Posts with tag: buy-to-let landlords

Could property investment soon become financially unviable?

Published On: June 27, 2017 at 8:40 am

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A leading industry peer has moved to voice his concerns surrounding the future of the buy-to-let market, following recent announcements and legislation changes.

Last week’s Queen’s Speech were dominated by a number of Brexit bills, but also included the Tenant’s Fees Bill, which proposes banning landlords and letting agents from charging fees to tenants.

Difficulties

This proposal was initially announced last November as part of the Autumn Statement. Despite the details remaining unclear, the move is designed to put the cost of all letting agent fees onto landlords. In turn, an industry peer has expressed concern that this will make it extremely difficult for a number of buy-to-let landlords to make any considerable money moving forwards.

Simon Gerrard, managing director of Martyn Gerrard, called the ban announcement a, ‘headline grabbing knee-jerk reaction,’ from the new Government.

Gerrard observed: ‘This decision has been made with little consideration for the housing industry and my concern is that, moving forward, investing in property will cease to be a financially viable option for the many.’[1]

Could property investment soon become financially unviable?

Could property investment soon become financially unviable?

Rent Rises

Many experts believe the proposed changes in legislation could leave landlords with little choice but to increase rents, as agents pass existing tenants fees onto investors.

ARLA has also moved to suggest that up to 4,000 jobs in the letting sector could be at risk as a result of the alterations.

David Cox, Chief Executive of ARLA, noted: ‘A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants.’[1]

‘It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed on the 2nd June. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/investing-in-property-could-soon-cease-to-be-financially-viable

 

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.”

Does property investment offer better returns than pensions?

Published On: June 19, 2017 at 8:48 am

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Despite recent Government tax hikes on buy-to-let landlords, alongside tougher criteria for mortgage lending, a new report has suggested that the correct property investment can provide better returns than a pension.

According to the report from Armistead Property, there are a number of surveys that underline the fact property investment is more profitable.

Portfolio

While pensions were found to beat single-property returns, investors with more sizeable portfolios have the potential to exceed pension money.

Further analysis from AJ shows how much £100,000 would grow in both capital and returns over 10 and 20 years in three scenarios.

Using both historic and housing stats, the forecasts compare investing in a pension with someone purchasing a single buy-to-let property without a mortgage and with someone buying three properties with a total mortgage borrowing of £300,000.

The original £100,000 is split into three, where each third becomes a 25% deposit on a property. Tax features, such as stamp duty, are also factored in with property investments.

The table below reveals the results:

Scenario Value of Investment Over 10 Years Annual Income Over Period (Pre-Tax) Value of Investment Over Another 10 Years
Buy-to-Let (1 x property) £123,095 £4,188 £156,331
Buy-to-Let (3 x properties) £171,600 £7,242 £217,932
Pension drawdown after first 10 years £203,612 0 £174,008
Does property investment offer better returns than pensions?

Does property investment offer better returns than pensions?


Risks

Peter Armistead, Director of Armistead Property, noted: ‘The research shows that three buy-to-let properties produce £42,000 more than a pension over the 10 years.  However, property investment comes with greater risks such as fluctuating house prices and capital growth; void periods; fluctuating rents, maintenance issues, tenant management issues etc.  Property is definitely a long term investment and does have many drawbacks as an asset class which a pension doesn’t, the most notable one being lack of liquidity.’[1]

‘In an ideal world, people should be investing in both a pension and property from as early an age as possible and ideally from your 30’s.  It is advisable to spread the risk and have investments for the future in more than one pot,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/can-btl-really-deliver-better-returns-than-a-pension.html

 

Top regions for BTL split between Tory and Labour

Published On: June 16, 2017 at 9:43 am

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The latest quarterly buy-to-let index report from LendInvest has revealed that the top ten postcode areas in England and Wales are split evenly between locations that voted for the Conservatives or Labour.

LendInvest’s Index is calculated by analysing four critical measures, namely:

  • capital value growth
  • transaction volumes
  • rental yield
  • rental price growth

Locations

Luton has been revealed as the best buy-to-let investment location across both England and Wales. Average yields here are 4.54%, with rental price growth 7.37%. The majority of people here were found to have voted for Labour in the recent election.

Stevenage was found to be the top region for buy-to-let amongst Conservative supporters, with capital gains of 11.64% and rental price growth of 7.5% in the last quarter.

