Average home let within 20 days as rent rises go on

Countrywide logoBritain’s largest letting agency says rents grew by an average of 3.1 per cent in 2015, taking the average monthly rent to £919pcm. 

Rents rose in every region of Britain with the East of England seeing the highest growth – 6.5 per cent – and Central London the lowest with a mere 0.5 per cent.

Some 34 per cent of tenants who renewed their tenancies faced higher rents, an increase of seven per cent from 2014. However, the average rent for renewing tenancies only grew by 1.3 per cent, much less than for those moving into a new home.

The continuing imbalance between supply and demand has intensified competition for homes in the market, says Countrywide.

The average property is now let within 20 days of being instructed – two days quicker than it was in 2014.

Greater London as a whole saw a slowdown in rental growth in 2015 compared with 2014 yet rents still rose by 4.7 per cent on average. Affordability issues have kicked in across London; the proportion of under 25s living in the rental sector in the capital fell by four per cent in 2015, the continuation of a longer term trend.

Surrounding regions in the South of England have seen small growth in the proportion of under 25s in their market, as Londoners look further afield for more affordable markets.

“2016 looks to be a complicated year for landlords as the government focuses its efforts on boosting homeownership. The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour” admits Johnny Morris, research director at Countrywide.

“With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures” he warns.

Source: Letting Agent Today


Scotland announces extra tax on second homes

ScotlandFlag400x310Private rented sector landlords in Scotland and second home owners face an extra 3% stamp duty tax from next year which will bring them into line with changes in England and Wales.

It was only a matter of time before the change came about after the UK Chancellor George Osborne announced the additional tax for England and Wales in his recent Autumn Statement.

Scottish Finance Minister John Swinney said that he would bring forward legislation on the new second home charge soon so that it could be in force by April 2016. ‘I am conscious of the issue of second homes. We need to ensure that the opportunities for first time buyers to enter the market in Scotland are as strong as they possibly can be and we need to make certain that tax changes elsewhere in the UK do not make it harder for people to get on the property ladder,’ he explained.

It means that an extra 3% rate will apply to the purchase of additional properties, such as buy to let and second homes from 01 April 2016 and be levied on the total price of the property for all sales above £40,000 on top of the current LBTT rates.

The Scottish Government has forecast that it will raise overall LBTT receipts in 2016/2017 by between £17 million and £29 million, rising to a possible £66 million by 2020/2021. Overall the Government expects LBTT will raise £295 million in 2016/2017.

John Blackwood, chief executive of the Scottish Association of Landlords, said that landlords will be disappointed and frustrated by the decision which will effectively ‘punish’ those who choose to invest in the private rented sector (PRS) Scotland.

‘The supplementary tax on the purchase of second homes will have a huge impact on the buy to let market and exacerbate an already serious shortage of properties in many areas. We firmly believe that the biggest losers from today’s statement will be tenants who will now find it even harder to get the accommodation they want at a price they can afford,’ he added.

Oliver Knight, a senior analyst in Knight Frank’s residential research department, said that sales will be brought forward as landlords and others seek to minimise their property tax burden.

He added that buy to let property investors will also be able to continue offsetting all stamp duty against capital gains tax when they sell their property.

Bob Cherry, partner at property consultants CKD Galbraith, also believes that there will be a flurry of activity before the end of March 2016. ‘This new levy will have implications for current landlords looking to sell as well as act as yet  another deterrent to would be landlords thinking about the market as an investment opportunity,’ he said.

‘This measure, like the LBTT rises introduced earlier this year, is also a wealth tax on owners as buyers of buy to lets will seek to pass on the extra purchase costs by reducing the price they are prepared to pay,’ he added.

Source: Property Wire

London rents to continue rising in 2013

Rental price growth in the capital will continue to outstrip the national average next year despite the fact that a rising number of tenants are falling behind with rent payments due to affordability constraints.

A Rightmove report, released earlier this week, found that more landlords are expected to introduce a rent freeze in 2013, as rents increasingly look like they may have peaked.

But some property market experts believe that the huge gulf between supply and demand in the capital will only act to push rental values even higher.

Peter Rollings, CEO of Marsh & Parsons, said: “The more buoyant sub £1,000 a week market has seen a strong performance, with annual rises of up to 15% in many areas where would-be buyers are forced into the rental market by a historically low supply of both mortgage finance and property to purchase.

“Based on current trends, Marsh & Parsons expect rents in this segment of the market to rise by a further 8-10 per cent in 2013.”

Virginia Ewart-James, head of residential lettings at EA Shaw, a central London specialist based in Covent Garden, said: “Generally rents will continue to increase with a rate of 5% estimated during 2013. This follows an impressive increase of 4% in rent up to November 2012 over the previous year.

“There is still good demand for rental properties which will continue to strengthen as London grows further as a hub and a popular place to live and work. London is still seen to have the best education in the world and remains an attractive option for studying. Students in particularly, are bringing in good budgets; often paying six months in advance, and proving to be valuable and lucrative tenants within residential lettings.”

