Posts with tag: buy-to-let sector

London’s Buy-to-Let Pain Becoming Manchester’s Gain, Expert Insists

Published On: August 23, 2017 at 9:18 am


Categories: Landlord News

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As London’s buy-to-let and property markets begin to dampen, it seems to be Manchester that’s emerging as the winner for investment.

That’s the opinion of one property expert, who notes that uncertainty has been the order of the day in the buy-to-let market for the past year, at the hands of the Government.

London's Buy-to-Let Pain Becoming Manchester's Gain, Expert Insists

London’s Buy-to-Let Pain Becoming Manchester’s Gain, Expert Insists

2016’s shock Brexit vote, followed by a hung Parliament this year, combined with Stamp Duty hikes, the reduction in mortgage interest tax relief, and imminent introduction of tougher lending criteria for portfolio landlords has created an aura of uncertainty and caution in the buy-to-let market.

Surprisingly, the ever-shining star of London even seems to be fading, with house prices down by an average of 0.6%, while private rent prices sit behind the national 12-month growth rate.

So, have the past 12 months permanently dampened the appeal of the UK’s buy-to-let sector? Should buyers be investing their funds elsewhere? Critics are divided.

Jean Liggett, the CEO of Properties of the World, gives her thoughts: “The uncertainty that the UK buy-to-let market has experienced over the past year has undeniably impacted investor confidence, but it seems to be primarily aimed at London.

“With interest rates remaining so low, investors still see the merit in purchasing bricks and mortar, but those seeking maximum returns in 2017 are increasingly looking at other areas than the capital.”

She believes: “By keeping an eye on regeneration plans and new transport links, it is still possible to find great areas to invest in.”

Indeed, despite splutters in the London buy-to-let market, buoyant activity is still being witnessed in other parts of the UK.

Greater Manchester has become a key destination for property investors and, thanks to its high demand from buyers and tenants alike, the city continues to register a strong house price growth rate of 6.7%.

Liggett adds: “As we have seen the capital’s market decline, other UK cities have stepped up and taken its place. London’s buy-to-let pain has become Manchester’s gain!”

Due to its proximity to both MediaCityUK and Manchester city centre, Salford Quays in particular is leading the way when it comes to buy-to-let growth.

2017 marks ten years since major transformation began in the area, kick-started by the BBC’s decision to move many of its jobs from London to Salford Quays. This £650m regeneration project has boosted the area’s credentials for buy-to-let investment, while Manchester has ascended to one of the top ten buy-to-let locations in the UK.

The latest Land Registry data paints a positive picture for Salford, with an average 5.9% increase in house prices over the past year.

Meanwhile, savvy investors will be watching with glee as news of more top class office space being snapped up is announced, suggesting a thriving local economy and growing rental housing demand.

It looks like Manchester is the place to be! Will you move investment there?


Landlords remain confident over future of sector

Published On: July 21, 2017 at 8:56 am


Categories: Landlord News

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A high-number of landlords remain confident about the future of the buy-to-let sector, despite recent tax alterations impacting on the market.

57% of landlords have not changed their view on the future of the sector, despite cuts to mortgage interest tax relief and alterations to stamp duty, according to research from buy-to-let investment platform Property Partner.


The survey discovered that many landlords seeking to minimise risks choose to invest in property, as they feel long-term trends will continue. They are hopeful that property prices will remain resilient despite economic and political upheaval.

Despite this bullishness surrounding property investment, experts at Property Partner expressed their surprise at how few investors are actually diversifying into property.

Only 19% of investors see property as a good way of diversifying their assets and only one in ten would-be landlords see investing in property is simple. 51% said that they were deterred by the thought of having to manage tenants.

Landlords remain confident over future of sector

Landlords remain confident over future of sector


Dan Gandesha, founder at CEO at Property Partner, observed: ‘This research underscores the confidence being shown in the buy-to-let sector across the UK. It really highlights that, despite efforts to increase the tax-take from landlords, investors continue to be bullish and see property as a secure, long term investment.’[1]

‘With no end in sight to the acute shortage in housing stock, there is an inevitability to the continuing upward pressure on prices. In the long-term, prices are expected to rise faster than the rate of inflation, economic growth and wages, despite recent political uncertainty,’ Mr Gandesha added.[1]



Tax reforms putting investors off

Published On: June 14, 2017 at 8:40 am


Categories: Finance News

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The number of mortgages approved for buy-to-let purchases fell during April, according to the latest figures released from the Council of Mortgages Lenders (CML).

This data indicates that that many landlords are being driven from the market due to alterations to mortgage interest tax relief.


