Posts with tag: buy to let mortgages

Buy-to-Let Tax Changes will Push Rents Up

Published On: November 26, 2015 at 1:10 pm

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Buy-to-Let Tax Changes will Push Rents Up

Buy-to-Let Tax Changes will Push Rents Up

Over two thirds of landlords believe that changes to buy-to-let mortgage interest tax relief will cause rents to rise, according to a survey by the Deposit Protection Service (DPS).

In the summer Budget, Chancellor George Osborne revealed plans to cut the amount of tax relief available for interest on buy-to-let mortgages.

The study, of 4,480 landlords, found that 69% believe the changes will push rents up, with more than a third stating that they are considering leaving the private rental sector. 35% said they might sell their rental properties.

Managing Director of the TDS, Julian Foster, comments on the findings: “Many landlords are currently facing a double-whammy of tax changes that could lead to increased rent for tenants – forcing them to sell or leave the rental market.

“Many landlords are small businessmen and women or accidental landlords, and taxation increases can affect their livelihoods and financial wellbeing.

“With many commentators predicting an interest rate rise next year, landlords are facing a series of financial challenges over the next few years.”1 

A future interest rate rise is also likely to have an impact on landlords’ finances, with 33% of respondents saying that they would pass on these costs to their tenants.

Around two thirds (62%) of landlords also said that they would be worse off due to changes to wear and tear tax relief.

From April next year, the automatic 10% tax break for wear and tear will be cut and replaced with tax deductions for the actual cost of replacing or repairing a property’s contents.

Do you agree with the findings of the survey?

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/landlord-tax-changes-will-lead-to-rent-increases-says-survey

Landlord Calculator Launches Ahead of Buy-to-Let Tax Changes

Published On: November 23, 2015 at 12:58 pm

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Landlord Calculator Launches Ahead of Buy-to-Let Tax Changes

Landlord Calculator Launches Ahead of Buy-to-Let Tax Changes

Property Partner has launched a buy-to-let calculator for landlords to work out the potential impact of the reduction in mortgage interest tax relief on their income.

The property crowdfunding platform has introduced the calculator ahead of the changes, which will be phased in from April 2017.

Thousands of buy-to-let landlords will see a significant dip in their rental income when the maximum level of tax relief that can be claimed on buy-to-let mortgage interest drops from the current rate of 45% to the basic rate of 20%.

The cut is designed to create a balance between landlords and first time buyers, as well as raising billions of pounds in revenue for the Treasury. However, landlords in the UK are already taxed much more heavily than those in Germany, France and the USA.

Experts believe that the reduction could cause serious changes in the private rental sector, further limiting the supply of rental accommodation and subsequently pushing rent prices higher.

The Property Partner calculator will help landlords understand the impact of the changes. Landlords put into the calculator whether they are a basic rate taxpayer (20%), a higher rate taxpayer (40%) or an additional rate taxpayer (45%).

They then put in how much their bought their property or properties for, their total rental income per year, how much is left on their mortgage(s) and what interest rate they are paying. The resulting prediction indicates how much more worse off higher rate taxpayers will be once the cuts are fully implemented.

CEO of Property Partner, Dan Gandesha, comments: “Landlords were hit with a shock new tax in the summer Budget when the Chancellor announced that mortgage tax relief would be cut.

“Our buy-to-let calculator allows you to quickly and easily work out whether it’s still worth holding onto your property or not, and what other alternatives are available.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/property-partner-launches-tax-change-calculator

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Just 25% of Young Adults will Own a Home by 2025

Published On: November 17, 2015 at 3:55 pm

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Around 60% of 20 to 39-year-olds in England will live in private rental homes by 2025, with just 26% owning their own property, according to new research.

Just 25% of Young Adults will Own a Home by 2025

Just 25% of Young Adults will Own a Home by 2025

It is claimed that generation rent will continue to find it difficult to buy a home and are likely to be older than previous generations before they can get onto the property ladder, says the report from PwC. The firm has analysed data on the housing market from the summer.

