Search Results For: buy to rent sector

Age Limit Scrapped for Experienced Buy to Let Landlords

Published On: April 13, 2018 at 8:55 am

The Mortgage Works (TMW) are scrapping the maximum age restriction for older buyers next week. A branch of Nationwide Building Society, TMW’s change comes after a decision that mortgage cases from older borrowers who have long invested in the Buy to Let sector don’t offer a significantly higher risk than for younger borrowers.

As of the 18^th of April, there will be no maximum age at either application or redemption for experienced landlords who are hoping to borrow up to a 65% loan-to-value (LTV) ratio for purchase or remortgage.

Having a lower LTV ratio benefits older buy-to-let landlords, who have the cash up front to be able to put down a higher deposit (such as 35%), meaning the risk to the lender is reduced (as the new homeowner’s equity is higher).

Usually, conventional homebuyers have about an 80 – 90% LTV, which is a factor of increasing the possible risk for lenders. By reducing the LTV to 65%, this means the risk has decreased, even for prospective borrowers now aged 70+.

TMW also recently hiked the maximum LTV for new purchase and remortgage products for first time landlords.

Paul Wootton, Nationwide’s director of specialist lending, said: “TMW is extending its range of mortgage products to include loans at up to 80% LTV to give greater choice and more options for landlords, including those taking out new buy to let mortgages and those looking to refinance existing borrowing.

“TMW is entering an established part of the market to offer a range of competitive rates to landlords working to manage their costs, including for those with smaller amounts of capital invested.”

Age Limit Scrapped for Experienced Buy to Let Landlords

Natwest and Barclays to change rates of mortgages for Buy to Let products too

A NatWest Intermediary Solutions spokesman said: “Having reviewed our portfolio we have made some adjustments to rates to reflect the current market conditions and balance our mix of business.”

Some of Natwest’s two-year fixed rate But to Let purchases have seen increases of 3bps, with some of its five-year rate purchases are up by 6 – 11 bps.

Basis points (bps) refers to a unit of measure for describing interest rates. One basis point is 1/100^th of 1% (0.01%), and the unit used in the finance industry to measure changes in interest rates, as they can be very slight.

As of this month, Paragon Bank has also launched a range of limited edition buy-to-let mortgage products. John Heron, Managing Director of Mortgages at Paragon has commented: “Our new Limited Edition buy-to-let range brings added choice and flexibility for portfolio landlords looking to refinance or expand.

“The addition of cashback provides an extra boost, helping landlords fund the up-front costs associated with arranging finance and enhancing value for this important segment of the market.”

Back in 2017, the LTV of a typical landlord fell to 35%, meaning the majority of landlords actually own more than half of their investment, meaning that these changes seem to be fitting the market requirements – of lower risk to lenders, and more easily accessible products for older prospective landlords – whilst creating more all-important rental homes.

With many banks adjusting their lending criteria, it could mean good signs for landlords and the rental industry. Especially with older people now increasingly moving into rented accommodation, and younger people struggling to find decent but affordable homes, it seems these financial changes in the rental market are coming at a welcome time.

Are Build to Rent Homes the Answer for Older Tenants?

Published On: April 12, 2018 at 8:09 am

Author: Em Morley

Categories: Tenant News

The number of older people and retirees moving into rented accommodation has soared over the last few years. Between 2013 and 2017, an increase of 13% was recorded, according to the Telegraph. Whether certain groups and demographics of people are choosing to rent or buy, it’s still apparent that the modern rental market needs to keep up with a diverse range of customer needs.

Stephanie Smith, the Operations Director at Atlas Residential, highlights the needs of different demographics when it comes to good quality and affordable homes.

“When we talk about rented accommodation, too often the image that springs to mind is of young, single tenants sharing a flat, living close to work as they try to start climbing the career ladder. However, that stereotype which the UK subscribed to for the past 7+ years as Build to Rent came to fruition is becoming increasingly outdated, meaning that the way we design and deliver rental developments needs to change.

“I am a firm believer that this is a community for everyone, from a new graduate, indeed, to a retiree who has decided they don’t want the hassle of a mortgage or home repairs and prefer a social community setting.

“The latest English Housing Survey, for example, confirmed that more than 1.5 million people aged 65 and above now live in rented accommodation.”

Are Build to Rent Homes the Answer for Older Tenants?

