Search Results For: buy to rent sector

Is Deposit-Free Renting on the Horizon? One Campaigner Thinks So

Published On: July 5, 2017 at 9:21 am

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Deposit-free renting could be on the horizon, according to deposit reform campaigner Ajay Jagota, of Dlighted.

Is Deposit-Free Renting on the Horizon? One Campaigner Thinks So

Is Deposit-Free Renting on the Horizon? One Campaigner Thinks So

With almost 5.8m households expected to be living in the private rental sector within four years, the amount of cash sitting in tenancy deposits is set to surge by around 40% – and that’s despite Government plans to cap security deposits to just one month’s rent, as announced in the recent Queen’s Speech.

Jagota believes that with the average UK tenant currently needing £967 for a deposit, around £5.8 billion worth of funds will be held as tenancy deposits by 2021, reflecting predicted growth of around 24% in the number of households renting privately.

Jagota described the figure as “the absolute scandal of wasting money to fill the funding gap on social care on literally nothing”.

The figures, from a survey conducted by Knight Frank, also show that 37% of tenants now rent out of choice rather than necessity, with renters naming the flexibility and fewer responsibilities of renting as primary reasons for not purchasing properties of their own.

The study also found that 68% of tenants still expect to be living in the private rental sector in three years’ time.

Jagota insists: “Tenancy deposits are a blatant economic inefficiency in serious need of Government intervention – an intervention which could save almost six million renters an average of £1,000 by the time of the next election.

“The £3.5 billion already is an eye-watering figure enough, but the £5.8 billion it could rise to within five years is monstrous. With 97% of deposits unnecessary, this is an absolute scandal.”

He believes: “I’m not convinced a deposit cap goes anywhere far enough, but I believe the industry has to accept that this is just the first step.

“I predicted pre-election that tenancy deposit reform is now irrevocably on the agenda and, even just this week, deposit-free renting was proposed in an influential blog by leading property academic Professor Brian Sturgess.

“The tide is turning in favour of deposit-free renting, and those of us who have worked so hard to put reform on the agenda – even when it has not been a very popular attitude in our industry – are entitled to feel a little vindicated.”

Jagota claims: “There are an infinite number of better ways all that money could be spent, and by abolishing outdated tenancy deposit schemes with deposit-free renting and landlord insurance, we can save renters a fortune while giving landlords better protection and boosting our economy, or facilitating generation rent onto the housing ladder via transfer of funds into Help To Buy ISAs.”

Do you agree that deposit-free renting is on the horizon? And is this a good thing?

One in seven tenants spend half of their income on rent

Published On: July 4, 2017 at 10:06 am

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Nearly one in seven private renters are spending more than half of their total income on rents, according to new research. This comes in contrast to just 2% of homeowners spending the same on their mortgage.

These figures have been released by the Local Government Association (LGA) and suggest that renters are facing difficulty in not just finding an affordable home to live in, but to save up for a deposit.

Indeed, the average deposit is now 71% of a first-time buyer’s annual income.

New Wave

The LGA believe that the Government should start a new wave of rental properties that reflect what families can afford, which seemingly is no more than one-third of total income.

In addition, the research suggests:

  • 43% of private sector tenants spend more than 30% of their income on rent
  • 37% renting from a local authority also spend over this amount on rents
  • Rents currently average at £852 across the country

While affordable and social rents are lower typically than private rents, the high number of social tenants spending in excess of 30% of their income on rent shows low total household incomes.

One in seven tenants spend half of their income on rent

One in seven tenants spend half of their income on rent

Deposits

Greater house prices and rents are making it more difficult for UK youngsters to save up for a deposit for their own property.

In the South East, deposits are 85% of the average household income, but in the North West, this figure relaxes to 55%. London however is seeing the highest price, with 133% of a household’s average yearly income.

The LGA has called for councils to be given powers and access to funding to resume their historic role as a key builder of affordable homes- including those for social and affordable rents.

 

CML Revises its Buy-to-Let Forecast for 2017 and 2018

Published On: June 23, 2017 at 8:11 am

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The Council of Mortgage Lenders (CML) has revised its buy-to-let forecast for 2017 and 2018, which is down from previous expectations at the end of last year.

CML Revises its Buy-to-Let Forecast for 2017 and 2018

CML Revises its Buy-to-Let Forecast for 2017 and 2018

Its latest gross mortgage lending figures for May estimate that lending reached £20.1 billion. This is up by 12% on both April and May last year, in which £17.9 billion was advanced.

The CML’s buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations at the end of last year, reflecting tax and prudential burdens in the housing and mortgage markets.

The organisation now expects buy-to-let lending of £35 billion in 2017 and £33 billion in 2018 – down from £37 billion in each year, which was forecast in December 2016.

The Director General of the CML, Paul Smee, comments on market conditions: “Remortgage activity and first time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.

“Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.”

He continues: “While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market. Following the distortion of the Stamp Duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.

“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”

Shaun Church, the Director of mortgage broker Private Finance, also says: “While it is good to see mortgage lending increase, the market remains sluggish, with remortgaging driving a substantial amount of activity. The home mover market continues to be dampened by changes to Stamp Duty and a lack of new homes coming onto the market.

“The latest forecast on the prospects for buy-to-let mortgage lending clearly demonstrates the damage that has been inflicted on the market by the Stamp Duty surcharge and the phasing out of interest rate tax relief. A healthy housing market requires a range of tenure types to support both buyers and renters.”

