Search Results For: buy to rent sector

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Published On: January 12, 2017 at 9:28 am

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Asking rents will rise by 4% outside London this year, according to Rightmove.

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Last year, the property portal reports that asking rents increased by 3% outside London, but dropped by 4.4% within the capital.

The highest growth in rental prices of the year was recorded in the northern regions of Yorkshire and the Humber and the North West. However, all regions outside London saw a rise.

In inner London, rents fell by 5.2%, while there was a smaller decline of 2.5% in outer London.

The Head of Lettings at Rightmove, Sam Mitchell, considers the future of the rental market: “This year will be one of caution for buy-to-let investors, due to tighter lending criteria and increased Stamp Duty.

“We definitely won’t see the spike in Q1 purchases that we saw last year, as landlords rushed to buy before last April’s new Stamp Duty deadline.”

He also assesses how further changes will affect the sector: “If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents.

“We forecast that asking rents could rise by 4% outside London by the end of 2017, though in London, prices are likely to stay flat.”

Mitchell advises landlords on the best locations to invest: “Investors looking for the strongest yields could consider investing in certain areas in the North West, where both demand and yields are high.

“Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.

“In order to mitigate this, we would recommend landlords asking for longer tenancies to help secure a steady rental income over the next few years while they adjust to what the tax changes will mean for them.”

While recent reports claim that rental yields are expected to drop below the five-year average this year, landlords should be aware that strong returns are still possible in some locations.

Number of buy-to-let products at lowest for 8 years

Published On: January 9, 2017 at 3:04 pm

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Data released by Moneyfacts has revealed that there has been a substantial fall in buy-to-let product numbers. According to the report, there have been 74 deals taken from the market in the last month.

The report indicates that the total number of live buy-to-let products stood at 1,482 in December, but has slipped to 1,408 this month. Particularly affected was the 75% LTV sector, which saw the total number of products fall from 606 to 540 during the same period.

This said, the number of products is still higher than the 1,256 seen in January.

Number of buy-to-let products at lowest for 8 years

Number of buy-to-let products at lowest for 8 years

Hit

Charlotte Nelson, Finance Expert at Moneyfacts, observed: ‘The BTL mortgage market took a hit last month, seeing the largest reduction in product numbers since March 2009. Usually, the month of December is quiet, with providers gearing up for the holidays. This time, however, the BTL market has seen a surge of activity, with the number of BTL products falling back to July 2016’s levels. Withdrawals have not been limited to just a few providers, either, with the reductions having been spread across the board.’[1]

‘Alongside tougher affordability, major changes to the way in which income from property rentals is taxed will be coming in April. Lenders are perhaps withdrawing products to get back to just their ‘core’ range in an attempt to wait and see what other providers will be doing in the run up to April. 2017 is set to be an uncertain year, which could be a lethal cocktail for landlords, particularly now there are less products on the market. Anyone unsure about their options should seek out a financial adviser,’ she added.[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-market-sees-the-largest-fall-in-products-in-8-years.html

 

80% of ARLA agents foresee rent rises in 2017

Published On: December 20, 2016 at 11:07 am

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UK rents are expected to increase during 2017, as a combination of a lack of housing supply and the raft of tax changes impacting on buy-to-let landlords.

The eventual phasing out of mortgage tax relief, alongside the introduction of more stringent buy-to-let mortgage lending conditions will also serve to push landlords away from the market.

A new poll from the Association of Residential Letting Agents (ARLA) has highlighted the possible adverse impact a ban on letting agent fees could have.

Rental Rises

After the Chancellor announced a ban on letting agent fees in this year’s Autumn Statement, 80% of ARLA agents believe that rents will rise in 2017. This is due to the assumption that the outright ban on letting agent fees to tenants will see these costs moved to landlords.

David Cox, managing director of ARLA, said: ‘The number of rent hikes reported by letting agents continued to decrease in November and it’s a shame the ban on letting agent fees will have the opposite impact on rent prices when the measure comes into force.’[1]

‘The buy-to-let market is becoming less attractive for investors as the ban on fees, combined with the scrapping of mortgage interest relief and the stamp duty increase on second homes push costs up for landlords. So unfortunately, regardless of the uplift we saw in supply this month, we expect to see the number of properties available to rent fall next year,’ he continued.[1]

Fall in Letting Agents?

