BTL mortgage availability Almost half One in 10 North West Stamp Duty holiday Buy-to-let 5-year fixed BTL mortgages buy to let investment areas UK property investment locations buy-to-let lenders BTL properties buy-to-let landlords Number of UK buy-to-let landlords buy-to-let limited companies
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Stamp Duty holiday and falling mortgage costs provide timely buy-to-let boost

After years of cracking down on landlords, the chancellor’s Stamp Duty holiday is a shot in the arm for the industry.

It’s not been an easy few years for the nation’s landlords.

A succession of decisions by the Government has chipped away at just how attractive it is for people to invest in property, particularly if they want to do so on a small scale and have maybe one or two buy-to-lets in a portfolio.

But a couple of recent changes may have made the prospect far more enticing.

Say goodbye to Stamp Duty (for now)

It was no great surprise when the Chancellor stood up in the House of Commons to announce a Stamp Duty holiday.

The nil rate threshold is temporarily being hiked from £125,000 to £500,000, meaning that nine out of every 10 buyers in England and Northern Ireland won’t have to pay any.

The surprise came in the revelation that this is being applied to landlords as well as those buying a property they intend to live in themselves.

Just a few years ago a higher rate of Stamp Duty was introduced for those buying a second home, in a bid to make buy-to-let less appealing (or more profitable for the Government, depending on your point of view).

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While this 3% surcharge still applies ‒ landlords can’t avoid Stamp Duty entirely ‒ it does mean they will enjoy smaller Stamp Duty bills as a result.

For example, before the changes, if I wanted to buy a £250,000 investment property I would pay 3% on the first £125,000 and then 5% on the remainder, meaning a total tax bill of £10,000.

That tax bill will now drop to £7,500, a tidy saving, especially if you’re looking to buy more than one investment property.

Falling mortgage costs

Another significant source of optimism for all would-be property investors has been the shifting state of the buy-to-let mortgage market.

Perhaps unsurprisingly, the number of buy-to-let mortgages on offer has dropped significantly as a result of the Covid-19 crisis.

According to data from financial information site Moneyfacts, the number of buy-to-let deals stood at 2,897 in March, but had crashed to just 1,455 in May.

The reopening of the housing market has led to a rise in the number of products on the market though, with product numbers jumping to 1,738 in July.

Still a long way down on the pre-pandemic, but a clear move in a more positive direction.

It’s not just the numbers of products that are likely to give landlords hope though, but the rates being charged on them too.

Moneyfacts data shows the average rate on two-year fixed rate buy-to-let deals in March stood at 2.77%, while on five-year deals it was 3.24%.

By July, this had fallen to 2.61% and 2.97% respectively.

Part of this will be down to the fact that lenders are far warier about lending at higher loan-to-values currently.

But equally, now that the market is moving again, lenders will want what business there is. And that competition will likely feed into some decent deals for landlords.

Jenny don’t be hasty

That said, there’s no doubt that moving into buy-to-let at the moment could be a nervy move.

Yes, there remains healthy demand for rental properties ‒ the shortage of housing hasn’t disappeared, and while people will struggle to purchase their own home, they will have to rely on rental properties.

But taking on any tenant is a big gamble at the moment. With significant unemployment seemingly on the way, how confident can you truly be that they will be able to maintain their rental payments?

There’s only so much due diligence you can do on a tenant ‒ you can’t really have a chat with their boss to find out what the chances of them getting the boot in the next year are.

Fortune favours the brave

Landlords are often painted as the pantomime villains of the housing market, a little unfairly in my view.

But the truth is that the Stamp Duty holiday is a real boon for investors, who could also benefit from lender competition and enjoy cheaper funding when purchasing their next buy-to-let property.

The big test will be just how robustly they run the rule over prospective tenants, to ensure they don’t end up with costly void periods. It doesn’t matter how much you saved on your Stamp Duty bill or mortgage, if you end up with an empty rental property.

By John Fitzsimons

Source: Love Money

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Criteria searches soar as property market gets back to business in June

Residential mortgage searches increased by 79% in June as brokers scoured the market for deals for furloughed workers and for products with temporary maximum LTV restrictions.

That’s according to the latest criteria activity tracker from Knowledge Bank which has provided an insight into borrower behaviour in the first full month after physical valuations and viewings resumed.

Overall, brokers’ searches were up to 68% in June as the market responded to eased restrictions following the Covid-19 lockdown.

But the residential market showed even greater pick up of searches, with a 79% increase – reflecting the demand in the market.