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Published On: June 14, 2017 at 9:06 am

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Specialist lending brand Keystone Property Finance has reduced all of its rates in its Classic Range for buy-to-let landlords.

The rates have been cut by ten basis points. The lender’s LIBOR has also been reset downwards, at 0.29%.

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Pricing in the Keystone Classic Range now starts at just 3.59% for a three-year fixed rate mortgage at 65% loan-to-value (LTV). This product is available on standard buy-to-let property.

The range also includes options at 75% and 80% LTV, as well as rates designed specifically for Houses in Multiple Occupation (HMOs) and multi-unit blocks.

Keystone’s Classic Range buy-to-let mortgages are available to both individual landlords and those operating through limited companies.

Unlike most other lenders, Keystone accepts trading limited companies, as well as SPVs, as standard.

The CEO of Keystone, David Whittaker, comments on the reductions: “We are delighted to be able to accommodate a price cut within the Classic Range. Landlords using trading limited companies as borrowing vehicles will be particularly pleased with the reduction, as we are currently the only buy-to-let lender not to require a fixed and floating charge or debenture.”

Keystone Property Finance is an intermediary-only lending brand, and brokers must be registered to gain access.

We remind all landlords looking to take out mortgages of the Government’s recent and ongoing reduction in tax relief on finance costs – including mortgage interest.

A detailed guide from the Government on how the restriction will affect you can be accessed here: /government-guide-tax-relief-changes-residential-landlords/

We also reported yesterday that Together has launched a new, specialist buy-to-let range created to support landlords that are looking to expand their portfolios.

Keep up to date with all property market, mortgage sector and lettings industry news at Landlord News and on our social media accounts: Twitter, Facebook, Google+ and LinkedIn.

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Retiree renters paying much more than one decade ago

Published On: June 12, 2017 at 9:39 am

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A new report from Countrywide has revealed that retiree tenants are paying a lot more in rent than they were ten years ago.

During the last twelve months, retiree renters paid a total of £3.7bn in rent – a rise of 216% on the £1.2bn paid in 2007.

This rise means that £1 in every £14 paid by tenants in the UK comes from a pensioner. In fact, the total amount of rent paid by private tenants in Britain during the last year hit £50.6bn.

Rent Rises

In 2017, pensioners paid an average of £810 per month – a rise of 0.3% on last year and 19% since 2007. However, the typical retiree actually paid 12% less than the average tenant, as they were likely to rent a smaller property.

75% of retiree tenants rent a one or two-bedroom home, in comparison to 66% of all tenants.

Pensioners now make up 8% of the total number of tenants, in comparison to 5.2% in 2007. The greatest proportion of retiree tenants can be found in Wales, where almost 1 in 5 tenants are of pensioner age. The South West and North East have the next greatest proportion.

However, London has the fewest, with just 3.5% of retiree tenants.

In Britain as a whole, 53% of tenant pensioners live alone, while 81% are over 65.

Retiree renters paying much more than one decade ago

Retiree renters paying much more than one decade ago

Slow Growth

During May, the cost of renting a home was just 0.1% higher than it was in May 2016. In the capital, rents fell for the seventh straight month.

Johnny Morris, Research Director at Countrywide, observed: ‘The rental market can no longer be typified by the image of carefree, young professionals.  More than half of tenants are over 30 and the number of pensioners renting has reached record levels.  And with younger generations growing up much less likely to be homeowners, tenants are getting older with an ever more diverse group of people calling the rented sector home.’[1]

‘Seven consecutive months of falling rents in the capital are starting to show signs of rippling out across the country with rents down in over half of regions outside London. The number of homes on the market remains well up on last years’ levels, softening rental growth,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/retirees-rent-triples-in-10-years.html

 

New Government must do more to improve buy-to-let

Published On: June 12, 2017 at 8:54 am

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Britain is still reeling from the result of the General Election, with the Conservatives hoping that the DUP will prop up their majority share.

There are now calls for the Government to reverse existing tax policies, to increase badly needed housing supply in the rental market. In addition, this will give existing and would-be investors more of a reason to invest in the sector.

Lower Valuations

The so-called anti-landlord policies imposed by the Conservative Government have certainly had a negative impact on private landlords – particularly those with smaller portfolios.

In turn, they have deterred many landlords from investing further, with buy-to-let valuation activity on the decline.

The most recent report from Connells Survey & Valuation indicates that the proportion of buy-to-let valuations during April stood at 6% under the five-year average for the month.

What’s more, the percentage of valuation activity undertaken in the buy-to-let sector slipped from 11% in April 2016 to only 7% in April 2017. This fall can be largely attributed to alterations to mortgage interest tax relief.

Combined with the 3% Stamp Duty surcharge, it is little surprise to see valuations falling.

New Government must do more to improve buy-to-let

New Government must do more to improve buy-to-let

Changes

With the new Government starting to take shape, Carol Pawsey, lettings director at Kinleigh Folkard & Hayward, believes that the focus should firmly be on improving the private rental sector.

Pawsey said: ‘The new government, however it is compiled, needs to ensure we have a balanced private rental sector that attracts investors and landlords to the market while looking after the long-term interests of the increasing number of tenants looking for quality long-term rental homes.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/new-government-needs-to-focus-on-attracting-btl-landlords