Posts with tag: buy-to-let landlords

Chancellor’s measures to harm sector, report shows

Published On: February 11, 2016 at 11:42 am

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A new survey has revealed that the Chancellor’s policies intended to slow buy-to-let growth are actually leading to increased pressure on the sector.

Research carried out by Belvoir shows that despite 68% of landlords surveyed not raising their rents during the last year, 86% think that larger purchasing costs for investment properties will leave them with no choice but to put rents up in 2016.

Analysis

Managing Director of Belvoir, Dorian Gonsalves, explained, ‘the survey ran from mid December 2015 to mid-January 2016 and we invited all landlords, not just those who are clients of Belvoir, to respond to an on-line questionnaire. We received a total of 1,038 answers and many of these concurred with Belvoir’s predictions at the start of this year.’[1]

The vast majority of respondents were investment landlords with between one and ten properties. 93% of these rental properties were in England.

‘When we asked landlords how changes to stamp duty and taxation were likely to influence their investment plans for the next 12 months, 44% responded by saying they will be adopting a cautious approach to further investment,’ Gonsalves continued.[1]

‘A total of 68% of landlords had not increased their rents at all in the last 12 months and almost half of those surveyed have no plans to increase rents in the next 12 months.’[1]

Chancellor's measures to harm buy-to-let sector, report shows

Chancellor’s measures to harm buy-to-let sector, report shows

Ominous

More ominously, 88% of landlords feel that higher purchasing costs for their investment properties as a result of the tax changes will lead to increased rental costs.

‘Landlords are almost equally divided in their views as to whether they think BTL remains a good investment for new people coming into the market. A total of 46% thought it would still be a good investment and 40% thought it would not, with 14% undecided,’ Gonsalves explained.[1]

‘The majority of landlords named George Osborne’s anti-landlord policies as the single largest challenge that landlords will face in 2016. This is entirely in line with my prediction that increased Government interference in the BTL market will put a real squeeze on the supply of property in the rental market in 2016 and beyond,’ he concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/letting-agencys-survey-shows-osborne-measures-hurting-private-rental-sector

 

Annual rental prices up in 11 out of 12 UK regions

Published On: February 10, 2016 at 10:08 am

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Residential rents rose year-on-year in 11 out of the 12 regions of Britain, with the most prominent rises in the South East of England and the East Midlands.

Overall, the typical rent in Britain, with the exception of Greater London, is now £740 per month. In London, average rents stand at £1,510 per month, according to the most recent rental index from HomeLet.

Slow progress

The data indicates that only the North West of England has seen a fall in rental prices over the last twelve months. Prices here fell by 3.4% from £646 per month to £624.

However, rent costs for new tenancies in Greater London are increasing at the slowest rate seen for nearly two years. The January index shows that Greater London prices are 6.2% higher for the three months to January 2016, in comparison to the same point in 2015. This is the least amount of growth seen in the capital since March 2014.

By contrast, rent prices in other regions continued to increase. The South East of England recorded rises in rent prices of 7.2% in the three months to January 2016. The East Midlands also saw a significant rise of 6.8% in rental prices in the same period.

Annual rental prices up in 11 out of 12 UK regions

Annual rental prices up in 11 out of 12 UK regions

Monthly differences

On the other hand, monthly data gives a different outlook. Rental prices in the UK, excluding Greater London, were 0.2% greater in the three months to January 2016, than in the three months to December 2015. In Greater London, rents have slipped by 0.9% over the same timeframe.

In all, six out of the twelve British regions recorded rises in rental prices during the three months to January 2016.

Martin Totty, chief executive officer of Homelet’s parent group, Barbon Insurance Group, said,’ it’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely.’[1]

‘The fact that UK wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact if the long term structural imbalance in supply and demand of property,’ he added.[1]

Concluding, Totty said, ‘landlords achieving higher average rents over time also suggests that tenants starting a new tenancy are proving they can afford higher average rents. With demand outstripping supply, some would-be tenants may be able to outbid rivals for properties, which could drive higher rents.’[1]

[1] http://www.propertywire.com/news/europe/uk-rental-price-index-2016021011539.html

 

66% of BTL mortgage applicants unaware of regulations

Published On: February 5, 2016 at 11:37 am

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An alarming new report from Direct Line for Business shows that over half of new buy-to-let mortgage applicants are unaware of new and upcoming regulations.

Accidental landlords are least likely to be aware of any changes, according to the research.

Concern

66% of applicants were found to be unaware of either the alterations to Mortgage Tax Relief. This rose to 71% of accidental landlords. Mortgage advisors believe that these type of landlords account to 17% of new applications, with buy-to-let applications increasing by 29% during the course of the last year.

In addition, data from the report shows that just 7% of mortgage advisors believe that the Mortgage Credit Directive (MCD) will have a positive effect on the sector. This was in comparison to 59% who believe it will have a negative impact.

Alterations to mortgage tax relief are also set to be brought in from April 2017. As a result, landlords will no longer to be able to remove mortgage interest payments before working out their tax bill. Instead, they will receive a tax credit equivalent to 20% basic-rate tax on the amount. The changes in Stamp Duty from April 2016 are also set to test landlords and second-property owners.

66% of BTL mortgage applicants unaware of regulations

66% of BTL mortgage applicants unaware of regulations

Changing

‘The new EU legislation on mortgages, coupled with the Government’s increase in buy-to-let taxation, could significantly alter the buy-to-let market,’ said Nick Breton, Head of Direct Line for Business. He said his firm, ‘would encourage any mortgage applicants to think carefully about the new law and how this could impact on them as a landlord.’[1]

‘With house prices in the UK rising by 7% in the year leading to October 2015 and with the estimated average deposit standing at more than £61,003, it is imperative that landlords are able to maintain a suitable amount of property to house the population of young people saving up to buy their first property, or those seeking a temporary stay in a town or city,’ he continued.[1]

[1] http://www.propertyreporter.co.uk/landlords/71-of-accidental-landlords-unaware-of-new-regulations.html

 

Will regulations force many out of BTL sector?

