Posts with tag: buy to let market

Half of landlords rely on portfolio for income

Published On: June 26, 2015 at 9:10 am

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With the buy-to-let market continuing to surge on the back of low savings rates and stock market volatility, new research suggests that nearly half of investors rely on their property portfolio to provide a large supplement to their paid income.

A study of over 500 landlords from PropertyLetByUs.com found that 40% gain an income from their buy-to-let investment, with half stating it is their main source of money.

Jobs

The study suggests that just over one-third of buy-to-let landlords have a full-time job, with 5% working part-time. One on six working landlords said they would like to give up their jobs to work full-time.[1]

Additionally, the research found that half of buy-to-let landlords have a LTV of 20%, with 36% of landlords having a LTV of 40%. One of five were said to be enjoying annual yields of between 15% and 30%, with a quarter having yields between 5-10%.[1]

Half of landlords rely on portfolio for income

Half of landlords rely on portfolio for income

‘Buy-to-let continues to provide an excellent return on investment, with many landlords able to take an income, as well as enjoy the capital growth of the property,’ commented Jane Morris, Managing Director of Property Let By Us.[1]

She continued by saying that, ‘recent research from the HomeLet Rental Index shows that rents across the UK are 10.2% higher than a year ago. The average rent on a tenancy signed in the UK during the first quarter of 2015 was £902, compared to £819 for tenancies signed during the first quarter of 2014.’[1]

‘Mortgage rates remain at record lows which is helping buy-to-let landlords achieve higher yields. So for potential investors with enough money to raise a big deposit, buy-to-let is highly attractive, compared to the low savings rates and stock market volatility,’ she concluded.[1]

[1] ‘Landlord & Buy-to-let’ Issue 59 June 2015

 

 

Britain facing generation of retiree landlords

Published On: June 25, 2015 at 12:53 pm

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Britain is headed towards a generation of retiree landlords, according to a new report. Many are said to be taking advantage of new, relaxed pension rules and see property investment as their best bet for cash returns.

Increasing

Research from the Office for National Statistics saw a study of 20,000 households, which suggested the proportion of pensioners planning to invest in the buy-to-let market is steadily growing.

The survey found that 42% of respondents considered property investment as their best way of creating the largest retirement fund. Many experts predict that buyers in their forties or fifties plan to live off the rental income for many years. They are concerned that the survey, coupled with changes to pension rules, points towards a, ‘nation of older landlords.’[1]

David Lawrenson of buy-to-let consultancy Lettingfocus.com, said, ‘a generation of people of people in their forties and upwards have seen house prices increase almost every year from 1989 and so many see property as a good, safe bet. On top of that, the ability to claim tax breaks on mortgage interest and other expenses is also very appealing, and many are finding they can easily use equity in their residential property or money from a pension pot to fund a deposit.’[1]

Britain facing generation of retiree landlords

Britain facing generation of retiree landlords

Loans

Figures show that the number of buy-to-let loans available has risen substantially by 15% over two months since the pension reforms took hold. The total number now stands at around 700. Nearly £1bn has been withdrawn from pensions so for, by around 60,000 people.[1]

‘It’s highly likely that some of this money has been accessed with buy-to-let in mind, ‘commented Charlotte Nelson of data analyst Moneyfacts. ‘Savings rates are currently so poor that many are looking elsewhere to fund their retirement,’ she added.[1]

Mr Lawrenson also observed that due to relaxed rules, it is now, ‘relatively easy,’ for would-be investors to qualify for loans and rates as low as 1.95%.

Private landlords currently own around one in five homes, with critics arguing that this surge in buy-to-let activity is driving property prices up and expanding the housing shortage towards the bottom of the property ladder.