It believes that high house prices and deposits, alongside rising interest rates, will put young adults at risk of being priced out of the market.

The biggest shift in lifestyle is expected amongst 25 to 34-year-olds, with two-thirds of households living in the private rental sector by 2025, compared with 48% in 2013. In the 35 to 44 age range, a third will be renting in ten year’s time, compared to 24% in 2013. Among 45 to 54-year-olds, the number is expected to increase from 15% to 21%.

Within the 20 to 39 category, just 26% will own their home by 2025, down from 38% in 2013.

The older generations that have recently benefited from the huge rise in home values will mostly be protected from these trends, believes PwC. Three-quarters of over-55s own the home they currently live in and it is expected that this will be the same in 2025.

Senior Economist at PwC, Richard Snook, says the study highlights the scale of the challenge facing young adults. He insists that the continuous rise of house prices, which has much exceeded wage growth, is fundamentally affecting the way people live. He believes that policy must be changed to adapt to the differences in tenure.

He explains: “This could include encouraging a better quality of private rented accommodation, including longer tenure periods, and more rental properties designed for families.

“Demand for housing in the UK has outstripped supply for more than two decades. Changing the outlook for generation rent will require us to build more houses than needed just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”1

Our recent report on buy-to-let mortgages reveals that competition is mounting amongst lenders hoping to attract new investors. Read more here: /buy-to-let-mortgage-market-is-thriving/

Moneyfacts has found that the average rate on a two-year fixed rate buy-to-let mortgage has dropped to 3.26% from 3.63% a year ago and 5.23% in 2010. The typical rate for a five-year fixed rate loan has fallen to 4.06% compared to 4.33% last year and 6.12% five years ago.

The amount of fee-free buy-to-let mortgages has doubled in the past 12 months, standing at 130.

It appears that a vicious circle of supply and demand has formed. But will this continue?

1 http://www.theguardian.com/money/2015/nov/17/generation-rent-young-adults-housing-ladder-2025

 

Buy-to-Let Mortgage Market is Thriving

Published On: November 17, 2015 at 12:51 pm

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Demand for buy-to-let mortgages is booming, as confidence in the sector as an investment continues to grow and rents rise, according to data analyst Moneyfacts.co.uk.

Buy-to-Let Mortgage Market is Thriving

Buy-to-Let Mortgage Market is Thriving

Mortgage lenders are therefore taking advantage of soaring demand and are competing in an attempt to attract new investors.

Figures from Moneyfacts reveal that lenders are doing all they can to entice new borrowers. The average rate has dropped significantly, while the amount of deals with no arrangement fee has more than doubled in just 12 months.

Finance Expert at Moneyfacts, Charlotte Nelson, comments on the findings: “The BTL [buy-to-let] market is clearly booming, with rents at a high and BTL mortgage rates dropping to historic lows, there is great potential for prospective landlords.

“The finding that the average two-year fixed rate has fallen by 0.37% in just one year is particularly good news for older borrowers who are looking to access their pension pots to invest in bricks and mortar.

“However, the Bank of England has recently gained new powers to regulate the buy-to-let market, which may mean that the end is nigh for these low-cost deals. Potential landlords looking for a fixed rate should therefore act fast to ensure they are not disappointed.”

She continues: “Future legislative changes to the BTL market could also mean potential profits will fall, so investors need to keep an eye on any announcements to ensure BTL will still be profitable for them.

“The increase in deals with no fee is a sign that BTL lenders are trying to diversify and offer borrowers more choice than ever before. However, borrowers still need to weigh up the true cost of a mortgage to ensure the best deal is secured. Anyone thinking about entering this sector would be wise to seek the advice of an independent financial adviser to see if BTL really is the best place for their investment.”1

If you are considering becoming a buy-to-let landlord, or have rental properties already, keep up to date with the latest landlord law, finance news and goings on in the property market on LandlordNews.co.uk.

