Posts with tag: property investment

Limited Companies Borrow more than Individual Landlords for First Time

Published On: July 4, 2017 at 9:12 am

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Limited companies are borrowing more than individual landlords for the first time, according to Mortgages for Business.

Limited Companies Borrow more than Individual Landlords for First Time

Limited Companies Borrow more than Individual Landlords for First Time

The firm’s latest Limited Company Buy-to-Let Index found that over half the value of buy-to-let lending in the second quarter (Q2) of the year was provided to limited companies.

Based on lending transactions brokered by Mortgages for Business, data from Q2 shows that limited companies borrowed more per quarter than individual landlords for the first time, including both purchase and remortgage transactions.

Limited company structures are particularly common when making new purchases, and Q2 proved no exception. Of buy-to-let purchase completions in Q2, 73% were performed by limited companies – up by more than 10% from 62% in Q1.

Similarly, limited companies accounted for 76% of buy-to-let lending by volume, up from 63% in Q1. This was caused by high volumes of purchase applications from limited companies, accounting for 77% of buy-to-let purchase applications in Q1 and 78% in Q2.

Steve Olejnik, the COO of Mortgages for Business, comments on the findings: “Landlords are increasingly looking to limited company structures because of the benefits they bring in the form of tax efficiencies and softer affordability testing. The structures are not without their hurdles, however, and we recommend all our clients take professional tax advice before deciding how to proceed.”

The index also shows pricing improvements, particularly three and five-year fixed rate deals, as buy-to-let lenders seek to compete in the ever-increasing limited company sector.

Among buy-to-let products available to limited companies, the average three and five-year fixed rates dropped by 0.4% each, to 3.7% and 4.0% respectively. This further narrows the gap with the wider market, with the average three-year fixed rate across all buy-to-let products just 0.2% lower, at 3.5%.

The appeal of limited company structures has become stronger following the Government’s reduction in mortgage interest tax relief for individual buy-to-let landlords.

The Mortgages for Business figures arrive as the Residential Landlords Association (RLA) calls on the Government to scrap its recent tax changes.

West End investment market driven by £100m+ deals

Published On: June 23, 2017 at 1:45 pm

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Property deals worth over £100m are dominating the market in London’s West End, according to a new report from Savills.

Ten deals, totalling £2.175bn have been transacted this year, which is a record for both the number of deals in this category.

Turnover

The property advisor reports that the ten £100+ transactions have made up 69% of the total turnover of the West End market during 2017.

Asian investors have been responsible for nearly half of all deals of this size during the year – in comparison to 19% in the whole of 2016.

Domestic investors are also pursuing larger plots, according to the report. Three acquisitions of over £100m from UK investors recorded until the end of May has equaled the number seen in the whole of 2016.

West End investment market driven by £100m+ deals

West End investment market driven by £100m+ deals

Savills said that the 11 transactions that took place in May totalled £583, which took the total investment in the year in the West End to £3bn.

Paul Cockburn, head of the West End investment team at Savills, noted: ‘A key characteristic of overseas demand is their willingness to target both scale and quality. With this comes the current high level of liquidity for large lots. Such is the demand of late there again seems renewed downward pressure on prime yields.’[1]

In addition, Savills said that prime yields in the West End market remain at 3.25% for the fifth straight month.

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/6/londons-west-end-investment-market-dominated-by-100m-deals

 

 

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Published On: June 14, 2017 at 9:06 am

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Specialist lending brand Keystone Property Finance has reduced all of its rates in its Classic Range for buy-to-let landlords.

The rates have been cut by ten basis points. The lender’s LIBOR has also been reset downwards, at 0.29%.

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Keystone Reduces Rates on Classic Range for Buy-to-Let Landlords

Pricing in the Keystone Classic Range now starts at just 3.59% for a three-year fixed rate mortgage at 65% loan-to-value (LTV). This product is available on standard buy-to-let property.

The range also includes options at 75% and 80% LTV, as well as rates designed specifically for Houses in Multiple Occupation (HMOs) and multi-unit blocks.

Keystone’s Classic Range buy-to-let mortgages are available to both individual landlords and those operating through limited companies.

Unlike most other lenders, Keystone accepts trading limited companies, as well as SPVs, as standard.

The CEO of Keystone, David Whittaker, comments on the reductions: “We are delighted to be able to accommodate a price cut within the Classic Range. Landlords using trading limited companies as borrowing vehicles will be particularly pleased with the reduction, as we are currently the only buy-to-let lender not to require a fixed and floating charge or debenture.”

Keystone Property Finance is an intermediary-only lending brand, and brokers must be registered to gain access.

We remind all landlords looking to take out mortgages of the Government’s recent and ongoing reduction in tax relief on finance costs – including mortgage interest.