Romford, which came top of the pile in previous editions of the report, fell to tenth, due to falling rental yields and capital gains.

The top-ten buy-to-let postcodes, as per the Index, were found to be:

  Yield Capital gains Rental price growth Transaction volume growth
Luton 4.54% 12.83% 7.37% -10.40%
Stevenage 4.05% 11.64% 7.47% -9.40%
Rochester 4.55% 12.34% 5.45% -9.40%
Colchester 4.29% 14.14% 4.14% -11.16%
Dartford 4.37% 13.61% 3.92% -10.94%
Peterborough 4.71% 9.04% 6.98% -10.67%
Southend-on-Sea 4.30% 12.37% 3.89% -10.26%
Manchester 6.11% 7.58% 7.53% -12.41%
Canterbury 4.36% 9.34% 6.62% -11.49%
Romford 4.81% 14.42% 1.28% -11.67%

For Conservative supporters, the top-ten reads:


Yield		 Capital gains Rental price growth Transaction volume growth
Stevenage 4.05% 11.64% 7.5% -9.40%
Rochester 4.55% 12.34% 5.4% -9.40%
Colchester 4.29% 14.14% 4.1% -11.16%
Dartford 4.37% 13.61% 3.9% -10.94%
Southend-on-Sea 4.30% 12.37% 3.9% -10.26%
Romford 4.81% 14.42% 1.3% -11.67%
Chelmsford 3.96% 12.44% 3.3% -10.25%
Northampton 4.68% 9.64% 4.8% -11.23%
Swindon 4.10% 9.46% 5.0% -10.49%
St Albans 3.56% 11.30% 3.9% -12.48%

 

Top regions for BTL split between Tory and Labour

Top regions for BTL split between Tory and Labour

For Labour, the list is:

Yield Capital gains Rental price growth Transaction volume growth
Luton 4.54% 12.83% 7.4% -10.40%
Peterborough 4.71% 9.04% 7.0% -10.67%
Manchester 6.11% 7.58% 7.5% -12.41%
Canterbury 4.36% 9.34% 6.6% -11.49%
Bristol 4.45% 10.34% 4.8% -10.82%
Coventry 4.95% 8.49% 5.6% -10.49%
Ipswich 4.02% 11.77% 3.2% -10.86%
Newport 4.79% 5.52% 6.8% -8.83%
Ilford 4.37% 13.94% 0.9% -14.63%
Leeds 4.77% 5.97% 6.4% -9.59%

Changes

Christian Faes, co-founder and chief executive of LendInvest, said: ‘Against a backdrop of all the political upheaval the country has endured in the last quarter, it isn’t surprising to see some significant changes in the performance of postcodes against one another.’[1]

‘These shifts, however, are more isolated than systemic and the fact that there has not been a greater shakeup in the Top 10 buy-to-let postcodes signals the durability and resilience of the UK property market,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/top-ten-btl-postcodes-see-significant-changes-during-election.html

 

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

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

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Categories: Landlord News

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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

 

 

Specialist buy-to-let range announced at Together

Published On: June 9, 2017 at 2:39 pm

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Today has seen Together announce a new specialist buy-to-let product range, which is designed to give support to property investors looking to extend their portfolios.

The product, aimed at landlords and investors with many properties, alongside those looking to get finance for Houses in Multiple Occupation (HMOs) or commercial properties.

A new loan size of £2m is available for first charge applications, on both standard and specialist buy-to-let products, spanning most property times. In addition, the maximum loan for second charge has risen to £500,000.

Demand

Marc Goldberg, commercial CEO of Together, noted: ‘We’re seeing continued demand for buy-to-let funding, with an increase of 44 per cent in 2016, so we’ve developed this new product range to support property investors as they build their portfolios. As a leading buy-to-let lender, we’re committed to improving and enhancing our products in line with market needs, and our increased loan size of £2 million is reflective of the growing demand for larger loans.’[1]

Specialist buy-to-let range announced at Together

Specialist buy-to-let range announced at Together

‘The buy-to-let sector is in a period of transition, and whilst there are a lot of changes taking place, it’s also an exciting time for the market as it adapts and evolves. In fact, we’re seeing that long-term investors are not being deterred, but are perhaps focusing on lower loan-to-values and using larger deposits to take the various changes into account,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/together-announce-specialist-btl-range.html