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/moneyfacts-buy-to-let-mortgage-market-is-booming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buy-to-Let Lending Up as First Time Buyer Loans Rise

Published On: November 12, 2015 at 10:02 am

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Buy-to-Let Lending Up as First Time Buyer Loans Rise

Buy-to-Let Lending Up as First Time Buyer Loans Rise

Buy-to-let mortgage lending is now at its highest level since 2007, as landlords continue to invest in the property market, despite forthcoming tax changes, which are set to hit landlords’ profits hard.

Buy-to-let lending accounted for 18% of all new mortgage lending in September, according to the Council of Mortgage Lenders (CML).

Buy-to-let remortgaging increased by 62% over the year to September, while buy-to-let lending for house purchase was up 36% on last year.

In September, 24,100 buy-to-let loans were approved, compared to 22,200 in August and 17,700 in September 2014. Of these, 11,300 mortgages for were buy-to-let property purchase.

The CML also witnessed a 10% annual increase in lending to first time buyers, up 2% month-on-month. Lending to home movers dropped by 4% on the month, but is up 15% on an annual basis.

In total, there were 62,300 mortgages in September for homeowner house purchase, the same number as recorded in August, but up from 57,600 in September last year.

Around half, 28,600, were approved for first time buyers, up from 27,500 in August and 26,300 in September 2014.

In a separate study, chartered surveyor e.surv has forecast the highest October lending levels for seven years, with house purchase approvals at 72,409. Based on its own activity, the firm is predicting a monthly and annual increase in approvals, up 5.1% on September and 21.9% on October last year.

Are you one of the investors sticking to the market despite the impending tax changes? And how will your business change in the new year?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total London Housing Stock Valued at £1.13tn

Published On: November 11, 2015 at 4:01 pm

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The Halifax has valued London’s total housing stock at £1.13 trillion, almost double the worth of all the homes in Scotland, Wales and Northern Ireland.

Total London Housing Stock Valued at £1.13tn

Total London Housing Stock Valued at £1.13tn

Property in Scotland, Wales and Northern Ireland is worth a combined £582 billion, says the mortgage lender.

The substantial rise in the value of London’s homes means that the capital’s residential property is now worth the same as the total housing stock in the North West, Yorkshire and the Humberside, the North East and Scotland.

The housing stock in the north of England, from Cheshire to Northumberland, is valued at £810 billion.

The Halifax’s research found that the estimated total value of the UK’s private housing stock has exceeded £5 trillion for the first time. However, this hides a huge north-south divide.

House prices in the north have risen by 36% over the last decade. Meanwhile, property values in the south have surged by 66%.

As a result, the south’s share of the UK’s total housing worth has grown from 56% in 2005 to 61% this year.

Although mortgages are typically higher in the south, the average homeowner in London has net equity – the value of the property after the mortgage is deducted – of £306,000, compared to £94,000 in the North East and £82,000 in Northern Ireland.

On paper, Britons are much wealthier than they were a decade ago, with the net value of homes increasing from £3.3 trillion in 2005 to £5.1 trillion today.

The growth of £1.8 trillion is equivalent to £76,316 per household, according to the Halifax. However, it did not specify how much is down to private landlords.

Since lenders began providing buy-to-let mortgages, owner-occupation in Britain has dropped significantly, from a peak of 70% in 2005 to below 65% this year.

The data also highlights how much more property prices have increased than inflation and wages, with growth of 53% over the last ten years, compared with a 35% rise in CPI.

A separate study by the Office for National Statistics (ONS) shows how Britons consider housing the best long-term investment. It found that 44% of people think that property will make them the most money in life, compared to less than 10% who believe the stockmarket is a better investment.

The latest house price index from the Halifax found that the average home in Britain is now worth £205,500, up by 9.7% over the last year.