The terms brokers were searching for continued to follow the same pattern which has been dominant since the pandemic began.

Indeed, the main residential searches, Knowledge Bank revealed, included ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’.

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What’s more, the ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products.

“Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.

“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve.”

Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.

Top five searches performed by brokers on Knowledge Bank – June 2020 (source: Knowledge Bank)

RESIDENTIALBUY-TO-LETSECOND CHARGESEQUITY RELEASE
1COVID-19: Temporary Maximum LTV RestrictionsLending to Limited CompaniesMaximum LTV / Loan To ValueEarly Repayment Charges
2Help To Buy Equity Loan SchemeFirst-time landlordCOVID-19 : Temporary Maximum LTV RestrictionsProperty with an Annex / Outbuildings / Land / Acreage
3COVID-19: Furloughed WorkersRequirement to be a HomeownerCapital Raising for Debt ConsolidationTimber Framed Construction
4Self-employed – one year’s accountsMinimum Income – Interest-Only / Part-and-Part Single ApplicantSelf-employed – one year’s accountsFlexible Payments / Ad hoc
5Maximum Age at End of TermCOVID-19: Temporary Maximum LTV RestrictionsIncome Multiple used for Affordability AssessmentMinimum Property Value
SELF-BUILDBRIDGINGCOMMERCIAL
1Maximum LTV / Loan to ValueRegulated BridgingMaximum LTV for Commercial Investment
2Maximum LTC – Loan to CostMaximum LTVSemi-Commercial Properties
3Lend against LandCOVID-19: Temporary Maximum LTV RestrictionsMinimum Loan Amount
4Maximum Loan AmountMinimum LoanCommercial Owner Occupier
5 Barn ConversionMinimum Property ValueMixed-Use Properties / Part Commercial

By Kate Saines

Source: Mortgage Finance Gazette

Scottish commercial property
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Commercial property market shows signs of life

UK commercial investment activity rose 42 percent in June compared to May, up from £755m to £1.3bn, taking total volumes for H1 2020 to £15.6bn, according to the latest market update from Savills. With the all-sector prime commercial property yield remaining stable at 5.21 percent in June, Savills says that together this may signal some stability is now returning to the UK investment market.

According to the real estate advisor, another notable change is that there are signs that yields may harden on prime West End offices, industrial multi-let and distribution assets. This reflects a very typical turning point for the commercial property market, says Savills, with investor interest returning first to those sectors that are perceived as core.

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James Gulliford, joint head of UK investment at Savills, comments: “There’s some evidence that we may have passed the nadir of this cycle in terms of investment volumes in May. This of course does not change the overall story of Q2 2020 being the weakest quarter on record for UK investment activity, and we estimate that volumes in the first half of 2020 were 43 percent below the five year average, but the hope is now that a corner has been turned.”

Mat Oakley, head of UK and European commercial research at Savills, adds: “The shape of the UK economic recovery is increasingly looking ‘tick-shaped’, starting with strong quarter-on-quarter growth in Q3 2020, though with 2021 not showing a recovery of the magnitude of the fall seen in 2020. While a revival in GDP growth is imminent, unemployment is not expected to return to 2019 levels at any point in the next five years. Although this isn’t essential, as many businesses were reporting recruitment difficulties due to such a tight labour market, high levels of unemployment will drag on consumer sentiment, boost precautionary saving and diminish retail spending.”

By Neil Franklin

Source: Workplace Insight

Mortgage brokers stamp duty Welsh housing market UK properties Yorkshire property sector buy-to-let mortgages October property
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Stamp duty freeze leads to ‘busiest’ week for mortgage searches

The week following the stamp duty holiday announcement has been the busiest for mortgage searches all year, according to mortgage technology provider Twenty7Tec.

Yesterday (Tuesday 14 July) experienced the greatest number of searches in the year to date, highlighting how much of an impact the chancellor’s announcement to cut stamp duty has made on the market.

There was also a flurry of activity in the buy-to-let sector which had not been experienced since February. Twenty7Tec reported this week has been the busiest for buy-to-let searches, according to its platform’s data.

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Today marks exactly one week since chancellor Rishi Sunak announced he was freezing stamp duty on properties worth up to £500,000 until March 2021.

Phil Bailey, Sales Director at Twenty7Tec said: “Since the stamp duty announcement last week, the market has really hit its stride.

“The last seven days have been the busiest for mortgage searches all year and we’re handling increased volumes of searches each day. Yesterday was the busiest day of the year, closely followed by the day before. Yesterday’s residential mortgage searches were triple the volumes in lockdown.

