionals. Both the content and the quality of those presenting have been previously well received, so we expect this time round to be no exception.

The RLA has stated that anyone with an interest in private rented housing is welcome to attend, from landlords with just one property, to those with larger portfolios, letting agency owners, local authority councillors and officers, journalists and housing charities.

Attending such events can be a useful way of keeping updated with the recent changes within the private rented sector. Whether it is for clarification about upcoming changes, or to gain tips about improving ideas for your own investments, it can be productive to spend time around like-minded professionals.

This one-day conference will be held at Imperial College London on 13th September, at the college’s Kensington campus.

Tickets are currently available to buy, priced at £50 for members and £65 for non-members, which will also include lunch and refreshments.

Up-to-date information about the RLA’s conference can be found on the association’s website.

Insufficient Enforcement in Rental Sector Incentivises Rogue Landlords and Agents

Published On: June 27, 2018 at 8:54 am

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According to Kate Faulkner, Housing Market Commentator for the TDS Charitable Foundation, failure to enforce private rental sector (PRS) regulations is incentivising rogue landlords and agents.

Faulkner discovered that, despite efforts to rectify regulation and standards in the sector, including Housing Health and Safety Rating System, a lack of compliance was shown, in addition to a lack of enforcement by some landlords and agents. Due to this, many efforts made, were futile.

145 pieces of legislation have been presented covering the PRS, with 50% revealed since 1996. However, more properties are deemed as ‘non-decent’.

The report utilises data taken from the English Housing Survey to convey that, despite the proportion of non-decent properties with reported issues of overcrowding, damp, fire risks or hazardous electrics, there are properties in the PRS dropped from almost 47% in 2006 to 28% in 2015. The growth of the sector has meant that these properties have increased from 1.2m to 1.3m.

The report expresses that, whilst the legislation introduced had rendered properties far safer, such as rules on gas safety, there remained many tenants who were oblivious to what passed as acceptable standards for a property.

It also warns that the cost of improvements could mean that rents will rise and that it will be more difficult for tenants to afford decent homes.

Faulkner comments: “Due to the rising costs to good landlords and a scant enforcement of PRS regulations, there is an incentive for some landlords and agents to act outside the law to increase their profit margins.

“The increased costs to landlords of buying a property, then letting it legally and safely, means that in some cases rents have increased beyond the means of some tenants. Reputable landlords and agents are being penalised financially for abiding by the law.

“It can create a vicious cycle and a two-tiered rental market, which the legislation was never intended to create.

“The problem, as I see it, is that bills are introduced on the sector all the time but aren’t backed with a communications plan or funding for enforcement.

“Myriad legislation can be confusing for tenants, and rogue landlords and agents often get away with offering sub-standard homes as tenants don’t know their rights.

“In reality, tenants hold the power in terms of accepting or rejecting poor or dangerous properties, although where supply is scant, this power disappears.”

Furthermore, the Government has recently launched new online information, with the purpose of enabling landlords and tenants to be certain about what rights they have. In addition, rental guides published by the Ministry of Housing, Communities and Local Government, also include checklists for landlords, existing tenants and letting agents.

These new guides will be extremely effective, as, private landlords will be provided with the opportunity to further their knowledge, regarding their primary responsibilities and most effective practices when letting a property. Moreover, paramount knowledge on how to conduct gas safety checks, install smoke and carbon dioxide alarms will be furthered, alongside the process of tenancy deposit protection.

Housing minister Heather Wheeler commented: “Every day across the country thousands of people move house – from young people leaving home for the first time, to those relocating after years in the same property.

“Whatever the circumstance, we want to ensure renters, landlords and leaseholders are armed with information so they know their rights, responsibilities and can challenge poor behaviour.

“The guides will be reviewed in light of any new legislation to ensure tenants, landlords and leaseholders are supplied with up-to-date information.”

 

To ensure that landlords understand their responsibilities, and protect the health and safety of their tenants, we have a wide range of free, useful guides on a host of lettings laws – view them here: https://landlordnews.co.uk/guide/

Onward’s Buy-to-Let Report Riddled with Errors

Published On: June 26, 2018 at 8:03 am

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Onward housing report riddled with errors

A new think tank has published findings that are completely wrong in its analysis of the private rental sector, with the number of buy-to-let mortgages falling, not rising.

In its first housing report, Onward claimed that at the end of 2017, buy-to-let lending was above the 2007 peak. In actual fact, according to figures from UK Finance (backed up by the government’s own statistics), buy-to-let lending for house purchases has fallen from over 183,000 loans in 2007, to just 74,900 in 2017. This is a fall of nearly 60%, making it a significant change.

