Young investors set to fuel buy-to-let boom

Couple browsingMany young people may be struggling to get a foot on the housing ladder, but that does not mean that they do not recognise the potential benefits of investing in residential property.

Fresh research provided by letting agent Rentify shows that nearly half (49 per cent) of 18-39 year olds believe that acquiring buy-to-let property represents the best investment option in the UK today, with almost 4 million people in this age group actively seeking to buy an investment property.

With buy-to-let landlords having benefited from a booming property market earning returns of up to almost 1,400 per cent since 1996 – capital growth and returns combined – it is easy to understand why it is an investment type that appeals to many people across all age groups, not just the young.

George Spencer, CEO at Rentify said, “The fact that 49 per cent of first-time buyers would consider investing in buy-to-lets is fantastic and shows that there are more options out there and more people who want to get on the ladder.”

But-to-let continues to beat returns on all other mainstream investments, including commercial property, UK government bonds, shares and cash, and that trend looks set to continue, on the back of soaring demand from tenants.

The latest HomeLet Rental Index revealed that overall rent price increases were running ahead of inflation and house price growth to hit an all-time high of £977 per month in July, up 11.8 per cent year-on-year, helping to ensure that many investors are continuing to rent out their homes at a healthy profit.

The latest buy-to-let index from Your Move and Reeds Rains shows that the gross yield on a typical rental property in England and Wales increased to 5.2 per cent in July, up from 5.1 per cent the preceding month and 5 per cent in July 2014.

The data also revealed that a typical landlord achieved overall returns of 8.7 per cent, on average, over the year ending July 2015. Although this marks a significant drop from the 10 per cent recorded in June and 12.5 per cent in the year ending July 2014, it remains considerably higher than all other investment assets in today’s market.

With attractive rental returns still achievable, the reality is that an increasing number of people will continue to enter the private rental sector, as buy-to-let consolidates itself as the investment of choice, partly due to the dismal returns savers are currently receiving from banks and building societies.

Charlotte Nelson, Finance Expert at, said: “With high rents and poor savings rates, it’s little wonder that the buy-to-let market is booming.”

In light of this increasing demand, buy-to-let mortgage product numbers have soared to more than 1,000, up from 460 products available just two years ago, according to data from

“The boom in deals has undoubtedly been boosted by providers taking advantage of the new demand from thousands of pensioners making the most of the new pension freedoms,” Nelson added.

Source: Property Drum

UK mortgage activity improved in second quarter of 2015, CML data shows

CMLlogosmallThe London property market saw increased mortgage lending in the second quarter of 2015 but levels were still down compared to the same quarter last year.

The latest quarterly data from the Council of Mortgage Lenders shows that home owner house purchase activity in Greater London came out of the traditional seasonal dip to show growth in the second quarter by volume and value.

First time buyer activity saw similar trends with an increase in levels on the first quarter of the year, but this sector was also down on the same quarter last year.

Unlike house purchase activity, remortgage lending had quarter on quarter and year on year growth in both volume and value.

“As in the UK overall, the London market came out of the usual seasonal dip in the first few months of the year and saw increased activity but volumes are still  on the same period last year,” said Paul Smee, director general of the CML.

“Remortgage activity has shown quarterly and year on year growth after a period of stagnation. Borrowers appear to be taking advantage of competitive mortgage rates, ahead of a potential future interest rate rise,” he added.

In Wales house purchase activity saw large quarter on quarter increases compared to the first quarter of the year, but a slight decline in volume of loans compared to the second quarter in 2014.

First time buyers increased significantly from the first quarter, but decreased in amount borrowed and number of loans compared to the second quarter of 2014.

Home movers went up in volume and value quarter on quarter, and while number of loans remained unchanged year on year the amount borrowed by home movers increased.

The data also shows that remortgage activity increased compared to the first quarter and on the same quarter last year.

“House purchase activity appears to have woken up in Wales after traditionally slower levels in the winter months,” said Julie-Ann Haines, CML chair for Wales.

“The uptick in remortgage is, in particular, striking as levels had remained relatively identical over the previous four quarters. With the current low rates of interest unlikely to continue, it seems that borrowers are now taking advantage of competitive mortgage rates before a rise,” she added.

