Posts with tag: buy to let investors

The Best Locations in Europe for Buy-to-Let Investment

Published On: October 3, 2017 at 8:11 am

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Ireland is once again the best European location for buy-to-let investment, shows new research by WorldFirst. This comes as the average UK rental yield drops to 4%, putting the country in the bottom five.

In the latest European Buy-to-Let League Table from WorldFirst, Ireland’s average rental yield rose to 7.08%, from 6.54% in 2016, keeping it at the tip of the list. As Ireland’s economy continues its upwards trajectory, maintaining its spot as one of the fastest growing in the Eurozone, so too does its rental market.

The average rent on a one-bedroom apartment in an Irish city has soared to over £12,000 per year, making it the second most expensive country to rent in the EU, after Luxembourg, which costs city renters over £14,000 a year.

And, while sales prices have seen an increase, they have remained closer to their European counterparts, with the average price of a one-bed apartment in an Irish city costing over £168,000.

The Best Locations in Europe for Buy-to-Let Investment

The Best Locations in Europe for Buy-to-Let Investment

Malta, Portugal, the Netherlands and Slovakia have emerged as the next European hotspots, with yields over 6%. All four countries have relatively low house prices, yet strong rental yields provide an opportunity to earn a decent income.

Meanwhile, the UK’s stuttering rental market is beginning to hit buy-to-let investors, with yields falling from an average of 4.91% to 4% over the past year. WorldFirst’s latest table also comes a year after Stamp Duty changes came into force in the UK, significantly increasing costs for those investing in additional properties.

Also sitting at the bottom of the table are Sweden, Croatia, France and Austria, all providing returns of less than 4% due to high property prices and stagnant rents. Sweden takes the bottom spot for the third time, thanks to its tightly controlled rental market.

For British landlords, the falling pound has led to a significant rise in the cost of purchasing a buy-to-let property, with a one-bed apartment in an Irish city costing over £12,000 more than it would have in 2016, and the same property in Luxembourg more than £25,000 more expensive.

Those who are lucky enough to have purchased a property prior to the recent fall will see returns from their rental income increase by up to 8%, getting £900 more per year for a one-bed apartment in an Irish city.

Commenting on the research, Edward Hardy, the Economist at WorldFirst, says: “The correlation between a country’s housing sector and the health of the wider economy is clear. It may now be the case that the deteriorating dynamics of the UK’s rental market is sounding the alarm for a wider slowdown in residential housing, and thereby broader economic wellbeing.

“While the UK remains in a purgatory-like state between EU membership and Brexit, long-term investment decisions have become increasingly difficult to make, and falling returns for property investors could mark the beginning of the end for one of the UK’s most successful investment avenues of the past 25 years.”

Julian Walker, of Spot Blue International Property, shares his thoughts on the opportunities that abound across the Channel in Europe: “According to research from WorldFirst, Portugal is the third best place to invest in buy-to-let property in Europe, with an average rental yield of 6.43%, and Turkey is the seventh, holding a strong average yield of 5.91%. These yields prove that, despite Brexit, investing outside the UK can bring strong investment returns.

“Portugal’s property market is one of the most bullish in Europe right now, with prices achieving a year-on-year rise of 8% for Q2 [the second quarter of] 2017. Sales by volume were up too, recording a hike of 16% year-on-year, with a total worth of €4.6 billion nationwide for the same three-month period.”

He continues: “Unsurprisingly, Lisbon is driving this growth, with sales in the capital accounting for 48% of the total value of the market. Prices in hotspots in the city have risen by an estimated 30% in the last three years, and are expected to continue at 5% per year for the next five years. Lisbon’s rental market is supported by young professionals and entrepreneurs, both Portuguese and foreign. This is thanks to the city becoming a hub for start-ups, but, in particular, new tech firms, so much so it has been dubbed the San Francisco of Europe.”

He offers his advice on investing in European property: “When buying a property overseas, the exchange rate can make a big difference. Just look at how sterling has fallen almost 20% against the euro since the Brexit decision! But it’s not just sterling which has fallen over the past year. Turkish Lira (TRY) has also weakened considerably since 2016, falling about 18% against the USD and 15.5% against the GBP.”

44% of landlords making alterations following tax changes

Published On: September 1, 2017 at 9:58 am

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Categories: Landlord News

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An interesting report from mydeposits has revealed that 44% of landlords are looking to make changes as a direct result of tax changes imposed on the sector during the last 18 months.

Tax Changes

Since April of 2016, three large tax changes have impacted on landlords. Buy-to-let investors have faced an additional 3% Stamp Duty surcharge, while there was also the abolition of ‘ landlords ability to claim a 10% tax break for ‘wear and tear.’

The third significant change came with alterations to mortgage interest tax relief, brought into force from April 2017. This means that by 2020, when the scheme is fully rolled out, landlords will only be able to claim a basic rate of tax back from their tax charges.

Worryingly, 26% of respondents to the survey said that they were unaware of the changes to mortgage interest tax relief. 23% said they were unaware of the alterations to Stamp Duty.