Government measures aimed at reducing growth within the buy-to-let sector, such as the 3% stamp duty surcharge on buy-to-let homes, are beginning to hit smaller investors in particular.

The CML’s data shows that there was a 16% fall in buy-to-let lending between March and April. In addition, the value of lending in the sector was 16% lower month-on-month.

On the other hand, first-time buyers are taking advantage of competitive rates- as shown by the 25,400 loans taken out by this group during April. These was collectively worth £4.1bn, down by 16% month-on-month but up by 8% year-on-year.

Tax reforms putting investors off

Tax reforms putting investors off


Alastair McKee, managing director of One 77 Mortgages, noted: ‘The market is less lopsided than one-sided. Against a backdrop of cheap loans, Help to Buy and significantly reduced competition from landlords, first-time buyers are having a field day.’[1]

‘With many landlords still reeling from the raft of tax and stress-testing changes, first-time buyers see an opportunity and are taking it,’ Mr McKee added.[1]




TSB Reduces Rates on Mortgage Products to Improve Presence in Buy-to-Let Market

Published On: May 5, 2017 at 9:32 am


Categories: Finance News

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TSB Reduces Rates on Mortgage Products to Improve Presence in Buy-to-Let Market

TSB Reduces Rates on Mortgage Products to Improve Presence in Buy-to-Let Market

TSB has reduced its rates by up to 0.25% on a selected number of mortgage products, in a bid to improve its presence in the buy-to-let market by offering more competitive deals.

New products include two-year fixed rate deals for property buyers and remortgage borrowers, with rates cut by between 0.2-0.25%.

Meanwhile, the three-year fixed rate for property buyers and remortgage borrowers has been cut by between 0.1-0.15%, excluding the no fee 60% loan-to-value (LTV) product.

TSB has also reduced the five-year fixed rate product for property buyers and remortgage borrowers by between 0.15-0.25%.

The two-year tracker rate for property buyers and remortgage borrowers has also been cut by between 0.2-0.25%.

The Mortgage Distribution Director at TSB, Roland McCormack, comments: “TSB helped over 14,000 people with their mortgages in the first three months of 2017 and provided £2.2 billion of new mortgage loans.

“We are committed to helping people borrow well, and these rate cuts across the LTV ranges are an example of us doing exactly that.”

Paragon Mortgages has recently updated its buy-to-let range to focus on the longer term plans of landlords. Meanwhile, specialist lender Investec Private Banking is targeting high net worth property investors with a new range of buy-to-let products.

The latest study by the Bank of England shows that mortgage rates dropped yet again in March, taking the average to a new record low.

Demand in Buy-to-Let Sector “has Never been so Low”

Demand from landlords in the buy-to-let sector “has never been so low”, according to a leading letting agent.

Demand in Buy-to-Let Sector "has Never been so Low"

Demand in Buy-to-Let Sector “has Never been so Low”

The number of people investing in the buy-to-let sector is falling at an alarming rate, recent reports have shown, while many existing landlords are selling their portfolios ahead of changes to tax relief on finance costs.

Buy-to-let lending improved during the fourth quarter (Q4) of 2016, with the share of lending for acquisitions in the buy-to-let sector increasing from 28% in Q3 to 38% in Q4, which is comparable to the 38% recorded in Q2 last year, shows the Mortgages for Business complex buy-to-let index.

But with tax relief on landlords’ finance costs set to be phased out from next month, and now that the Bank of England’s Financial Policy Committee has been granted greater powers over the buy-to-let sector – making it more difficult for many property investors to get a mortgage due to new, stricter affordability tests – activity in the sector is slowing dramatically, warns the Director of Milton Stone, Sacha Moussaieff.

The central London letting agent comments: “In my 20 years of agency, the demand for buy-to-let property has never been so low and landlords have been driven out of the market.”

He also believes that “the extra 3% Stamp Duty”, on top of additional taxes, “means that becoming a landlord is extremely unappealing”.

Worryingly for tenants, Moussaieff also says that he fully expects to see rent prices rise to combat the “new tax laws on rental income”.

He is not the only industry professional to caution about rent rises; a leading economist fears that rents could rise by up to 30% for tenants as landlords come to terms with the impact of the forthcoming tax changes on their buy-to-let businesses:

Are you planning to put your rents up to mitigate financial changes?






CML Paints a Picture of the Average UK Landlord

Published On: December 14, 2016 at 10:44 am


Categories: Landlord News

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New research from the Council of Mortgage Lenders (CML) has revealed significant insights about landlords’ profiles and investment strategies to paint a picture of the average UK landlord.

