Posts with tag: property investment

Lower Remortgage Activity in Buy-to-Let Sector Expected Going Forward

Published On: April 10, 2019 at 9:31 am

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Lower remortgage activity in the buy-to-let sector is expected going forward, due to landlords’ actions to mitigate higher tax costs, according to the latest PRS Trends Report from Paragon, covering the first quarter (Q1) of 2019.

The bank’s quarterly survey, which tracks the experience of more than 200 landlords with an average of 12.8 properties and over 20 years’ experience in the UK’s private rental sector, shows that, while investors in this group remain engaged in the market, they are now prioritising measures to bolster financial strength over portfolio expansion.

Specifically, the survey shows how landlords have scaled back their buying intentions, reduced their resilience on mortgage debt and improved affordability, by spending less of their rental income on mortgage payments.

For example, the proportion of landlords looking to purchase property has fallen from between 15-20% before the announcement of tax and regulatory changes in 2015, to just 7-10% in Q1 2019.

Average portfolio gearing – which measures the proportion of debt finance relative to a portfolio’s overall value – has fallen from 40% in 2014 to 33% today, with landlords who have three or more properties typically borrowing 36% of their portfolio value.

Meanwhile, mortgage costs as a proportion of rental income are down from 30% at the beginning of 2017 to 27% – also aided by landlords remortgaging onto lower interest rates and longer-term fixed rate mortgage deals.

The latest figures from UK Finance highlight the extent of the switch in focus from property purchase to remortgage activity, with buy-to-let purchase transactions in 2018 down by 34%, to 66,400, compared with 2014, and remortgage actvitiy up by 76%, to 169,100, over the same timeframe.

John Heron, the Director of Mortgages at Paragon, says: “The shift in focus from portfolio expansion to financial strength has driven a surge in buy-to-let remortgaging, with lower interest rates and longer initial fixed periods helping landlords reduce finance costs and lock in greater certainty. 

“However, it also extends the product maturity cycle, guaranteeing a reduction in the scale of opportunity to refinance buy-to-let mortgage deals over the next few years.”

Landlords, are you expecting a reduction in remortgage activity going forward? 

The Cheapest Locations to Invest in Property in England and Wales Revealed

Published On: April 9, 2019 at 9:29 am

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Categories: Landlord News

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Buying is still cheaper than renting, Revolution Brokers' research finds

If you’re looking to expand your property portfolio with a low-cost investment this year, then it’s worth considering the cheapest locations to purchase a home in England and Wales at present.

The latest data from the Office for National Statistics(ONS) reveals the cheapest locations to buy a property in England and Wales, based on the ratio of the average salary to a typical house price.

Copeland is currently the best place in England and Wales to get onto the property ladder, with an affordability ratio of 2.5 – just over three times cheaper than the national average and over 17 more affordable than the worst area, Kensington and Chelsea.

Barrow-in-Furness, Blaenau Gwent, Neath Port Talbot, Pendle, Merthyr Tydfil and Burnley are also home to an affordability ratio where property values are less than four times the average wage.

Knowsley, Derby and Hyndburn complete the top ten cheapest locations to invest in property in England and Wales.

Shepherd Ncube, the Founder and CEO of estate agent Springbok Properties, comments on the findings: “Housing affordability is a very hot topic and the consistent escalation of house prices, coupled with the slower rate of wage growth, means that, for many, the aspirations of owning their own home continues to move further out of reach.

“However, our property market is a diverse one and, amongst the many layers that form it, there are 140 pockets of affordability offering a below average house price to wage ratio.”

They continue: “Of course, wider economic factors, such as job availability, have a part to play, but, this aside, these areas offer hope to those wishing to shed the shackles of the rental sector. By doing your homework, you can uncover hidden gems of property affordability dotted all over England and Wales.”

Landlords, use this list of the cheapest locations to purchase property to influence your next investment opportunity. 

Costs of Five-Year Fixed Rate Buy-to-Let Mortgages Fall from 2018

Published On: April 8, 2019 at 10:05 am

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New research has revealed that the costs of certain buy-to-let mortgages have fallen.

After a spike during the months of February and March, it has been noted that some popular five-year fixed rate buy-to-let mortgages have seen a drop in fees. Many of these are now cheaper than they were a year ago in April 2018.

This research, from online mortgage broker Property Master, also shows that product fees for such mortgages have increased, sometimes by as much as £335.

The cost of five-year fixed rate offers for 50% of the value of a property fell by £8 a month between March and April, according to Property Master’s April 2019 Mortgage Tracker. Year-on-year, this type of mortgage was down in cost by £28 a month. 