86% of respondents to the survey said they owned between one and four rental properties, with a further 8% having between 5-10 properties. 21% replied that the tax changes would not affect their buy-to-let business, but 25% said they will need to raise rents.

10% said that they are looking to sell-up for good, with 9% switching from a managed service through a letting agent to self-managing.

50% said that they have no intention of leaving the sector, nearly 25% plan to sell up during the next 5 years.

44% of landlords making alterations following tax changes

44% of landlords making alterations following tax changes

Business

Tony Gimple, Founding Director of Less Tax for Landlords, noted: ‘Landlords should be running their buy-to-let portfolio as a business regardless of tax changes, and those forced out of the market will be the ones who are too highly geared with too little yield. Many landlords are trying to do everything themselves and often following unreliable or out of context information, whereas once they are professionally educated on what their options are, many choose to remain landlords and go on to prosper.’

Eddie Hooker, CEO of Hamilton Fraser, parent company to mydeposits, also said: ‘The results of this survey are particularly interesting for the short to medium future of the private rented sector. Around 25% of those who responded were unaware of the changes to the tax regime on their existing portfolios which shows that more is needed to be done to help educate the market and help prepare landlords for the changes to their personal tax liabilities over the next few years.’

‘Even more poignant however, is the suggestion that more than 50% of landlords are considering changing their behaviour to safeguard their income by either increasing rents, turning to self-management or even selling up completely. With all the well-meaning efforts that are being made in the market to make the whole renting experience a better place for both landlords and tenants, there is now a clear danger that supply could be restricted with the knock-on effects this may cause. The right tax planning advice and income protection strategies are absolutely crucial.’[1]

[1] http://www.propertyreporter.co.uk/landlords/almost-half-of-landlords-planning-changes-as-a-result-of-tax-implications.html

 

 

Landlords beginning to adapt to new market

Published On: July 28, 2017 at 11:52 am

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Categories: Landlord News

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The most recent Buy to Let Britain report from Kent Reliance has revealed shifting sentiments in the market, as landlords respond to new tax alterations.

A survey of 754 landlords, run in conjunction with BDRC Continental in the opening quarter of 2017, revealed 41% were positive about their portfolios. This was down slightly on the 44% on the last quarter.

Positivity/Negativity

Pleasingly, those with a positive outlook still outweigh those with negative one. However, the 41% recorded was well down on the 67% who were confident three years ago.

During the opening three months of 2017, 10% of landlords added to their portfolios – slightly outnumbering the 8% who reduced holdings. In the next three months, 19% of landlords asked expect to reduce their portfolios, as opposed to 13% who said they would increase.

Rather than a mass exodus of landlords from the private rental sector, the shifting sentiment could reflect how the reality of increased tax and running costs will undermine supply moving forwards. There could be consolidation in the market, with smaller landlords leaving the market as a result of being pushed into a greater tax bracket.

This gives an opportunity for forwarding the professionalism of the sector, in terms of size and scale of landlords and the service they provide to their tenants.

In terms of demand, tenant population is growing, albeit at a slower rate than in recent years. 27% of landlords saw tenant demand rise during the last quarter, but more saw demand lower.

Landlords beginning to adapt to new market

Landlords beginning to adapt to new market

Changes

Andy Golding, Chief Executive Officer at OneSavings Bank, noted: ‘Changes have come thick and fast for landlords since our last edition. First, the housing market came to the fore in the government’s housing white paper in February, which recognised the need to stimulate housebuilding and loosen restrictive planning rules. This was followed by a raft of pledges in each of the political parties’ manifestos ahead of the recent general election. The Conservatives promised to build 1.5 million homes by the end of 2022 while Labour committed to build 100,000 council and housing association homes a year. The failure of either party to secure a majority questions whether these promises will be met with action, however we have at least seen a firm recognition of the scale of the housing crisis.’[1]

Golding went on to say, ‘While this will hopefully shape the wider housing market in the longer term, landlords have been getting to grips with more immediate changes. This April saw changes to tax treatment of BTL mortgages introduced, raising costs for many landlords. The Prudential Regulation Authority (PRA) first round of changes to mortgage underwriting took effect from January, with the second; altering the way larger portfolio landlords are treated, set to come in to play in October. Against this backdrop, costs continue to rise, even before we factor in higher tax bills for many landlords. In the last report from our Buy to Let Britain Research Series showed that the annual running costs of a buy to let property have reached £3,632 – up a quarter since 2007.’

‘These factors are clearly beginning to drag on the growth of the sector; landlords have had to navigate the changing tides of taxation and regulation, at the same time as seeing the cost of doing business increase. We look at how they are doing so, how returns and rents are performing, and whether demand for, and access to, mortgage finance has been hit.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-adapt-to-new-market-as-sentiments-shift.html

 

 

 

Legislation changes unlikely to be reversed by new Government

Published On: June 12, 2017 at 11:53 am

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Categories: Landlord News

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Following the shock result of a hung-parliament in Thursday’s General Election, the Conservative Party is still in talks with the controversial Democratic Unionist Party in order to prop-up the Government.