Particularly vulnerable groups of people, such as the elderly, could feel the effects of a lack of supply in rental homes much more than others. In 2017, approximately 254,000 older people rented privately, and that figure has now risen to 414,000. If this data is extrapolated, estimates suggest a third of those aged 60 and above could be renting privately by 2040.

According to the Centre for Ageing Better, by the time people reach their mid 80s, over half of people have difficulty doing at least one activity of daily living unattended. This means that in order to find good quality and long term tenants for their properties, landlords could need to ensure that their rental homes suit the needs of their prospective tenants.

As Smith continues,

“The Centre for Ageing Better reports that private landlords have the highest proportion of poor quality housing of any tenure type, along with higher levels of disrepair. Poor quality accommodation is unsuitable for any resident, but particularly so for potentially vulnerable groups such as older renters. The difference that the build to rent sector can make is therefore significant.

“Tenancy length plays a role here too. Short-term tenancies are hardly likely to encourage older residents to agree home adaptations with their landlords, yet often a few simple adaptations such as handrails or ramps can enable older people to remain independent in their homes for many years.”

By making sure rental properties are adapted for more than just one type of demographic that has historically been associated with rental properties (young tenants that’ll be moving on soon), perhaps the market will become more inclusive, and beneficial for the diverse range of potential renters that live in the UK.

There are still ‘attractive yields to be had’ in the Buy To Let sector

Published On: April 11, 2018 at 10:43 am

Author: Em Morley

Categories: Landlord News

The current level of demand for rental properties is showing no sign of slowing down any time soon, and this seems to be placing upwards pressure on rental prices.

As it stands as the moment, the average rent (outside of London) comes to a record-high £758 per month. In London however, average rental prices come in at £1,537, according to Homelet’s rental index. These rates are up by an average of 1.21%, according to Landbay. With such a growing disparity between the demand for rental properties and supply, it seems no surprise that the rental prices for available homes are on the increase.

The buy-to-let sector has long been a secure place for investors looking to make great returns on their assets. However, there have been several factors affecting the industry in recent years, and this year especially has seen changes that property owners, landlords and prospective investors have had to take into account. With a decrease in people who own homes, These include the 3% stamp duty levy introduced on buy-to-let properties, as well as the new EPC legislation and of course, tax relief on buy-to-let mortgage interest now being phased out.

The UK’s average rent outside London comes in at a record-high £758 pcm

What does this mean for the future of buy-to-let properties?

The future of the buy-to-let market may still seem like it’s been going through a lot of changes. It seems many experts believe the amount of landlords (and property owners alike) is likely to plateau or drop over the next few years, as investors begin to feel the pinch from the new regulations coming into place.

With so many tenants reliant on the privately rented sector, and with demand and rent prices alike increasing, this seems a trend which is likely to continue.

As of the financial year ending in 2017, the latest estimate of a UK household’s disposable income comes in at an average of £27,300. Rent prices outside of London will account for 52% of this, and inside London, almost 89% of disposable income is spent on rent.

Commentary

John Goodall, CEO and founder of Landbay, said: “Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London – with monthly payments remaining a burden on those struggling to save.

“Tenants saving up for a house face a triple challenge with more and more of their income spent on rent, partnered with trying to catch up with the pace of house price inflation and record low interest rates limiting their ability to save money.

“There has been much speculation about the long-term future of the buy to let sector from an investment perspective, however, demand remains strong as brokers would attest. Not a day goes by when there isn’t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.”

Build to Rent in the UK today: Creating the Communities of the Future

Published On: March 29, 2018 at 9:40 am

Author: Em Morley

Categories: Property News

Home Movers Rely on Connection, Community and Convenience, Reveals New Report

Even in our increasingly connected world, social isolation is a problem. In days gone by, our ancestors would have lived in communities, shared food and resources and generally lived in a more interconnected world. So what’s caused this shift, and is there a way we could return to more community-centred and healthier times for all?

Even though each day we scroll through our Facebook, Twitter, Instagram and LinkedIn profiles to see the people we are connected with, it seems clear this does not truly match up with face-to-face and real-life interactions with the people closest to us.

Somehow, even though it appears on the surface that we are more connected than ever before, the widespread mental health issues affecting a large proportion of our population seem an indicator of a bigger problem.