The tracker also shows that the cost of a five-year fixed rate for 65% of the value of a property fell by £4 each month, and by £18 per month, when compared to year-on-year data from April 2018.

Five-year fixed rates for 75% of the value of a property stayed at £408 March to April, but fell year-on-year by £18 a month.

However, a sharp year-on-year increase in average product fees can be seen for almost all of the available fixed-rate buy-to-let mortgages categories that were tracked.

Fees for a two-year fixed rate for 50% of the value of a property saw major growth, from £714 in April 2018 to £1,599 today – an increase of £885.

On top of this, five-year fixed rates for 50% of the value of a property, which increased by £335 in April 2018 to today, from £1,164 to £1,499. 

Figures for this month’s Mortgage Tracker were calculated on deals available on 1st April, 2019.

Angus Stewart, Property Master’s Chief Executive, commented: “It is good news that the type of deals many landlords favour have fallen back a little in cost after last month’s increase.  Better still the headline rate for many of these offers are actually less than they were a year ago.  

“However, there is something of a catch in the increase in many product fees. Applying for a buy-to-let mortgage can be a complex process and it is important landlords compare the total cost of the mortgage they are offered.”

So-Called Diamond Buy-to-Let Hotspots Revealed in the North of England

Published On: April 8, 2019 at 9:04 am

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An investment portal has highlighted so-called diamond buy-to-let hotspots for landlords in 2019 – all of which are located in the north of England.

One & Only Pro has found that property investors can earn more than double the 8% yield currently aimed for by the average landlord, by using data more effectively.

It reports that, if investors identify the best deals in the best buy-to-let locations – rather than looking at the typical return for the whole area – they could secure net yields well in excess of 20%.

One & Only Pro has identified the proportion of diamond property investment opportunities in the UK’s top ten buy-to-let hotspots. The portal categorises investment deals as diamond if they receive a score of ten on the platform.

The top score out of ten means that the opportunity has the highest possible chance of increasing in value. The scores are calculated by One & Only Pro’s unique algorithm, which considers a range of key factors, data and metrics.

According to the data, the UK’s top ten buy-to-let investment hotspots are all located in the north of England, with Darlington, County Durham taking the top spot for the area with the highest proportion of diamond properties, at 22%.

The top five locations with the highest proportion of diamond properties is made up by Bootle, Merseyside (21%), Burnley (21%) and Blackpool (19%), both in Lancashire, and Washington, County Durham (18%).

So-Called Diamond Buy-to-Let Hotspots Revealed in the North of England

One & Only Pro’s study has also revealed the average price of the top ten diamond properties in the selected areas, with Burnley offering the most affordable deals, at an average price of just £37,000, which is highly likely to increase in value.

Other diamond hotspots with low average entry level prices include: Bootle (£53,000), Darlington (£56,000), Grimsby (£56,000) in Lincolnshire, and Sunderland (£63,000) in Tyne and Wear.

When it comes to returns, the top performing area was Liverpool, with an average return on cash investment of 78.2% for one of the top ten diamond properties in the Merseyside city. The return on cash investment is based on buying a property with the best mortgage deal.

Other standout performers for One & Only Pro’s average return on cash investment on diamond properties in the top ten buy-to-let hotspots include: Sunderland (68%), Washington (62%) and Burnley (61%). All of the top ten register an average return on cash investment of more than 35% for their top ten diamond properties.

Henri Sant-Cassia, the CEO of One & Only Pro, says: “It’s shocking that people think buy-to-let is dead or is no longer a good investment, as the real data shows something completely different.

“One & Only Pro can highlight the highest returning properties in the best buy-to-let hotspots in seconds.”

He explains: “As we can see, investors in Liverpool can earn almost 80% return on investment. This figure includes the costs of buildings insurance, a gas safety check, service charges and ground rents, and it is all calculated automatically on our website.

“With this kind of return, savvy investors could have earned their deposit back within two years. In many cases, in the above locations, a property’s mortgage could be cleared from the returns within several years and you’ll then have full ownership over your investment.”  

Sant-Cassia believes: “While some people have been delaying decisions due to Brexit, the shrewdest investors could already have earned enough income to purchase their next property.

“Where else could you invest and earn returns like this? What’s more, you have the backing of bricks and mortar, which will always have some kind of intrinsic value. As we know, stock investments could always get wiped out and be worth nothing.”

Millennial Tenants want to Live in these Top Ten Cities

Published On: April 5, 2019 at 10:00 am

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If you’re looking to let to millennial tenants, then it’s essential that you know which areas they want to live in, in order to help you make sound investment decisions.

The slump in UK homeownership, from 73% a decade ago to just 63% today, reflects the fact that more households are now renting from private landlords, particularly among the millennial population. 