Betsy Dillner, director of Generation Rent, observed that, ‘for every landlord building up a nest egg, there is at least one household for whom high rents are making it harder to save for the future.’[1]

 

[1] http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11697289/Britain-will-have-generation-of-pensioner-landlords-experts-predict.html

 

 

Brokers Confident in the Buy-to-Let Market

Published On: June 1, 2015 at 1:16 pm

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Confidence in the buy-to-let and new build markets is high among brokers, revealed NatWest Intermediary Solutions.

Research from the lender of 500 mortgage intermediaries found that 58% had experienced a rise in buy-to-let business in the past three months. Just one in 20 had seen a decrease and more than a quarter (27%)

Brokers Confident in the Buy-to-Let Market

Brokers Confident in the Buy-to-Let Market

said that it had stayed the same.

Regarding the next six months, over half (54%) believe that the market will grow more than in the last six months and only 4% expect to do less business. A third (32%) predict stable buy-to-let business.

Over half (57%) of brokers are optimistic about the new build sector this year. About a quarter (25%) are pessimistic and one in six (17%) are unsure.

Of those that have seen a new build development in their area recently, most (57%) think that they will see more business this year than last year. A fifth (21%) are not sure and 16% expect to do less.

A third (32%) of all brokers said that there weren’t any new build developments in their area.

Head of NatWest Intermediary Solutions, Graham Felstead, says: “The buy-to-let and new build sectors have both been touted as growth areas for 2015, and this sentiment has been echoed by the optimism shown by brokers in our survey.

“We have an appetite to grow our presence in both of these areas of the mortgage market and have recently refreshed our new build proposition to offer a more attractive approach to builder’s incentives.

“The buy-to-let market is one where we have made great strides in the last couple of years. We have focused specifically on non-professional landlords with small portfolios – an area of the market where there has been significant growth and one that is expected to continue to be buoyant as more people turn to property as a viable investment alternative to traditional pension arrangements.”1

1 http://www.propertyreporter.co.uk/landlords/btl-market-optimism-bounces-back.html?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=21136-105718-Campaign+-+13/05/2015+shaw

Surging BTL sector earned landlords £112bn

Published On: May 29, 2015 at 3:37 pm

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Figures released today indicate that the surging buy-to-let market earned British landlords a staggering £112bn in rents and capital gains over the last year. The findings appear to spell bad news for first-time buyers, with the popularity for investment pushing their dreams of homeownership further away.

Investment

Rising property prices and more condensed mortgage-lending criteria have lead more and more investors to come into the rental market. The report from mortgage lender Kent Reliance showed that landlords in Britain made an incredible £67.2bn in capital gains, with an additional £44.3bn in rent, in the year to March 2015. This combined total was an increase of £5.8bn on same period one year ago.[1]

Ever growing rents are a key contributor to the increase, with particular strong growth in London and the South-East enhancing profits. The figures suggest that landlords are making almost £4bn per month in rental yields from their properties. The average monthly rent grew by 3.9% in the first quarter of this year, to now stand at £832. These figures suggest the largest rise since the Autumn of 2013.[2]

Bright forecast

New pension reforms that came into force last month are likely to bring even more money into the Buy-to-Let sector. Kent Reliance predict that by the year 2020, the total number of rental properties will by 5.5m, which would represent about 20% of all homes.[3]

The Office for National Statistics and Land Registry’s latest figures show that landlords now own properties with a total value of £990.7bn. This is more than three and a half times the £262bn what the sector was worth in 2001.[4]

Surging BTL sector earned landlords £112bn

Surging BTL sector earned landlords £112bn

Andy Golding, chief executive of OneSavings Bank, owner of Kent Reliance, feels that, ‘buy-to-let has come of age, moving from a niche asset class to one big enough to rival the stock market.’ He thinks that, ‘landlords are seeing the benefit of a structural change in Britain’s housing market, with tenant demand ever strengthening.’[5]

He acknowledges that, ‘house prices are showing signs of steadying somewhat,’ but says that, ‘growth remains brisk.’ Golding also states that, ‘long-term price inflation is not in danger, given the gaping chasm between growing demand for housing and the number of houses being built each year.’[6]