A detailed guide from the Government on how the restriction will affect you can be accessed here: /government-guide-tax-relief-changes-residential-landlords/

We also reported yesterday that Together has launched a new, specialist buy-to-let range created to support landlords that are looking to expand their portfolios.

Keep up to date with all property market, mortgage sector and lettings industry news at Landlord News and on our social media accounts: Twitter, Facebook, Google+ and LinkedIn.

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Legal & General Announces New Build to Rent Scheme in Leeds

Published On: May 11, 2017 at 9:48 am

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Legal & General (L&G) has announced a new Build to Rent scheme in the centre of Leeds, marking the fifth UK city to which it will bring its new rental offering.

This latest investment brings L&G’s total pipeline of Build to Rent units to over 1,400, with an expected gross development value across the portfolio of £420m.

The Leeds site – Mustard Wharf – has been acquired from U+I in partnership with CTP, and has permission for 250 homes, as well as 8,640 square feet of commercial and amenity space.

Legal & General Announces New Build to Rent Scheme in Leeds

Legal & General Announces New Build to Rent Scheme in Leeds

Just a five minutes’ walk from Leeds Train Station, the central site is situated in Granary Wharf, an established retail, leisure and residential location. It also benefits from being strategically important to the wider regeneration area of South Bank. L&G expects to be able to begin construction on the £60m scheme in early 2018, with practical completion aimed for early 2020.

L&G’s total investment capacity for the Build to Rent sector currently stands at around £1 billion, having raised capital from major pension funds for an open-ended Build to Rent fund, as well as a £600m JV investment by Legal & General Capital and PGGM.

Its existing sites in Bristol, Bath and Walthamstow are progressing well, and its first scheme in Salford is due to welcome its first residents at the start of June.

L&G is involved in housing creation across the spectrum, backing a fast growing pipeline of over 70,000 new homes over the next five to ten years, and looking to help provide the UK’s population with high quality, affordable living at all stages of their lives.

Forming a vital part of this, its Build to Rent fund is creating bespoke, quality rental stock that offers a positive choice for elective tenants through high service levels and flexible lease structures.

Focused on key urban regeneration areas centred around transport hubs, it is targeting schemes of over 150 units, taking advantage of economies of scale to deliver better value and more choice for residents, while building sustainable, vibrant communities.

The Build to Rent Fund Manager at LGIM Real Assets, Dan Batterton, comments on the Leeds scheme: “In our view, Mustard Wharf is the ideal location for a Build to Rent scheme in Leeds. It is close to major transport links and local amenities, and complements the wider regeneration of the local area, supporting job growth and the local economy over the long-term. We are excited that we are going to create a new standard of rental accommodation and service in a thriving community.”

Mathieu Elshout, the Senior Director of Private Real Estate at PGGM, also says: “PGGM Private Real Estate builds strategic partnerships all over the world. This acquisition demonstrates the success of our partnership with L&G, having already secured five UK city regeneration schemes for our joint venture since its start last year. This enables us to make a positive difference to the built environment. Shaping the project from the outset, the L&G asset management team is able to create, from scratch, good quality residential accommodation that suits renters’ needs and offers a new, professional level of customer service, while also addressing the UK’s housing shortage. As a responsible investor of Dutch pension capital, we choose to back projects that contribute to a sustainable world.”

And James Lidgate, the Director of Housing at Legal & General Capital, adds: “This latest acquisition supports our vision of investing in long-term, sustainable urban schemes that support wider urban regeneration to transform and reshape Britain’s landscape, bringing jobs and housing back into the centre of cities, and better utilising our existing infrastructure. When complete, Mustard Wharf will provide well-connected, high-quality housing which is essential for supporting the UK’s economic position and driving future growth.”

Where Landlords can Achieve the Highest Rental Yields in the UK

Published On: April 13, 2017 at 9:44 am

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Some buy-to-let landlords are preparing themselves for dwindling profits over the next few years, as a result of the Government’s mortgage interest tax relief changes. But solid returns are still achievable, if you look to the locations with the highest rental yields in the UK…

Peer-to-peer lender Kuflink has assessed the average rental yield in 50 major towns and cities across the UK, finding that properties in Salford in the North West of England typically offer the highest rental yields in the UK, at an average of 7.08% in the first quarter (Q1) of the year.

Where Landlords can Achieve the Highest Rental Yields in the UK

Where Landlords can Achieve the Highest Rental Yields in the UK

This was followed by Leeds, Manchester and Coventry.

Unsurprisingly, London is among the bottom locations, given the high cost of buying property in the region. Average returns in the capital are just 3.45%. But it is Chelmsford in Essex that provides the weakest yields, at an average of just 2.89%.