The government’s own statistics show that the number of private rented homes actually fell by 46,000 in 2017. The total number of buy-to-let mortgages, including re-mortgages, also fell from 339,000 in 2007, to 227,000 in 2017, a drop by about a third.

On the back of its assertion, Onward called for further tax increases to reduce investment in homes designated for the private rental sector, arguing that landlords are taxed more advantageously than homeowners. However, according to Paul Johnson, director of the Institute for Fiscal Studies, “The tax system is not, and was not, even before the recent changes, more generous to people buying to let.”

Onward housing report riddled with errors

A new think tank has published findings that are completely wrong: in fact, the number of buy-to-let mortgages is falling, not rising.

Impact of the housing report riddled with errors

With another report today saying that it now takes just over ten years for the average first-time buyer to save for a 15% deposit, the Residential Landlords Association (RLA) argues that this is increasing demand on the private rented sector. As such, taking action to reduce the supply of rented homes available would logically seem a step in the wrong direction.

David Smith, Policy Director for the Residential Landlords Association, said:

“Today’s [Onwards] report is riddled with errors and fails to address the fundamental point that we need more homes to rent, not less.

“Rather than coming out with ideological assaults on the private rented sector, we need to reform tax so that it encourages the development of new homes to rent and longer tenancies so that the sector can adequately provide the pathway for tenants to go from renting to home ownership.”

London is Dead for Buy-to-Let, but Manchester and Liverpool Stand Strong

Published On: June 22, 2018 at 8:57 am

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Rumours may have been circulating over the profitability of investing in London property for some time, but one expert is now insisting that the capital is dead for buy-to-let, with Manchester and Liverpool standing strong.

Jonathan Stephens, the Managing Director of property investment firm Surrenden Invest, has spoken out in response to a range of new statistics released over the past week.

Firstly, estate agent Cushman & Wakefield has reported that homeowners in Manchester have seen the value of their properties surge by 34% in the three years to July 2017, while those in Salford have witnessed growth of 38% over the same period. The national average is 30%.

Cushman & Wakefield’s findings are supported by the results of property portal Zoopla’s latest Sentiment Survey, which found that more than eight in ten homeowners (84%) expect property values to increase in their area, up by 14% since the survey was last taken in November 2017.

London is Dead for Buy-to-Let, but Manchester and Liverpool Stand Strong

Surrenden Invest’s new Westminster Works apartments in Birmingham

Zoopla also suggests that homeowners believe that the value of their properties will rise by a significant 6.9% over the next six months, which is the largest increase in consumer confidence since the first half of 2016.

Despite higher property prices, Greater Manchester remains an attractive investment proposition to landlords, with increasingly strong rental yields leading to annual returns of between 11-20%.

The average annual rental yield in both Manchester and Salford, according to Cushman & Wakefield, is currently 5.3%.

Julian Cotton, the Associate Director of the firm, says: “Manchester benefits from a particularly active investor market, with more than 52% of the entire housing stock lying in the private rented sector.

“Considering the historically high rates of house price inflation in both Salford and Manchester, initial rental yields remain strong at present prices. This resilience is a clear indication of underlying strong tenant demand, as rates of rental inflation come near to keeping pace with house price growth.”

At the same time, Liverpool has been named as offering some of the most profitable postcodes for buy-to-let in the UK.

Stephens explains: “The key hotspots for sales activity are without a doubt the UK’s regional cities: investors are doing their research and looking at Birmingham, Manchester and Liverpool in particular – and even further north to Newcastle.”

He believes: “The London market is really stagnant, and many investors are voting with their feet (or rather, their wallets) and passing over it altogether. There are still deals to be done there for those buying at big discounts, but the market is over-hyped following a huge over-supply of new build stock. The ongoing standoff between developers and private sellers means that it’s likely to remain stagnant until we see a price correction. Add to that the fact that there’s little, if any, prospect of meaningful capital growth in London, and that yields there have been notoriously low for years now, and it’s easy to see why regional cities are coming to the fore.

“Five years ago, investors were incredibly skeptical about any UK property investment outside of London. Now, they’re coming to us having already chosen a regional city. Investors are incredibly well informed, and thus most have no intention of buying in London. Instead, they are looking at yields of 5-6% net in cities like Manchester, Liverpool and Birmingham, along with the prospect of capital growth in the region of 5-10% year-on-year. The rental market is growing in these cities too. Manchester, for example, has seen rental market growth of 4% over the past year. This is all underpinned by significant economic growth in the UK’s regional cities.”

Landlords, what is your sentiment regarding investment hotspots across the UK? And is London really dead for buy-to-let?