Source: Property Wire

Regulation ‘favours Buy-To-Let investors’

Couple browsingIndependent mortgage broker Private Finance has said that mortgage market regulation has created a bias in lending which favours investors over residential homebuyers; most especially in areas where property prices continue to rise.

Figures have shown that the Mortgage Market Review, introduced in late April 2014, has caused a general slowdown in the residential mortgage market. Private Finance has said that capping mortgages at a certain income multiple combined with limiting the Help to Buy scheme is therefore not supporting home ownership and suggests that MMR might be having a negative impact on the most vulnerable section of the market.

In contrast, the broker has said that whilst the buy to let  sector continues to succeed in providing a ready supply of generally well managed property, it remains non-regulated with lenders being ‘free from the constraints of MMR’ and able to advance up to 85% LTV interest only mortgages to BTL landlords.

Simon Checkley, Managing Director of Private Finance says:

“The outlook for house price growth remains heavily influenced by the BTL sector. Therefore, we are calling on regulators and policy makers to consider the effects of MMR on residential lending levels which, if maintained at their current level, could potentially exclude an entire generation of home buyers from the property market and force them into the private rental sector for years to come.

“Stifling activity in the housing market increases house prices by reducing supply; if existing homeowners had access to mortgage products which promoted affordability they might be inclined to bring their properties to the market thus increasing supply. These measures coupled with policies promoting development and house building could stimulate an otherwise lacklustre property market whilst simultaneously stirring up general economic activity.

“Not allowing first time buyers access to mortgage products similar to those available to buy to let investors snapping up the same properties that first time buyers would choose to buy if they could afford them, also seems rather unfair. In theory, property prices and rent should rise in line with inflation and therefore owning a property with a mortgage which allows for interest only payments for an initial period is still preferable in many cases to being forced to rent property from the landlords fuelling the market.

Source: Property Reporter

Number of first time buyers up by 42 per cent

Boards smlLending to first-time buyers, home movers and remortgagors all increased in May, with a particularly marked increase in lending to first-time buyers, according to the latest Regulated Mortgage Survey data published today by the Council of Mortgage Lenders.

The £8.4 billion of lending for house purchase accounted for 57% of all mortgage lending in May (by value), while remortgaging at £4 billion accounted for 27%, and other lending (including lifetime, buy-to-let and further advances) at £2.3 billion accounted for 16%.

The number of mortgages to first-time buyers in May reached 25,100 – 29% higher than in April, and 42% higher than in May last year. First-time buyers accounted for 45% of all loans for house purchase, similar to the levels of the past few months but considerably higher than the 38% seen on average since 2007.

The number of first-time buyer loans was the highest monthly figure since late 2007, and a marked contrast to the low point of just 8,500 loans in January 2009. By value, first-time buyer lending reached £3.4 billion in May, up from £2.5 billion in April and £2.2 billion in May last year.

For some months, there has been an increase in the number of first-time buyers entering the market with smaller deposits – this has now resulted in a shift in the average first-time buyer loan-to-value ratio rising to 83%, up from 81% in April and the highest ratio since November 2008. First-time buyers are also typically borrowing more (£113,400 in May, on average, compared with £110,000 in April and £105,000 in May last year), and typically now have higher incomes (£35,700 in May, up from £33,500 in May last year). The age of the typical first-time buyer remained at 29.

The number of loans to home movers in May was up by 32% on April, an increase similar to that among first-time buyers, but unlike the first-time buyer market  the number of home-mover loans rose by a more modest 4% compared with May last year. And, in contrast to the shift in first-time buyer loan profile, movers have experienced far less change in average loan size, income, or loan-to-value.

Paul Smee, director general of the Council of Mortgage Lenders, commented:

“Although monthly lending is still running at far less than half its typical monthly level during the peak, there is no doubt that the mortgage market is firmly open for business. Both the borrowing appetite of first-time buyers, and the availability of attractive mortgages for them, have improved markedly since a year ago.