Published On: February 4, 2016 at 12:24 pm

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Yet another investigation into the current state of the buy-to-let market has suggested there could be a gloomy outlook for landlords.

Research by The House Crowd has indicated that buy-to-let investors are predicting a rocky road in 2016. 72% said that the forthcoming legal changes will have a detrimental effect on their investments.

What’s more, one-fifth of landlords plan to sell their properties during the course of 2016.

Changes

Instead of looking on their properties as a solid form of investment for the future, buy-to-let purchasers are becoming increasingly concerned that they are being targeted by the Government. With features such as the Mortgage Credit Directive and the increase in Stamp Duty coming into play in March and April, it is hard to argue.

Results from The House Crowd survey found:

  • Half of investors stated their retirement plans are now at risk to the changes
  • One-third said it would now become harder to support their children or grandchildren to get on the ladder
  • 38% stated that landlords should look at better ways of investing
  • 43% felt that the Government is trying to get rid of smaller landlords
Will regulations force many out of BTL sector?

Will regulations force many out of BTL sector?

Pressure

‘Property investment has long been viewed as a sensible way for the shrewd small investor to save for the future, making life a bit more comfortable and paving the way for a financially secure retirement,’ noted Frazer Fearnhead, founder of The House Crowd. ‘However, these new regulations are putting increasing pressure on those who own perhaps two or three properties, making it very difficult for smaller landlords to remain in the buy-to-let sector.’[1]

‘I’d encourage investors to look at newer options to help them remain in the game, like property crowdfunding-there is another way,’ he added.[1]

[1] http://www.propertyreporter.co.uk/finance/will-new-regulations-force-investors-out-of-btl-this-year.html

 

Stamp Duty hike driving Auction Market

Published On: February 4, 2016 at 11:29 am

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The forthcoming rise in Stamp Duty charges has been the catalyst behind a record rise in lot entries at property auctioneer Auction House during the last month.

703 lots have been entered in Auction House’s first round of auctions, representing a 13% rise from the same period one year ago.

‘Adrenaline Rush’

Founding Director of Auction House, Roger Lake, said, ‘the Chancellor’s introduction of an additional 3% stamp for investors and second-home owners has sent an adrenaline rush through the market. We have worked hard to publicise the short window that the created for sellers and buyers and this has certainly helped boost entries into our February auctions.’[1]

‘Whilst the precise details won’t become available until the Budget is unveiled next month, canny purchasers are realising that buying now prevents them being caught out by the tax surcharge, whatever form it may take,’ he continued.[1]

Stamp Duty hike driving Auction Market

Stamp Duty hike driving Auction Market

Selling

Recent investigations have suggested that buy-to-let landlords are looking to sell 500,000 homes during the next year and a further 100,000 per year until 2021.

Despite this, Lake said he is,’ not convinced that the number of properties hitting the market will be quite as high as the reports suggest. But two things we know for sure: the tax rise will come into place from 1 April 2016 and that properties will need to have completed by this date-not simply to have exchanged-to avoid the higher rate.’[1]

‘With the Budget scheduled for 16 March, that gives us a mere two weeks between having certainty of the details and the changes coming into effect. Nevertheless, our February auctions provide a chance for buyers to guarantee beating the stamp duty hike in a climate of low interest rates, with those selling benefitting from strong demand, lively bidding and a higher hammer price. Early March sales with shortened completion periods can also deliver purchases at the old Stamp Duty rates-but sellers will need to act quickly to capitalise on the opportunity,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/auctions/is-the-stamp-duty-hike-driving-the-property-auction-market.html

BTL lending at Paragon up 80% in Q4 of 2015

Published On: January 28, 2016 at 10:24 am

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New figures released by Paragon Mortgages suggests that investors are looking to purchase property before the tax changes in April.

The lender said in the final quarter of 2015, its lending to buy-to-let landlords nearly doubled. Mortgages for rental accommodation reached £401m, a rise of 80.6% on the same period in 2014.

What’s more, Paragon’s pipeline of future loans rose by 43% to hit £595.7m.

Profitable

This fantastic quarterly performance was a key feature in Paragon Group making a profit of £35.2m during the period. This was a rise of 14% on the year before.

John Heron, Director of Mortgages at Paragon, said, ‘our buy-to-let business has continued to grow and perform exceptionally well. Whilst over time recent policy developments may cause some softening in the rate of growth of buy-to-let at a market level, demand for private rented housing continues to remain strong and all indications suggest this is only likely to increase in the coming years.’[1]

BTL lending at Paragon up 80% in Q4 of 2015

BTL lending at Paragon up 80% in Q4 of 2015

Sensible

Despite the sudden surge in lending during Q4 of 2015, experts believe that Paragon’s buy-to-let growth will slow at a similar rate. However, Justin Bates, analyst at Liberum, believes the lender has not taken unhealthy risks to aid its quick expansion.

‘I’ve always considered Paragon to be a cautious, sensible lender at that is borne out in the credit quality statistics which are way ahead of industry averages,’ he noted. [2]

‘We see comments on the eye-catching growth rate of 80%, but that is not all new lending on new properties-around 60% of Paragon’s lending is remortgaging activity,’ Bates added.[2]

[1] http://www.propertyreporter.co.uk/landlords/btl-lending-up-80-according-to-paragon.html

[2] http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12125251/Paragon-Bank-booms-with-80pc-growth-in-buy-to-let.html