“Buy-to-let has definitely pushed on and the past few days have been the busiest since the first couple of weeks in February.

“Our sense is that buy-to-let will increase further as the products are there for that part of the market and the risk profile of buy-to-let is still attractive to lenders.”

By Kate Saines

Source: Mortgage Finance Gazette

Autumn statement
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FLA sets out recovery plan for UK economy

The Finance & Leasing Association (FLA) has published its recovery plan for the economy, Shaping the UK’s future prosperity: Recognising the opportunities for recovery.

The FLA has recommended a phased approach of short, medium and long-term measures that will position the UK to meet the government’s key objectives of achieving a net-zero, low carbon economy by 2050, enhancing economic productivity, and creating diverse and inclusive prosperity by levelling up the regional economies of the UK.

The short-term imperative is to rebuild consumer and business confidence, which begins with ensuring that lenders are in a position to lend during the recovery.

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In recognition of the fact that the assistance provided to customers in the form of payment deferrals means that the availability of new lending to help fund the recovery will be curtailed, especially in the case of non-bank lenders, the FLA has proposed several measures:

A Treasury Forbearance Liquidity Support Scheme to offer funding to lenders to deliver the liquidity they need to help to their customers.

An extension of the government guarantees for business and consumer lending until Spring 2021.

Reform of the British Business Investment (BBI) Direct Lending Scheme so that it works for a wider range of specialist funders of small the medium enterprises (SMEs) and consumers who do not have access to Bank of England support.

In the medium-term, the FLA proposed the reintroduction of the Annual Investment Allowance’s previous £1m limit, with no taper, to support businesses growth across the UK; the acquisition of new equipment would also enhance productivity and accelerate the move to more energy-efficient assets.

The FLA recommended that the long-term priority be to improve the regulatory regime so that it can provide protection in times of crisis, rather than act as an obstacle.

The FLA therefore proposed an overhaul of consumer regulation – specifically the Consumer Credit Act – to make it fit for purpose in the digital age, and to allow for the innovation of new finance products.

Stephen Haddrill, director general of the FLA, said: “The Chancellor’s Economic Statement set out a range of short-term stimuli, but these measures need to be consolidated with substantive plans for long-term growth – and all of this must start with ensuring that the UK’s providers of business and consumer finance are in a position to lend.

“This is not the case at the moment and without their input, the recovery on high streets and industrial estates will stall.

“We have set out a credible plan that puts the UK on a path to a more sustainable and prosperous future.

This is the point when businesses will be planning their next move in terms of investing in new equipment to make them more agile – the government needs to ensure that funders are in a position to support these ambitions, and that consumer finance lenders are in a position to support the demand for goods.”

By Jessica Bird

Source: Mortgage Introducer

housing market
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BTL brokers showing increased confidence

Four out of 10 BTL brokers expect to write more business in the next 12 months, Paragon Bank’s Financial Adviser Confidence Tracker (FACT) Index has revealed.

The survey of more than 200 intermediaries showed that 41% of advisors said they expect more buy-to-let business, a slight dip on the 43% recorded in the first quarter of 2020, but up on the 38% from the final quarter of last year.

Just over a quarter (28%) of intermediaries expect buy-to-let mortgage levels to remain stable.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “Despite the buffeting that coronavirus has caused to the mortgage market, and housing sector more broadly, there is clearly still strong and stable demand for buy-to-let via intermediaries, which is reflected in the results of this survey.

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“We have seen a solid rebound in buy-to-let business since the housing market reopened in mid-May and landlords have been unlocking capital to invest and grow their portfolios further. We expect to see increased demand for rented property underpinning growth in the coming months as people delay house purchase or cannot obtain a mortgage with the removal of higher loan to value products in the residential market.”

Of those intermediaries forecasting an increase in buy-to-let business, confidence was stronger amongst directly authorised firms (46%) than appointed representatives (36%). Confidence was also firmer in sole adviser organisations (47%) than firms with between two to three advisers (34%) and four or more advisers (37%).

Richard added: “Coronavirus has had a clear and damaging impact on the economy and the UK as a whole, but the long-term fundamentals underpinning demand for buy-to-let remain unchanged. The UK has a growing population with increasing numbers of households and the private rented sector will provide a good quality home for many of them.”

Source: Property118

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Surveyors expect government measures to boost housing market

Expectations for activity in the Scottish housing market are improving as more new buyer enquiries are reported by surveyors following lockdown closures.