A number of buy-to-let landlords do not currently use letting agents to either find or manage properties and it has been mooted that many more should consider going solo moving forwards.

Gillian Kent, chairman at No Agent, said: ‘We’re firm believers that as landlords’ purse strings are tightened by tax changes and the expected increases from traditional letting agents that landlords will look for alternatives.’(1)

Simon Lambert, editor of This is Money, wrote on the website: ‘Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential future villains in the ban on tenant fees.’[1]

80% of ARLA agents foresee rent rises in 2017

80% of ARLA agents foresee rent rises in 2017

Anger

Lambert also believes that buy-to-let investors are right to be as angry as tenants over fees charged by agents.

He observes: ‘Many (landlords) pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for.’[1]

‘A check with their agent on the level of double-charging going on would leave a landlord as grumpy as their tenant,’ he added.[1]

Concluding, Mr Lambert observed that landlords no not profit from existing tenant fees. As a result, while agents will be wanting to keep their revenues, an attempt to get back lost earnings by putting extra costs onto landlords represents a, ‘high-risk strategy.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/12/vast-majority-of-letting-agents-expect-rents-to-rise-in-2017

Rate of UK rental growth slows during 2016

Published On: December 16, 2016 at 11:20 am

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New data released by buy-to-let lender Landbay has revealed that the average rent paid for a property in Britain increased by 1.12% in 2016.

This represented a slowdown from the 2.34% in 2015, with falling rents in the capital dragging down the resilience in rental growth evident in the rest of the UK.

National rents

According to the report, the typical UK rent rose to hit a record £1,188 per month during this year, up from £1,177 at the end of 2015. These figures are inflated by London, where rents rose to a peak of £1,894 during April, before falling in every month since then to hit £1,883 by the end of November.

The negative growth in the capital (-0.31%) was different to the 2.46% increase seen in 2015. Taking London out of the equation, rents in Britain increased by 1.91% to hit £749 by the end of November.

The East Midlands (2.6%), North West (2.03%) and Yorkshire and Humberside (1.67%) have all seen rental growth rise at their quickest pace for five years.

John Goodall, CEO and co-founder of Landbay, noted: ‘When you look at the raft of regulatory, political and economic challenges coming to bear on the buy to let sector in 2016, it’s clear to see why rental growth has slowed this year, but the nation has not been equally affected. London has been something of a millstone for the rest of the UK, and tenants will no doubt be relieved that rental pressure has eased since the referendum, but the fall in rents is unlikely to last, and we expect the tide will turn in 2017.’[1]

‘A new stamp duty levy, tighter affordability controls from the PRA, and the removal of mortgage interest tax relief all look likely to restrict the supply of rental housing in 2017, and tenants will have little choice but to compete for what properties are on offer. As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3% by the end of 2017,’ he continued.[1]

Rate of UK rental growth slows during 2016

Rate of UK rental growth slows during 2016

Infrastructure Rises

Both the HS2 and Crossrail 2 projects have been announced in recent years, with Landbay’s report uncovering tenants close to the proposed routes are already seeing rental pressures.

All key stations on the HS2 routes north of London have seen rental growth above the national average of 8.8% during the last five years. Birmingham Curzon Street (23.7%), Birmingham (22.4%) and Leeds (15.3%) have seen significant rental growth over the period.

Mr Goodall concluded by saying: ‘Infrastructural investment featured highly in the Chancellor’s Autumn Statement, and it’s clear that the government is counting on HS2 and Crossrail 2 to deliver significant economic benefits to people living in the areas they connect. This may well be so, but it will all be for naught if a shortage of housing makes the areas unattractive to live in. Rapidly rising rents may offset some additional costs for landlords, but if the situation becomes unsustainable this is not good for the housing market as a whole. Housebuilding along the route needs to be spread across all tenures, so those in the rental market aren’t squeezed out by the impacts of the sudden arrival of new transport infrastructure.’[1]

[1] http://www.propertyreporter.co.uk/landlords/pace-of-uk-rental-growth-halves-in-2016.html

Rental growth slows again in London

Published On: December 15, 2016 at 11:42 am

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The most recent report from HomeLet has revealed that rents in London increased by only 1.6% in the year to November. This was more slowly than all other regions of the country.