The study, conducted by Kath Scanlon and Christine Whitehead of the London School of Economics, broadly found that private sector individual landlords – either those with buy-to-let mortgages or without – are adopting an “even keel” mentality.

Around half of all UK landlords have no mortgage debt at all. However, the quarter of buy-to-let landlords with the largest portfolios and highest incomes will be negatively affected by future tax changes, which may influence their behaviour in ways that could impact the whole market.

The survey results suggest that measures aimed at buy-to-let landlords may impose significant burdens on them, but won’t necessarily affect the private rental sector as a whole.

How many landlords have mortgages? 

The survey, of 2,500 landlords, found that 49% owned all of their properties outright, with no mortgage debt at all. This was an unexpectedly high figure, considering that the Government’s 2010 Private Landlords Survey reported that 77% of landlords used a buy-to-let mortgage to acquire their properties.

However, buy-to-let landlords typically hold larger and more valuable portfolios than other landlords, and 47% of the rental properties in the study were held with buy-to-let mortgages.

Among buy-to-let landlords, over half had loan-to-value (LTV) values of below 60%, with just 1% reporting LTVs of over 90%.

How many properties does the average UK landlord own? 

Around 62% of landlords own just one rental property, with buy-to-let landlords more likely to have a multi-property portfolio. Just over half of buy-to-let landlords own more than one property, with the mean size of a portfolio being 2.7 properties.

However, there has been a substantial shift towards smaller portfolios among buy-to-let landlords since the last time the CML conducted a similar study in 2004.

How old are landlords?

CML Paints a Picture of the Average UK Landlord

CML Paints a Picture of the Average UK Landlord

Just like homeowners, landlords are part of an ageing group. Back in 2004, just 24% of landlords were aged 55 or over, compared with 61% today. Buy-to-let landlords are generally younger than other landlords, but only marginally.

One reason is that the rate of new investors coming into the sector has slowed down. In 2004, 18% of buy-to-let landlords had bought their first properties within the last two years, compared to around 7% today.

The typical landlord profile

The average UK landlord owns property close to their home, is just as likely to manage their property themselves as to use a letting agent, and was originally motivated to invest as a contribution to their pension, as an investment for capital growth and income, or to supplement earnings.

Two thirds of landlords earn less than 25% of their household income from rent. Around one in 20 said they make a profitable full-time living from being a landlord.

The median annual gross rental income was £7,500, while the mean rose to £17,300, as some landlords have very high rental incomes.

About a third of landlords earned gross rental income equating to the amount that might be associated with renting out a single property for between £416-£830 per month.

Nearly a quarter of landlords ended up renting out property incidentally, while around 14% entered the market originally to provide a home for a relative or friend.

Over a third currently offer leases longer than 12 months on at least some of their properties, and most of the rest don’t do so because they believe there is no demand for it.

Landlords’ plans for the future

Landlords seem to take a long-term view of their property holdings, and many who entered the market decades ago remain active. However, there is only a modest aspiration among landlords to either increase or decrease their portfolios over the next five years.

Yet the overall direction in terms of sentiment and planning appears to be a modest shift towards disposal of some of their holdings. More landlords expect to reduce their portfolios than increase them.

Over the next 12 months, 6% of landlords expect to reduce their portfolios, while over the next five years, 14% plan to do so. Buy-to-let landlords were slightly less likely to say they plan to divest.

Typically, the reasons given by landlords for looking to cut their portfolios were as part of a planned exit. Just 21% of landlords cited tax changes as part of their reason to sell.

Unsurprisingly, however, tax featured more heavily as part of buy-to-let landlords’ decisions to sell, at 36%, compared to 13% of other landlords. Overall awareness of the various tax changes was extremely variable.

The majority of landlords expect their net incomes to stay the same or increase slightly over the next five years. However, 16% of buy-to-let investors expect their earnings to drop. When asked to say what their main coping strategy would be, only 16% and 12% of landlords would raise rents for new and existing tenants respectively, suggesting that most landlords will look for alternative options before increasing rents.

The Director General of the CML, Paul Smee, comments on the findings: “While the overall findings are encouraging and offer a reassuring picture of relative stability, there is a certain irony in the researchers’ conclusions that the landlords who will be most affected by the Government’s tax changes are those at the most professional end of the sector – those with large, leveraged portfolios.

“These landlords will be particularly hard hit by the changes in the treatment of mortgage interest and may choose to divest or moderate their property holdings. Given the Government’s longstanding interest in professionalising the sector, policymakers will need to be closely attuned to the risk of unintended consequences and, indeed, own goals.”

Does this picture of the average UK landlord reflect your positioning in the sector?