Eventually, it is expected that Theresa May will strike an unlikely alliance with the Northern Irish party, but this is unlikely to see an end to alterations impacting on the buy-to-let sector.

Legislation Changes

It is fair to say that buy-to-let investors have faced a tough time over recent months, with a raft a legislation changes having been introduced. These include changes to mortgage interest tax relief, Stamp Duty, Right to Rent and EPCs. The list goes on!

Despite this, it is unlikely that any of these policies will be reversed under the incoming Government, according to James Davis, CEO and founder of online lettings agency Upad.co.uk.

Legislation changes unlikely to be reversed by new Government

Legislation changes unlikely to be reversed by new Government

‘Bashing’

Responding to the election result, Mr Davis observed: ‘The landlord bashing is only likely to continue with Theresa May forming a deal with the DUP to allow her to continue leading the country.’[1]

‘There were no new pledges set out to help struggling landlords in her manifesto. The Tories have proven that they can’t be trusted by landlords; as they continue to use them as a political football to kick around,’ he continued.[1]

Concluding, Mr Davis said: ‘I certainly wouldn’t let one of my properties out to a Tory as you can’t trust them. Whilst the Conservatives have recognised that the 8 million tenants in the UK are worth supporting politically, what they don’t seem to realise is that the changes they want to bring about for landlords, will eventually through the test of time affect tenants far more through higher rents.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/theresa-mays-plan-to-govern-with-dup-will-not-halt-landlord-bashing

Many investors struggling to secure mainstream funding

Published On: May 31, 2017 at 8:00 am

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Categories: Finance News

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Around 75% of buy-to-let investors were able to raise alternative finance during the last year, after struggles to obtain mainstream funding.

According to mtf data, 44% of these investors saw affordability as their main obstacle in obtaining mainstream funding- followed by adverse credit (34%) and stricter lending criteria (22%).

Alternative Lending

This said, 47% of investors took out a secured loan as an alternative, with 39% opting for a bridging loan.

Another three-quarters of landlords questioned intend to expand their portfolio during the remainder of 2017. Encouragingly, 67% are looking in London, with 33% targeting the South East. This will come as a relief following reports of landlords leaving the sector as a result of the recent alterations to mortgage interest tax relief.

When asked how the sector could be improved to help landlords, the majority responded by saying that they would like the see the additional 3% Stamp Duty surcharge on buy-to-let properties scrapped.

Many investors struggling to secure mainstream funding

Many investors struggling to secure mainstream funding

Tough

Tomer Aboody, director of mtf, noted: ‘The results from our Q1 Property Investor Survey reflect the impact of stricter affordability and stress testing from lenders on professional property investors’ ability to obtain mainstream funding.’[1]

‘It’s certainly been a tough 18 months for landlords but alternative lenders are stepping in to meet the needs of borrowers,’ Aboody added.[1]

[1] http://www.propertyreporter.co.uk/finance/majority-of-property-investors-unable-to-secure-mainstream-funding.html

Keystone Adds New Three-Year Fixed Rate But-to-Let Mortgage

Published On: May 11, 2017 at 8:25 am

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Categories: Finance News

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Keystone Adds New Three-Year Fixed Rate But-to-Let Mortgage

Keystone Adds New Three-Year Fixed Rate But-to-Let Mortgage

Specialist lending brand Keystone Property Finance has added a new three-year fixed rate buy-to-let mortgage deal to its Classic Range. Priced at just 3.69% at 65% loan-to-value (LTV), it is now the lowest priced product in the selection.

This rate is being offered to landlords regardless of whether they choose to invest personally or through a limited company. And, unlike many buy-to-let lenders, it is available to trading limited companies as well as Special Purpose Vehicles (SPVs).

Perhaps crucially for many investors using corporate structures, Keystone does not impose an upper age limit to qualify for finance.

Older investors borrowing personally also find Keystone a viable option, as its criteria stretches to borrowers up to 85-years-old at the end of the mortgage term.

David Whittaker, the CEO of Keystone, comments: “The rate is available on standard buy-to-let property to landlords with slightly larger deposits who are looking to borrow between £50,000 and £750,000. It sits nicely beside our other three-year fixed rates, each of which are targeted at landlords with specific needs. For example, we have a three-year fixed rate at 4.29% designed for HMOs [Houses in Multiple Occupation] with up to eight bedrooms and multi-units with up to ten flats. We also have options for landlords with higher LTV requirements.”

Keystone is an intermediary-only lending brand, which boasts criteria aimed at investors typically with more complex borrowing scenarios. It is one of the few lenders that will allow remortgages within six months of purchase, and will consider a wide range of non-standard properties, including flats above commercial premises and new build flats.

Full details of all Keystone’s rates can be found online here: www.keystonepropertyfinance.co.uk

Are you thinking of investing further in the buy-to-let sector? Take a look at Keystone’s offerings, including the new three-year fixed rate deal, to find out what it can do for you.