Concluding, Golding said, ‘combined with the dearth of high LTV lending to first-time buyer, this will continue to buoy demand for rental accommodation as well as landlords’ returns and the sector will continue to expand.’[7]

[1] http://www.theguardian.com/money/2015/may/28/booming-buy-to-let-112bn-landlords

 

 

 

Value of Buy-to-Let Could Reach £1 Trillion

Published On: May 29, 2015 at 10:59 am

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Value of Buy-to-Let Could Reach £1 Trillion

Value of Buy-to-Let Could Reach £1 Trillion

It has been predicted that the overall value of the buy-to-let market could hit £1 trillion in the near future.

The Council of Mortgage Lenders (CML) revealed that the total worth of the sector reached £990 billion in 2014 and is expected to continue increasing.

This value has grown 70% since the financial crisis of 2007.

The overall worth of residential property was £4.8 trillion last year, with £1.8 trillion belonging to homeowners and £990 billion to buy-to-let investors.

Landlord loans were also the fastest growing sector of the mortgage market, however, the scale of buy-to-let borrowing relative to investors’ asset worth was fairly minimal.

The amount of landlords with buy-to-let loans is very low, with just 19% of the whole property market accounting for these mortgages. Of the £990 billion total, almost two thirds (£643 billion) is mortgage-free.

 

 

 

 

 

 

Small year-on year growth in buy-to-let market during February

Published On: April 14, 2015 at 4:22 pm

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Recent findings from the Council of Mortgage Lenders suggest that the buy-to-let market is still steadily growing, particularly when year-on-year figures are considered.

 

Data

The results released from the CML show that buy-to-let advances totalled 15,900 during February, down 13% from January but up by 11% in comparison to February 2014.[1]

 

Loans for buy-to-let accumulated £2.2bn of overall lending during February, down on January’s figures by 12% but again up on February 2014, by 16%. Buy-to-let loans taken out for house purchases numbered 7,400, 3% down on January but up by a nominal 1% from one year ago.[2]

 

Numbers of buy-to-let loan remortgages fell by a considerable 19% during February to 8,400, however this figure was up by 23% in the past 12 months. Overall value of these loans totalled 1.3bn, a drop of 13% month on month but 3% up on February last year.[3]

 

Seasonal Factors

Director general of the CML, Paul Smee, believes that seasonal features have played their part in the latest figures. He commented that, ‘as with January, seasonal factors have played their part in dampening house purchase lending activity in February.’ Smee feels that the, ‘typical seasonal trend may also be exacerbated by uncertainty ahead of the general election,’ but said that CML, ‘expect to see an upturn in the spring and summer months.’[4]

 

Smee went on to say that, ‘buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.’[5]

Small year-on year growth in Buy-to-let market during February

Small year-on year growth in Buy-to-let market during February

 

Adrian Gill, director of Your Move and Reeds Rains estate agents, feels that the U.K is, ‘witnessing a slightly more measured mortgage market,’ but says that should not be a concern, ‘in the midst of extraordinary circumstances.’ Gill believes that there has been, ‘an exceptional year of progress and regulatory reforms to the lending process.’[6]

 

Election

Mr Gill also believes that the country is heading towards, ‘one of the most uncertain General Elections in living memory,’ with David Cameron pledging to, ‘help over a million social housing tenants get on the property ladder.’ Gill though is cautious, stating that, ‘any additional rockets to demand would need to be matched with new homes available to buy,’ or the pent-up pressure in the market will just grow, propelling prices along with it.’[7]

 

He continued by saying that, ‘Tory proposals to unlock brownfield land for housebuilding could perhaps have more far-reaching tremors through the market.’ This said, Gill thinks, will lead many to be, ‘speculating today whether 400,000 homes over a five year period is truly enough to abate our current housing shortage.’[8]

 

[1-8] http://www.propertyreporter.co.uk/landlords/buy-to-let-sees-measured-growth-in-february.html