Atlas Residential’s Operations Director, Stephanie Smith, considers the implications of this and what the build to rent sector can do to combat the situation;

Smith writes; ‘An overwhelming truth of today’s “advanced” world is, quite simply, social isolation is rapidly becoming one of the largest health risks facing the UK population. Despite technology providing more avenues of connection than ever before, we have never felt so disconnected.

‘Meaningful discussion has been replaced by cat videos, 280 characters or less and picture-perfect images of lives that, while we fully realise can’t possibly be as idyllic as the photos suggest, adds stress and focus on struggles we may be experiencing internally.

‘It’s essential to look at different communities around the world, where life is drastically different to the buzzing cities and 70 hour work weeks of the US and UK, to see where we can improve and also dispel assumptions about how to reach the elusive goal of a “quality, long life”.

‘A Brigham Young University study of tens of thousands of people found that social interaction and close relationships were the top two predictors for long life, again outweighing clean air, healthy body weight, exercise and more. Further to this, an Amsterdam Study of the Elderly reveals that those who suffer from loneliness are at a 64% greater risk of developing dementia.

‘It’s not a secret to any of us that an evening laughing with friends or relaxing with our families with popcorn and a movie is far better than staring at our laptops or smartphones, however, it causes one to ask why and when we allowed the latter to become the dominant factor of our lives?’

Build to Rent properties could help create a greater sense of community, c/o Atlas Residential, Bow Square, Southampton

Smith here poses an interesting question. Perhaps the scrolling through on social media we all find ourselves guilty of (on an all too regular basis!) is an effect of something out of place in our realities.

Check out this article on the build to rent sector’s rising popularity in the UK’s housing market.

How might build to rent developments work to improve the social conditions of our culture?

As Smith points out, ‘Through careful design and thoughtful management, we have the ability to bring vital interactions into our residents’ lives, thus enhancing their wellbeing through the home environment. The emphasis is on community creation not just property provision.

‘Shared social spaces for residents to interact are one facet of this community creation approach. However, it is important to realise that sites without extra spaces like resident lounges, etc. can create many opportunities to add value to their residents’ lives.’

Purpose-built developments in the rental sector could be well equipped to suit the needs of key inhabitants. The provision of certain facilities, such as creating open social spaces, organising clubs and interest groups (something many of us join during university as societies, but are not always as widely available in adult life).

All in all, it seems that looking forward, housing is a key way in which the UK’s property and housing industries could contribute more to positive mental health and less social isolation. Residents could one day be able to pursue more of their interests, get to know their fellow neighbours, and have a pleasant environment to return to after work, all whilst keeping it affordable and suited to the needs of occupants.

Buy to Let is dead, long live Build to Rent

Published On: March 23, 2018 at 10:19 am

Author: Em Morley

Categories: Lettings News

Tags: build to rent,housing market,renting,uk

Buy to Let is dead, long live Build to Rent

With many people living in rented accommodation, in part due to difficulty in getting onto the property ladder, it seems it is the number of rented homes available that needs to expand.

Buy to let decline leaving vacuum for build to rent (Atlas Residential)
69% of landlords put off further buy to let investment (Residential Landlords Association)
There are just 105,000 build to rent homes in UK so far, but sector ready to boom (Atlas Residential)

Buy to Let industry in decline

We’ve heard a lot about the 3% Stamp Duty levy on buy-to-let homes, the effect of which seems somewhat a punitive measure directly affecting private landlords. As a result, 69% of landlords surveyed by the Residential Landlords Association (RLA) have been put off making further investments.

Managing Director of Atlas Residential, Jonathan Ivory, says: “just as the UK needs more rental homes than ever before, the stamp duty change has significantly dented investors’ interest in providing those homes.

“We’re in danger of seeing a real vacuum in the buy to let market – many of those submitting their tax returns this April and May will be thinking carefully about alternative ways to make money.

“Thankfully, the build to rent sector is growing rapidly, providing the UK with the means to fill that vacuum.”

According to the institute of Fiscal Studies, just 25% of those born in the late 1980s owned a home by the age of 27, compared to 43% of those born in the late 1970s. This is quite a staggering statistic for such a short time frame – in just a decade, the housing market experienced significant shifts.

Due to the impact of recent tax hikes on the housing market, buy to let landlords are increasingly being put off new investments, and looking for other ways to generate income.