In fact, rental price inflation in the capital is now barely half the rate seen in the rest of the United Kingdom.

Rent increases

While landlords in the capital are still seeing rental increases in cash terms, they are unable to increase prices as much as in the first half of the year, with inflation at 6%.

November was only the second month in which rental increases in London did not keep up with the rest of the country. In fact, the gap is now more marked than at any time since the HomeLet index started.

During the last month, rents increased by an annual average of 3%-the fifth consecutive month in which inflation has either been flat or has fallen. A typical tenant signing up for a new tenancy during November agreed an average monthly rent of £898, in comparison to the £872 during November 2015.

Martin Totty, HomeLet’s Chief Executive Officer, noted: ‘November’s figures reflect a continuation of trends which the HomeLet Rental Index has been tracking for several months. While landlords have been able to edge rents up, the amount of the increase been slowing for a number of months, which suggests landlords understand that tenants have, or are, reaching an affordability ceiling, particularly given the uncertain economic climate.’[1]

Rental growth slows again in London

Rental growth slows again in London

Two halves

The Rental Index from HomeLet has confirmed a year of two halves. During the opening half of 2016, UK rents rose at rates above 4%, with those in London hitting a peak of 6.2% during March.

However, since the summer, rental price inflation has slowed massively.

This year has seen a massive raft of changes for buy-to-let landlords. Increased stamp duty coming into effect in April saw landlords rushing to complete before the deadline. In addition, there have been changes in the Right to Rent guidelines and alterations to mortgage interest tax relief, to name but two alterations.

Mr Totty added: ‘It is difficult to think of a period when there have been so many external interventions in the private rental sector as yet seen during 2016: the impact of many of the changes are yet to be worked through and it’s unclear yet who will emerge as the winners and the losers.’[1]

 

[1] http://www.propertyreporter.co.uk/landlords/rent-rises-slow-down-in-london.html

 

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Published On: December 14, 2016 at 11:43 am

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Mortgage sentiment is improving, but buy-to-let business is down, according to Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report, based on interviews with around 200 mortgage intermediaries.

The improvement in confidence arrives despite a reduction in the volume of business being written in the third quarter (Q3), with the latest data showing that the number of mortgages introduced per office has dropped from an average of 24.7 in Q2 to 21.8 currently. There has also been a corresponding drop in the average number of advisors per office, from 3.7 in the previous quarter to three in Q3.

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Mortgage Sentiment Improving, but Buy-to-Let Business is Down

Confidence around future business has shown some improvement, however, following a summer of uncertainty caused by Government intervention in the buy-to-let sector and Britain’s vote to leave the EU.

Asked how much mortgage business they expect to complete over the coming quarter, more than third of intermediaries (34%) expect to do more business, compared to 7% who expect to do less. On average, intermediaries expect a 2.1% rise in business through the next quarter. In Q2, intermediaries predicted a 0.8% increase in business.

Sentiment in the buy-to-let sector remains mixed, however, following multiple Government and regulatory interventions. The proportion of intermediaries describing landlord demand as strong or very strong has improved, rising from 5% in Q2 to 9%.

However, 46% of intermediaries describe demand for buy-to-let mortgages as weak or very weak, suggesting that there is some way to go before sentiment recovers to levels recorded prior to recent Government announcements on Stamp Duty and mortgage interest tax relief.

Likewise, almost half of all buy-to-let business (44%) comprises remortgages, while just a quarter (25%) is for portfolio extension. This figure is down from 26% in the previous quarter, and 33% in Q4 2015.

A recent study by the Council of Mortgage Lenders paints a picture of the average UK landlord’s future plans: /cml-paints-picture-average-uk-landlord/

The Managing Director of Paragon Mortgages, John Heron, says: “While there has been some seasonal reduction in business volumes among intermediaries, there has also been a definite improvement in sentiment about likely future business. This comes on the back of a summer of uncertainty in the property market, and the economy more generally, following the vote to leave the EU.

“While any improvement in sentiment is to be welcomed, the latest data does indicate that confidence remains muted, especially in the buy-to-let market. Although intermediaries are reporting an increase in demand from landlords, a growing proportion of this demand is for remortgages, and buy-to-let purchases remain at low levels.”

He warns: “At a time of high demand for private rented sector properties, this dynamic could lead to reduced supply, higher rents and put greater pressure on the housing market.”