According to the June 2020 RICS Residential Market Survey, a net balance of +17% of survey respondents in Scotland saw a rise in new buyer enquiries in the month, which is in stark contrast to the readings of -82% and –81% posted in April and May respectively.

Most other indicators also headed in the right direction in the latest survey, with net balances for newly agreed sales and new instructions to sell moving less negative than they were in the May and April reports.

There were also notable improvements in near-term expectations. A net balance of +23% of Scottish respondents said that they expect sales activity to increase in the three months ahead. Meanwhile, the net balance for three-month price expectations moved from -58% in May to -7% in June.

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Despite the notable improvements though, the Scottish housing market appears to be lagging the UK as a whole, given the earlier easing of restrictions in England. At a UK-level, the number of people looking to purchase a home rebounded in June, with a net balance of +61% of UK survey respondents seeing a rise in new buyer enquiries over the month.

The number of new properties being listed for sale in the UK also rose in June, with a net balance of +42% of survey participants noting an increase rather than decrease.

As agents continue to deal with a backlog of sales held up by lockdown, the number of newly agreed sales in the UK moved into positive territory for the first time since February, with a net balance of +43% citing an increase in completed transactions.

Thomas Baird, MRICS of Select Surveyors in Glasgow, said: “Since return, like most other surveyors, we have a significant backlog of instructions to work through. This of course may lead to an artificially high expectation of the current market conditions.”

Simon Rubinsohn, RICS chief economist, said: “Key activity indicators in the RICS survey suggest that the market is enjoying a short term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions.

“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture. Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.

“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”

Tamara Hooper, RICS Policy Manager, added: “Government must ensure they keep the public at the heart of their interventions when rebuilding post-COVID. An ask RICS has called for since March is the temporary removal of stamp duty for all home movers, not just first time buyers, and this specific change will demonstrate government’s confidence in the residential sector as well as encouraging the economy and the country to start moving again.

“In keeping with this, all tenures must be addressed, and we look forward to more detail on the retrofitting announcements from government with regards to the PRS. Tenants’ needs are just as important as home owners, including their financial needs for decreased bills from more energy efficient housing if rents are set to rise. The need to feel safe, warm and secure is more important than ever.”

Source: Scottish Construction Now

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Buyers return to UK housing market as lockdown lifts

Buyers returned to the UK’s housing market last month as it reopened after months of standstill during the coronavirus lockdown, however activity remained low, the latest research showed.

The latest survey by the Royal Institution of Chartered Surveyors found that a net balance of 61 per cent of its members reported a rise in new buyer enquiries in June following a result of minus 94 per cent the previous month.

The number of new properties being listed for sale also jumped during the month, with a net balance of 42 per cent of Rics members reporting an increase rather than a decrease.

Despite the increase in supply, the average number of properties on estate agents’ books remained close to all-time lows, with just 39 on average per branch.

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The results of the survey were published the day after the chancellor announced a year-long stamp duty holiday, raising the payment threshold from £125,000 to £500,000, in a bid to boost activity in the market.

Simon Rubinsohn, Rics chief economist, said: “Key activity indicators in the Rics survey suggest that the market is enjoying a short term bounce following ending of the lockdown, with sharp spikes in the metrics tracking both buyer enquiries and new instructions.

“However, there are worrying signs that this rebound may quickly run out of steam against the backdrop of a tightening in lending criteria by mortgage providers, and the uncertain macro environment particularly with regard to the employment picture.

“Respondents to the survey highlight both of these issues in explaining the broadly flat picture regarding sales expectation beyond the immediate uplift.

“Meanwhile, the issues around the sales market appear to be shifting sentiment in the lettings market with, somewhat ominously given the prevailing economic climate, rent expectations beginning to edge upwards once again.”

By Jessica Clark

Source: City AM

BTL mortgage availability Almost half One in 10 North West Stamp Duty holiday Buy-to-let 5-year fixed BTL mortgages buy to let investment areas UK property investment locations buy-to-let lenders BTL properties buy-to-let landlords Number of UK buy-to-let landlords buy-to-let limited companies
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Buy-to-let benefits from increased choice and competitive rates

Landlords are benefiting from an increased choice of buy-to-let products as more mortgages return to the market following the dip caused by the pandemic.

Data from Moneyfacts.co.uk showed, having plunged to a total of 1,455 products in May, the buy-to-let mortgage market has received a boost of 283 more products as lenders increase their ranges.

The two-year fixed rate market now has 134 more products and there are an additional 164 options in the five-year fixed rate sector than compared to the start of May.