Source: PropertyInvestorToday

Paragon launch new range of buy-to-let mortgages

Buy-to-let mortgage specialist Paragon has launched a selection of new mortgage products for landlords looking to add to their property portfolio.

The new products are a combination of fixed and tracker rates which sit under both the Paragon Mortgages and Mortgage Trust brands.

Paragon Mortgages is offering 18 new products which target professional landlord business consisting of 12 trackers and six re-priced fixed rates.

Under the Mortgage Trust proposition – which addresses the mortgage needs of landlords with smaller portfolios – there are two new tracker rates and four new fixed rates.

John Heron, Managing Director of Paragon Mortgages, said: “The new products offer a much wider range of product options to intermediaries who are looking for competitive products for their landlord clients.

“The new Mortgage Trust products complement the existing range and are augmented by a state-of-the-art online service. The new Paragon Mortgages products are more suited to professional landlords who tend to need a more tailored approach for more complex rental properties. We expect that the new products will be well received by the intermediary market as we know they are seeing increasing demand from buy-to-let customers.”

Source: Paragon Mortgages

Buy-to-let mortgage lending up 8% in Q3

More buy-to-let mortgages were agreed in the third quarter of 2012, new figures have shown.

Data released by the Council of Mortgage Lenders (CML) has show that the value of such home loans being agreed rose to £4.2 billion during this three-month period.

This represents a rise of eight per cent on the total of £3.9 billion recorded in quarter two, while the number of these mortgages advanced during the third quarter stood at 34,400 – an increase of two per cent on the corresponding time-frame in 2011.

As such, in terms of the first nine months of 2012, loans worth some £11.8 billion were agreed between consumers and financiers – a marked 19 per cent hike on the £9.9 billion handed out in the same period last year.

Paul Smee, director general of the CML, commented: “Buy-to-let lending is continuing to recover and to grow in line with expectations … the growth of private renting looks set to continue in the years ahead.”

Source: Council of Mortgage Lenders


Buy-To-Let mortgage specialist ups its lending threshold

Keystone Buy to Let Mortgages has improved its lending criteria and is now offering loans up to £500,000 per property transaction to existing landlords. This represents an increase of £150,000 on its previous limit.

The amount was raised after feedback from brokers revealed that many customer inquiries were for higher-value HMOs and multi-unit freehold blocks.

The change will help investors to continue growing their portfolios with Keystone which, unlike some lenders, does not impose a limit on the number of loans that can be held with the brand.

David Whittaker, managing director of Keystone Buy to Let Mortgages and Mortgages for Business, said: “One of the reasons for launching Keystone earlier this year was to meet the needs of professional landlords who have been under-served by the mainstream buy-to-let lenders in recent years.

“Upping the maximum loan amount clearly demonstrates that we are able to respond quickly to investors’ ongoing requirements in order that they can expand their portfolios at a time when housing is in desperately short supply.”

At the other end of the lending scale, a minimum loan amount of £50,000 has also been introduced, although for particularly strong or worthy applications exceptions can be considered.

Keystone Buy to Let Mortgages, which was launched in April, is fully funded by Aldermore Bank and offered exclusively through Mortgages for Business.

Rob Lankey, managing director of commercial mortgages at Aldermore, said: “In a short space of time, the brand has cemented its position as one of the main go-to lenders for professional landlords.

“It has already produced in excess of £20m of mortgage offers and this criteria change, and the fact that our five-year fixed rates are now only 0.25% more than our three-year rates, will encourage more brokers to recommend our products to their customers.”

Source: LandlordToday 
Click here for Keystone website

UK rents accelerate to a new high

Rent rises have accelerated to hit a new high – and tenant arrears have crept up.

According to LSL this morning, owners of the Your Move and Reeds Rains chains, the average rent in September across England and Wales reached £741 per month.

That represented a rise of 1.1%, surpassing the previous record high of £734 set in August. Annually, rents went up by 3.2% across England and Wales, accelerating from an increase of 2.9% in August.

Monthly rents in London and the South-East went up the most, with rents rising by 1.7% and 1.9% respectively. Average rents across London are now a record £1,092 pcm, 6.2% higher than a year ago.

There were rent falls in three regions last month: the East of England, Yorkshire & the Humber, and the West Midlands.

Average tenant finances deteriorated slightly, with 9.1% of all rent late or unpaid at the end of September.

Source: LandlordToday

New bank woos investors with landlord loans

Shawbrook Bank, which launched a year ago, is setting out to woo buy-to-let landlords with a range of short-term loans.

These include a loan for investors looking to buy, refurbish or release equity from the after-works value of a property, and short-term loans for acquisition, for example at auction.

The bank also offers a short-term loan for light refurbishment.

Stephen Johnson, managing director of commercial lending at Shawbrook Bank, said: “We are a relatively new lender in the short-term loan space, but we’ve already seen high demand for our short-term loan products which offer competitive pricing and fee structures.