Overall, rental yields in Q1 2017 remained broadly stable across the UK, with the gap between returns in the north and south closing.

The CEO of Kuflink, Tarlochan Garcha, says: “This index shows that savvy investors should look to the regions where strong rents and more affordable house prices make for fruitful investment opportunities. The Northern Powerhouse is leading the way, while London falls by the wayside, as rents fail to keep up with rocketing house prices.

“The stability of both house prices and rents is a positive sign for buy-to-let investors, proving the strength of the UK’s property market, which is able to withstand the uncertainty surrounding the UK’s exit from the EU.”

He adds: “The following few months will be the true test of the market, as Article 50 negotiations get underway.”

Are you looking for the highest rental yields in the UK? Here are the locations you should invest in:

  1. Salford, North West – 7.08%
  2. Leeds, Yorkshire – 5.96%
  3. Manchester, North West – 5.79%
  4. Coventry, West Midlands – 5.64%
  5. Belfast, Northern Ireland – 5.46%
  6. Portsmouth, South East – 4.92%
  7. Birmingham, West Midlands – 4.90%
  8. Edinburgh, Scotland – 4.88%
  9. Durham, North East – 4.85%
  10. Fife, Scotland – 4.54%

The following towns and cities provide the lowest average rental yields:

  1. Chelmsford, East of England – 2.89%
  2. Cambridge, South East – 3.17%
  3. York, Yorkshire and the Humber – 3.17%
  4. Chester, North West – 3.28%
  5. Doncaster, Yorkshire and the Humber – 3.38%
  6. Derby, East Midlands – 3.41%
  7. Wigan, North West – 3.44%
  8. Wolverhampton, West Midlands – 3.44%
  9. London – 3.45%
  10. Carlisle, North West – 3.47%

Northern University Cities Dominate Best Investment Hotspots

Published On: April 4, 2017 at 8:13 am

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Northern university cities dominate the list of the best buy-to-let investment hotspots in the UK, according to recent figures.

Research found that half of the top 20 best buy-to-let investment hotspots are in northern university cities. Manchester – home to the University of Manchester and Manchester Metropolitan University – offers buy-to-let landlords a potential average rental yield of 6.73% – the best in the UK.

In addition, Salford – in the metropolitan borough of Greater Manchester – offers investors a very respectable student property yield of 6.68%.

Northern University Cities Dominate Best Investment Hotspots

Northern University Cities Dominate Best Investment Hotspots

Portsmouth – home to the University of Portsmouth – came in third place, with an average yield of 5.75%. Meanwhile, Leeds, Cardiff and Coventry were close behind, with average returns of 5.67%, 5.59% and 5.59% respectively.

Plenty of UK cities saw growth in average yield, with Hull – where the University of Hull is based – experiencing the greatest average yield increase of 0.31%, closely followed by Luton – home to the University of Bedfordshire – with a rise of 0.31%, and Rotherham, at 0.28%.

The study also found that cities hosting the very best UK universities were not necessarily the best locations for buy-to-let investors.

Despite being home to the fourth best university in the world and boasting alumni such as Charles Darwin, Isaac Newton and Stephen Hawking, Cambridge actually has the worst average rental yield, at 2.7%.

Oxford – host to the current number one university in the world – also followed this trend, with an average return of 3.9%.

Chester was found to be the second worst investment hotspot for landlords. Home to the University of Chester, the city recorded an average rental yield of just 3.04%.

Chelmsford, home to Anglia Ruskin University, followed closely behind, at 3.07%, with Wolverhampton and Carlisle not far off – 3.27% and 3.29% respectively.

Even London – home to King’s College London, the London School of Economics and the University of London – recorded an average rental yield of just 3.25%, ranking the fourth worst in the UK.

It seems that the best investments really are found in northern university cities!

Danielle Cullen, the Managing Director of StudentTenant.com, comments on the findings: “For anyone looking into investing into student property, it’s important to assess the potential yields in the area. It’s really interesting to see that the cities that contain the best universities actually offer the worst yields, and just a little bit of research will uncover this for potential investors.

“Yield is a bit of a buzzword for investors, but often, a lot of people don’t actually know how to work them out, or how valuable knowing that information is. I would strongly advise spending a bit of time learning about the importance and how you can optimise them to ensure you get the best possible return on investment.”

She continues: “I would also express though that yields aren’t everything you need to know. There are a lot of other factors a landlord should consider before investing, such as proposed vacancy rates. For example, if the property will be vacant over the summer in a student let. Or, if it’s more attractive for a certain type of tenancy, such as short-term lets where there is likely to be a higher rate of vacancy, but perhaps the potential of higher rents.”