“What is interesting is that, in contrast to some recent assertions, this is happening in parallel with the strengthening buy-to-let market. It is perfectly possible for both the buy-to-let market and the first-time buyer market to improve at the same time, as the evidence clearly demonstrates.

“It is important that the supply of housing steps up, as increased housing supply is a crucial factor in ensuring that housing is affordable over the long term.”

Click here for full CML report.

Londoners still aspire to home ownership

CMLlogosmallHalf of all adults surveyed in London would like to buy a new home to live in (be that a first or subsequent home) in the next 2-3 years, according to findings by the Council of Mortgage Lenders based on a survey undertaken by YouGov.

In the longer term, 75% of adults currently living in London would like to own their own home in 10 years time, a slightly lower proportion than in Great Britain overall where 79% of individuals indicated a longer term preference for home ownership.

In line with these consumer trends, first-time buyer activity was similar to the first quarter of 2012, while home mover lending and remortgaging was down, according to separate data released today by the CML.

A total of 9400 loans were advanced to first-time buyers in the first quarter in London, unchanged from the same quarter last year. This was a more positive result than the figures suggest due to the boost in first-time buyer activity in the first quarter last year as a result of the end of the stamp duty holiday in March.

First-time buyer affordability in London remained tighter than in the UK overall. First-time buyers borrowed an average of 3.58 times their income in the first quarter and their mortgage payments, on average, consumed 21% of their income. This was a marginal improvement compared to the fourth quarter of 2012 and is likely to due to the continuing downward trend in mortgage interest rates, however affordability remained less favourable than in the UK overall where the average income multiple was 3.23 in the first quarter and on average 19.5% of first-time buyer income was taken by mortgage payments.

The average loan-to-value ratio for first-time buyers remained at 75% in London in the first quarter, below the 80% seen in the UK overall.

First-time buyers in London continued to make up a larger proportion of house purchase loans in the first quarter than in the UK overall. 54% of house purchase loans advanced in the first quarter in London were to first-time buyers compared to 44% in the UK overall.

As in the UK, lending to home movers in London dipped in the first quarter. A total of 8000 loans (worth £2.3billion) were advanced to home movers in London, an 18% fall compared to the fourth quarter of last year, and down by 5% compared to the first quarter of 2012.

While lending to home movers fell in London, the falls were not as large as in the UK overall, where lending fell by 9% compared to the first quarter of 2012 and by 24% compared to the previous quarter.

Total house purchase lending fell in the first quarter in London compared to both the previous quarter and the first quarter last year. A total of 17,400 loans (worth £4.1billion) were advanced for house purchase in the first quarter in London, a 12% fall compared to the previous quarter – reflecting the expected seasonal pattern with weaker activity in the first two months of the year.

This also represented a 2% fall compared to the first quarter of 2012 – however when the stamp duty effect is factored in (which boosted activity in the first quarter of last year) this suggests a more positive outcome.

As in the UK overall, remortgage lending in London remained subdued. A total of £1.8 billion was advanced to borrowers remortgaging in the first three months of 2013, an 18% drop compared to the first quarter of last year, similar to the fall seen in the UK as a whole, where remortgage lending dropped by 19% compared to the first quarter of last year.

CML director general Paul Smee said: “These figures show that higher house prices and tougher affordability constraints in London have not had a significant impact on consumer appetite to buy or move home in the capital. A similar percentage of those who live in London want to be home-owners despite differences in demographics and population flows.

“Lending activity in London was largely similar to the same period last year, a positive picture bearing in mind the significant boost to the market caused by the end of the stamp duty holiday in March last year.”


Significant rise in first-time buyers

CMLlogosmallFirst-time buyer activity in the UK continued to grow in March with the number increasing by 20%, according to new figures published by the Council of Mortgage Lenders (CML).

There was also a marginal month-on-month rise in the volume of home movers and remortgage lending, helping to contribute to a welcome increase in overall property purchase lending.

The data reveals that overall a total of 19,100 loans worth £2.4bn were advanced to first-time buyers in March, up from 15,900 loans in February, but down on the 24,400 loans advanced in March 2012.

But the CML pointed out that March 2012 marked the end of the first-time buyer stamp duty holiday which fuelled a sharp rise in in activity.