Build to Rent housing could be a futuristic solution

Despite the buy to let market becoming increasingly hostile, the government has stated it is committed to improving the UK’s housing market in other ways. In fact, the stamp duty levy on buy to let properties (as well as tougher lender criteria and the reduction on mortgage interest tax relief) could put buy to rent investors in a much better position.

Some measures the government may put in place include making planning permission harder to obtain. This mean it is likely to primarily have an effect on developers that might hold onto land simply to watch its value increase. This change could give rise to a generation of build to rent developers who are looking to create homes with the needs of the modern inhabitant in mind.

Atlas Residential and Rockspring Property Investment Managers LLP's complete and operational site, Bow Square, Southampton

Buy to Let is dead, long live Build to Rent – Bow Square, Southampton

As Ivory notes, “Build to rent provides an unprecedented opportunity to put renters’ needs first. Renters can enjoy premium facilities that have been shaped around the contemporary urban lifestyle. Demand for homes in the UK is stronger than ever and the build to rent sector is ideally positioned to meet that demand. It is also well placed to adapt to the changing needs of the market. As the build to rent sector in the UK evolves, family homes are starting to take shape.”

In the United States, build to rent communities are more widespread – with low-rise, family homes including facilities such as playparks and swimming pools on site. In the UK, the sector is still in its infancy with just 105,000 homes either complete, underway or planned. Considering the UK’s population now amounts to over 65 million people, this is a very small amount. With buy to let properties quickly losing their charm, the property development market in the UK is likely to look to build to rent developments to create the housing communities of the future.

Index of Private Housing Rental Prices for Great Britain: February 2018

Published On: March 21, 2018 at 10:09 am

Author: Em Morley

Categories: Lettings News

Tags: iphrp,Landlord News,landlords,London,London housing,London housing market

The Index of Private Housing Rental Prices (IPHRP) is an experimental price index tracking the prices paid for renting property from private landlords in Great Britain.

The report shows that private rental prices paid by tenants in Great Britain rose by 1.1% from January to February 2018, the rate of growth here being unchanged in those 12 months.

In England, private rental prices grew by 1.1%, Wales grew slightly more at 1.4%, and Scotland 0.4%.

In the capital, London has seen an increase of 0.1%, coming in at 1% below the average for Great Britain as a whole.

The IPHRP covers Great Britain as a series of price indices, and doesn’t measure newly advertised rental prices. Instead, it reflects overall price changes for privately rented properties. Whilst Northern Ireland is not currently included, the Office for National Statistics (ONS) is working to secure private rental data for the entire UK.

The 12 month growth rate of private rental prices paid by tenants in Great Britain has seen signs of a slow down since 2015. It has however increased by 1.1% in the last 12 months, leading up to February 2018. This has largely been driven by a slowdown in London over the same period; its growth rate (0.1%) is currently at its slowest since 2010, when in September it was at -0.4%.

From January 2011 to February 2018, private rental prices increased by 15.6%. However, London has a great impact on this, and if you exclude the capital, private rental prices increased by 12.6%.

What does this mean for the private rented sector? Kate Davies comments

The Executive Director of Intermediary Mortgage Lenders Association (IMLA), Kate Davies, commented on the ONS’ Index of private housing rental prices (IPHRP) in Great Britain in February:

“These figures reaffirm how subdued private housing rental statistics have been in the last few months. Whilst that may be giving tenants some temporary respite from higher rents, the flip-side is that landlords will be facing downward pressure on their cash-flows and profitability. This comes at a time when successive policy changes in the buy-to-let (BTL) sector have proved detrimental, with net BTL investment falling by 80% since 2015.

“We are already concerned that availability of private rental homes is unlikely to keep up with household numbers. We therefore ask the Government to recognise the benefits that a strong Private Rented Sector (PRS) brings for the UK, and the importance of maintaining a good supply of rental properties for the periods when home ownership is not suitable or achievable for households.”

It seems that all countries in Great Britain have experienced a rise in rental prices, however in England they have increased more than in Scotland and Wales. See below for the index values for Great Britain compared to its constituent countries.

In London, it looks to be the case that growth in private rental prices is continuing to slow. The largest annual rental price increase was found to be in the East Midlands at 2.5% (down from 2.6% in January 2018). This is followed by the South West at 2.1% (unchanged) and the East of England at 2.1% (up from 1.9% in January 2018). The percentage change of private housing rental prices is shown below.