Homeownership rates among millennials have collapsed even more dramatically, owed largely to high house prices and weak wage growth since the financial crisis.

So, which cities are the best options for millennial tenants living in the private rental sector?

New research by credit expert TotallyMoney assessed 16 elements that are widely considered to be important to millennials, and used them to rank 63 cities in the UK, to reveal the best locations for millennial tenants.

These elements include: work factors, such as overtime hours, paid overtime, average weekly earnings, number of business start-ups, graduate hires, employment rates and the number of young people on benefits; property factors, such as the cost of a one-bedroom home to rent, as well as to buy; cost of living factors, such as the price of a cappuccino, gym membership and meal for two; and lifestyle factors, such as number of things to do, the population aged 0-17 and 18-29 and the percentage of Remain voters.

The study saw Scotland take two spots in the top three, led by Glasgow, owing to decent weekly wages, innumerable entertainment hotspots and house prices well below the national average – thought to be a huge contributor to its high performance.

Despite its reputation for extortionately high living costs and house prices, London still performs well, at second place. The capital isn’t shy of things for millennials to do, and also sees the highest weekly earnings, at an average of £727 per week, as well as the highest number of graduate hires across the whole of the UK.

In third place is Aberdeen. Its employment rates are the same as London’s and it has higher than average weekly earnings.

Top 10 cities for millennial tenants

  1. Glasgow
  2. London
  3. Aberdeen
  4. Liverpool
  5. Bristol
  6. Gloucester
  7. Southampton
  8. Cambridge
  9. Cardiff
  10. Middlesbrough

Basildon, Essex takes the bottom spot, owing to a paltry 2% of graduates finding work there, as well as extra curricular activities paling in comparison to the rest of the UK. It also had the second lowest Remain voters.

Yorkshire cities Doncaster (62nd), Wakefield (60th) and Huddersfield (59th) also performed badly. While one-bed home costs are low, so are wages, with graduate hires comprising just 6% across all three cities. 

James McCaffrey, the Spokesperson for TotallyMoney, says: “There are some things millennials have had to adjust to that haven’t been experienced by past generations, and, with this, comes an entirely different set of priorities.

“Rising house prices, stagnant wages, and Brexit are just some of the hurdles this generation have to get over. But that’s where our map could help, as it makes it much easier for millennials to find the places where those hurdles might be easier to jump.”

He continues: “Of course, the rankings should be taken with a small pinch of salt, as some factors will be more important to some than others. Nevertheless, if there’s a particular area young people have on the brain, our map certainly makes it easier for them to consider elements they might not have thought about before.”

Poll Highlights it’s a ‘Good Time to be a Landlord in London’

Published On: April 3, 2019 at 9:33 am

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Long-term renting is becoming the norm, as many tenants are favouring location preference over being homeowners.

The results from London estate agent Kinleigh Folkard & Hayward (KFH)’s Annual Tenant Barometer have been released, showing that tenants are expecting to rent for longer. 

The highlights of these results include:

  • Tenancy length is now a top 5 priority for London tenants
  • 59% of tenants feel they would never be able to buy in the Capital
  • Tenants now expect to be renting for 5 years, a 25% increase from a year ago

Lisa Campbell, a tenant who lives with her partner, has commented: “This was the first rental we had together, and the four years we have spent in our rental have suited us for this time in our lives. Buying a property outright was not affordable for us in the area we wanted to live given the current climate.”

Many feel that the prospect of purchasing a property in the capital city is one that is even more out of reach. This has led couples to make the decision to rent in a preferred area, over buying in a location that they don’t want to live in, purely due to affordability. Long-term renting provides them with more freedom of choice, when it comes to lifestyle, than being a homeowner in London would.

Carol Pawsey, Director of KFH Group Lettings, said: “The strength of the private rental sector has been well documented and debated, and there is no doubt that the demand for rented accommodation is set to continue. In fact, in the first 10 weeks of 2019, our online tenant enquiries were up by 57% on 2018 and tenant registrations across our 46 lettings offices were up by over 25%.

“It is a good time to be a landlord in London, albeit, with changes to legislation, it pays to be partnering with those who can guide you through.”

The Annual Tenant Barometer has concluded the top five tenant priorities, when looking to rent. These are respectively: 

  • Rental price
  • Location within London 
  • Size of the property
  • Proximity to transport links
  • Tenancy length

Younger renters (aged between 18 and 34) have also highlighted a preference for a fully furnished property and bills being included in the rent.

Brooke and Gordon Kenwright, who also rent through KFH, have said: “The main advantage of taking a longer tenancy is the feeling of security and knowing we won’t have to move again in 12 months – trying to minimise any disruption for our two sons, aged six and nine”.