Despite the spike in March last year, first time buyer lending activity over the first quarter of 2013 declined only slightly compared to activity in Q1 2012. Overall, 50,900 loans were advanced to first-time buyers in Q1 of this year, only slightly down on 51,200 loans in the first three months of last year.

The data also shows that while the loan to value ratio for first time buyers remained at 80%, there has been a gradual increase in the proportion of first time buyers taking out loans with a deposit of 10% or less.

CML director general Paul Smee said: “First time buyer activity in the first quarter was nearly at the same level as last year when figures were buoyed up by the end of the stamp duty holiday. This suggests that the market continues to be favourable for those looking to buy their first home.”

“More borrowers are taking out higher loan to value mortgages than any other time in the last four years, a sign that lenders are open for business, and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder.”

Property at centre of Government growth strategy

budget 2013Chancellor George Osborne has put the property market at the heart of the Government’s plans for economic growth.

In this week’s Budget he unveiled two schemes aimed at getting the sector moving positively once more.

The Help to Buy scheme will allow all purchasers to put down a 5% deposit on a newly-built home from April.

A maximum of 20% of the cost of the home will be funded by a shared equity loan, financed by the Government. This will be interest-free for the first five years.

The second measure is the new Government mortgage guarantee scheme which will run for three years from the start of 2014.

It will be used to support £130billion of mortgages for old and new homes.

Ian Fletcher, director of policy at the British Property Federation, said: “This is a strong package of help for housing. Annual transactions are half what they were and that has a knock on consequences for all those parts of the economy that rely on people moving. Helping people needing a deposit has for some time been cited as the missing piece of a coherent housing policy and is therefore welcome.”

Stephen Noakes, Mortgage Director at Lloyds Banking Group, said: “We are very supportive of innovation in the housing market and believe that the mortgage guarantee scheme, will give a much needed boost to the housing market and most importantly address the issue of accessibility.

“Since the launch of the Government’s Funding for Lending scheme we have seen mortgage rates hit an all-time low, really making a difference to affordability. These proposals will, just as importantly, address accessibility, and provide a genuine solution to the challenge of raising a deposit. Working together these two schemes will get more people on and moving up the property ladder.

“Crucially, this scheme will not only help first-time buyers but also second steppers, a key segment of the housing market that is also in need of more support and attention. Our recent report from Lloyds TSB indicates that little has improved in the past year for those first-time sellers looking to take the second step on the housing ladder, almost two-thirds of second steppers had wanted to move up the ladder in 2012 but were unable to. Raising a deposit has been cited as one of the key challenges. While the property market is likely to continue to be challenging, the fresh support announced [today] will have a real knock on effect across the whole of the housing market and we expect it could help around 50,000 people a year.”

Nick Kennett, Director of Financial Services at Post Office said: “[Today’s] Budget gives potential homebuyers reasons to cheer, whether buying their first home or looking to move. The Chancellor’s ‘Help to Buy’ scheme is just what is needed to get the country moving.”

Source: propertytalk Live!

Average house prices second highest ever recorded for February

rightmove-logo200There are signs of continued improvement in the health of the property market according to the latest Rightmove House Price Index.

At £235,741 the average price of newly marketed property is the second highest ever seen in the month of February, just £2,115 shy of the February record set in 2008 prior to the collapse of Lehman Brothers.

There are also encouraging signs of life among home-movers too as the Rightmove website recorded its busiest ever month in January. However, Rightmove research indicates that those most likely to buy and sell in 2013 are the ‘old hands’ with greater access to equity and finance, who have the confidence and the will to move.

Miles Shipside, director and housing market analyst at Rightmove comments: “There has been a sprightly start to 2013 and, while market activity remains patchy across locations and property type, some agents are reporting their busiest new year since the onset of the credit-crunch. While encouraging, it’s far too early to pop the champagne corks as certain sectors will remain on ice until the return of wider-spread mortgage availability. However, our research suggests that with age comes experience and, more importantly, equity, and it these old hands that seem most confident to plan a
move this year.”