“Shawbrook’s appetite to lend to professional investors is strong, and we’re constantly looking at ways to improve our products and processes to meet the needs of our brokers and clients.”


Record rise in UK rents

Landlords saw rents rise for a fifth consecutive month as tenant arrears fell for the first time in three months, according to the latest Buy-to-Let Index from LSL Property Services.

In England and Wales the average rent rose by 1.2% to £734 per month in August, surpassing July’s record high of £725. Rents climbed by 2.9% compared to August 2011.

Tenants saw rents reach record highs in five regions in August, hitting new peaks in London, the South East, the East of England, the North West and Yorkshire & the Humber. On a monthly basis, rents rose in eight regions. The South East saw rents climb the fastest for the second month, rising by 2%, while rents in both London and the East of England rose by 1.6%. Rents decreased in Wales and the West Midlands.

London and the South East have seen the fastest rent rises compared to August 2011, with rental inflation at 4.9% and 3.9% respectively. On an annual basis rents fell in two regions, decreasing by 1.9% in the South West, and by 1.8% in Wales.

David Newnes, director of LSL Property Services said: “The rental market is right in the thick of its peak season, and the demand from graduates and those starting new jobs has added a new layer of competition on top of the existing pool of frustrated buyers. London and the South East may be the powerhouses of the national rental market, but rent rises haven’t been limited to these areas by any means. In fact, rents have hit record highs in five regions as tight mortgage finance criteria and large deposit requirements for new buyers continue to ramp up the pressure on the limited stock of rental homes available.

“Some relief for tenants may be found if the Funding for Lending scheme begins to feed through into greater lending to borrowers with smaller deposits. But any improvement to the first-time buyer mortgage market will need to be significant and sustained to dent rental demand markedly in the long-term.”

Landlords saw an average total annual return of 5.3% on a rental property in August, up from 5% in July. This represents an average return of £8716 with rental income of £7853 and a capital gain of £863.

If rental property prices maintain the same trend as the last three months, an average investor in England and Wales could expect to make a total annual return of 9.2% per property over the next 12 months – equivalent to £15,191 per property. The average yield on a rental property remained steady at 5.3%, as slightly higher property prices were matched by higher rents.

Newnes said: “The Government’s response to the Montague Report recognises the need to expand the supply of rented property, and supporting the building of new rental properties and encouraging institutional investment to the sector marks a step forward. However, it’s equally vital that lenders continue to support individual investors, who are being drawn in by the healthy yields, historically low mortgage rates, and strong tenant demand.”

Tenant finances improved for the first time in three months in August, with 9% of all rent late or unpaid at the end of the month, a decrease from 9.3% in July. In total, late or unpaid rent amounted to £288m, 2.2% less than in the previous month.

Newnes said: “It’s encouraging to see tenant arrears fall for the first time in three months, despite the summer holiday season. A surprisingly resilient labour market, alongside a more stringent approach to referencing and credit checking by landlords, has helped prevent further rental arrears. However, rental inflation is still outstripping the growth in wages, and this will keep up the financial pressure on many tenants’ monthly budgets.”

Source: propertytalklive!

60% of landlords planning to expand portfolio in next 6 months

60% of landlords are planning to increase their property portfolios over the next six months, according to specialist mortgage broker Mortgages for Business. 

84% of investors looking to expand said they are planning to purchase more houses and flats (vanilla buy to let) by the end of the year, thereby increasing the supply of rental properties to help cater for demand which continues to outstrip supply.

Encouragingly, only 3% of investors are planning to reduce their portfolios over the next six months, down from 6% last quarter.

David Whittaker, managing director at Mortgages for Business, explained: “Landlord appetite for buying residential property is high. This will support the private rented sector and ease the strain on would be renters chasing too few properties.”

The research, which polled the views of 159 investors, showed complex buy to let property is becoming increasingly popular probably due to the more attractive yields compared to vanilla buy to let properties. 25% of respondents said that they were considering purchasing either HMOs, multi-units or semi-commercial property (or a combination of the three).

More than three quarters of landlords feel that lenders need to do more to support them and whilst it will come as no surprise that their main gripes were with rates, fees and LTVs, more interestingly landlords are looking for buy to let mortgages that cater for more specialist scenarios including more products for limited company applicants, products for holiday lets and more lending to ex-pats. Landlords were also interested in seeing more case-by-case underwriting rather than computer based lending decisions.

Just over half (54%) of investors who are planning to expand revealed they will need to refinance their existing properties. Of these, 20% are likely to struggle to secure finance because of a lack of equity, reflecting the dearth of high LTV mortgages in the market. As of June this year, there were only four 85% LTV mortgages available (from Kent Reliance).

8% of investors revealed they have been asked by lenders to refinance elsewhere, largely as a result of RBS which is looking to reduce its exposure to property and Bradford & Bingley which is looking to exit the market entirely.

David Whittaker commented: “Landlords are bullishly confident about the prospects of the buy to let market over the next six months. There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6% threshold.”