However, things are still not as buoyant as they were before the Covid-19 crisis began in March, when there were 2,897 buy-to-let mortgages available.

Eleanor Williams, finance expert at Moneyfacts, said its latest research revealed the buy-to-let sector had adapted well to conditions caused by the pandemic and there were indications landlords may have cause for positivity.

“The latest Rental Index research from lettings platform Goodlord indicates that in June, new tenancy applications remained at 90% above 2019 levels,” Williams added.

“Subsequently, they have recorded increases in rental costs and also void periods reducing, as tenant demand for new properties remains strong now that the market has reopened.

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“This news should be a boost to landlords, who after a difficult few months can see that choice is beginning to return to their sector.”

Vote of confidence

Kevin Roberts, director, Legal & General Mortgage Club said the news more choice was returning to the market was a vote of confidence in the buy-to-let sector and a sure sign that it remained open for business.

He added: “At Legal & General Mortgage Club, our data even shows that despite the pandemic landlords still have a positive view of the buy-to-let sector.

“Nearly three in every five landlords (57%) told us that the crisis has had no impact on their plans to stay in the market and more than one in ten (16%) even have plans to buy more property over the coming months.”

Competitive rates

Moneyfacts data also showed rates were currently competitive, especially when compared to January.

The average rate for two-year fixed rate mortgages on 1 July was 0.21% less than at the start of the year, while the five-year fixed rate has fallen by 0.22% over the same time period.

Buy-to-let mortgage market analysis
Product numbersJan-20Mar-20Apr-20May-20Jul-20
BTL product count – fixed and variable rates2,5832,8971,8871,4551,738
Two-year fixed rates BTL – all LTVs823914610491625
Two-year fixed rates BTL – 80% LTV11914157931
Two-year fixed rates BTL – 60% LTV126124129148144
Five-year fixed rates BTL – all LTVs8791,000695480644
Five-year fixed rates BTL – 80% LTV11015069619
Five-year fixed rates BTL – 60% LTV128133140155146
Average RatesJan-20Mar-20Apr-20May-20Jul-20
BTL two-year fixed – all LTVs2.82%2.77%2.71%2.51%2.61%
 BTL two-year fixed – 80% LTV3.64%3.56%3.80%3.61%3.18%
 BTL two-year fixed – 60% LTV1.92%1.89%2.24%2.39%2.28%
BTL five-year fixed – all LTVs3.19%3.24%3.16%2.94%2.97%
 BTL five-year fixed – 80% LTV4.03%3.98%4.18%4.32%3.82%
 BTL five-year fixed – 60% LTV2.32%2.31%2.62%2.76%2.65%
Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk

By Kate Saines

Source: Mortgage Finance Gazette

West Midlands house prices UK house prices
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UK house prices fall in June but mortgage enquiries surge – Halifax

UK house prices fell for the fourth month in a row in June as the Covid-19 crisis continued to take its toll, but new mortgage enquiries surged, according to a survey released by Halifax on Tuesday.

House prices dipped 0.1% on the month in June as the property market continued to emerge from lockdown, following a 0.2% decline in May. This is the first time since 2010 – when the housing market was still struggling to recover from the global financial crisis – that prices have fallen for four consecutive months.

On the year, house prices rose 2.5% in June, down from a 2.6% increase the month before. On a quarterly basis, prices fell 0.9% compared to a 0.5% drop in May.

Halifax managing director Russell Galley said: “Activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK. New mortgage enquiries were up by 100% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months.

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“However, whilst encouraging, it remains too early to say if this level of activity will be sustained.”

Galley said the near-term outlook points to a continuation of the recent modest downward trend in prices through the third quarter, with sentiment indicators, based on surveys of both agents and households, currently at or around multi-year lows.

“Of course, come the autumn, the macroeconomic landscape in the UK should be clearer and the scale of the impact of the pandemic on the labour market more apparent. We do expect greater downward pressure on prices in the medium-term, the extent of which will depend on the success of government support measures and the speed at which the economy can recover.”

Chancellor Rishi Sunak is expected to announce a stamp duty holiday on Wednesday, which would temporarily lift the threshold at which people start paying it from £125,000 to £500,000.

Hansen Lu, property economist at Capital Economics, said: “Looking further ahead, fresh virus outbreaks or the end of the furlough scheme still present risks to the housing market recovery. But there are now some upside risks too – from a possible stamp duty cut, or from post-lockdown buyer behaviour, which hints at a quicker than expected recovery. On balance, we expect UK house prices to fall by around 4% this year.”

By Michele Maatouk

Source: ShareCast