New sellers increased their asking prices by 2.8% (+£6,312) this month, pushing the national average up to £235,741. Whilst it is usual to see asking prices increase between January and February, this is the highest average price recorded at this time of year since 2008. This illustrates the slow but steady recovery in prices, which has taken five years, though it must be noted that the national average can mask the divide in the market between those with access to equity and finance and those without.

Whilst all regions have recorded a rise this month, some of the more dramatic increases reported in the northern regions are effectively ‘rebounds’ from substantial falls measured on the low levels of new listings in November and December.

The start of a new year, combined with more new stock coming to market after the Christmas lull, traditionally boosts activity, though in recent years this has been tempered by the economic backdrop. However, this year Rightmove has recorded its busiest ever month in January with those planning a move searching in record numbers and contacting agents with more follow-up enquiries than ever before.

Shipside observes: “Interest in property has hit such a peak that Rightmove is now the sixth busiest website in the UK. Pages viewed on the Rightmove website reached a new record high in January, up by over 20% year-on-year and, importantly, resulted in more enquiries to agents and developers than ever before. While the journey between expressing interest and closing the deal has many more twists and turns than before the credit-crunch, it is a sign of increased confidence and helps build a momentum that has been sadly lacking in many local markets over the last five years.”

Source: propertytalklive!

House sales rise across the UK

rics_logo-300x150The number of housing transactions continues to grow across the UK property market, according to the latest Royal Institution of Chartered Surveyors (RICS) housing market survey (published today 12 February 2013).

During January, chartered surveyors across the country reported a further increase in the number of newly-agreed sales with a net balance of 15% more stating that levels rose. Transactions have now increased for four consecutive months.

In tandem with this, prices remained broadly stable during the first month of the year. Four per cent more respondents stated that prices fell rather than rose last month (from -1%), meaning that prices have remained fairly consistent from December. Along with other signs, this suggests that the very worst may be over for the market.

Despite this, demand from would-be purchasers has dipped slightly since the start of the New Year, with a net balance of 9% of surveyors suggesting that new buyer enquiries fell during January. This was also accompanied by a slight fall in the number of homes coming up for sale with surveyors suggesting that poor weather may have contributed to the softer figures.

Across the UK, prices remained in positive territory in London and the South East while also moving into positive territory in Wales for the first time since the early part of 2010.

Looking ahead, chartered surveyors are optimistic that the price stability seen in recent months will persist over the coming three months and, more significantly, they anticipate prices beginning to move a little higher as the year wears on. Meanwhile, future transaction levels are expected to remain on an upward trajectory.

Property sales hit five-year high – HMRC

UK house sales increased last year to the highest levels seen since 2007, according to figures published by HM Revenue & Customs.

According to a report in The Telegraph, lenders hailed the figures as evidence that the “shutters are coming up” for mortgage borrowers.

There were 932,000 completed transactions last year, marking a 5pc increase on 2011, according to HMRC.

Meanwhile, the Council of Mortgage Lenders (CML) outlined evidence of why it believes the mortgage market is improving.

In its latest “news and views” release, the CML said: “Overall, there has been a marked sense of improvement in the mortgage lending landscape over the past year, which we forecast will continue in 2013.”

It said that at around 220,000 last year, the number of first-time buyers reached its highest level since the credit crunch started.

It also estimates that the share of first-time buyers getting on the property ladder without needing any extra help from parents has increased in the last couple of years.

The CML said: “We estimate that there has been a slow and steady increase in the proportion of first-time buyers buying without assistance from 32pc of all first-time buyers in 2009 to 36pc in 2012.”

The CML said yesterday that it expects mortgage lending to reach £156 billion this year, compared with an estimated £143 billion during 2012.

The HMRC figures showed that the number of sales in 2012 was still almost half the levels seen five years earlier.

However, sales picked up in the final quarter of last year to 237,000 transactions, showing a 4pc increase on the previous quarter and a 2pc increase on the same period in 2011.

The CML said: “It may be easy to overlook the recovery that has already quietly been under way in the mortgage market throughout 2012.

“Indeed, we suspect that consumer sentiment may not yet have caught up with the extent to which the mortgage market has already improved; and some commentators still take as their benchmark the over-heated market of the mid-2000’s.”

See full report here