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First Time BTL choice up and rates down

Competition within the first-time landlord buy-to-let mortgage market has increased significantly over the last five years seeing a rise in the number of products available and a reduction in rates, research from Moneyfacts.co.uk reveals.

Over the last five years, the number of products available for first-time landlords has increased from 645 in 2014 to 1,405 today. As well as this, rates for both two-year and five-year fixed mortgages have also fallen, with the average two-year fixed rate decreasing from 4.01% in 2014 to 2.97% today and the average five-year fixed rate falling from 4.68% to 3.52% during the same period.

Buy-to-let market analysis – First-time landlord products

Jul 2014 Jul 2017 Jul 2018 Jul 2019
Average two-year fixed rate 4.01% 2.85% 2.83% 2.97%
Average five-year fixed rate 4.68% 3.63% 3.94% 3.52%
Number of overall products 645 1,034 1,268 1,405

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Fixed rates for first-time landlords start below 1.50% on a two-year fixed deal, but the associated upfront product fees must be considered carefully. Borrowers must ensure they weigh-up the true cost of any deal before they commit; for example, choosing the lowest two-year rate in the market from Barclays Mortgage at 1.46% would cost £20,901 in repayments after the first two years, which includes its £1,795 product fee*. However, if they opted for a deal with a lower fee, such as the mortgage from Post Office Money® priced at 1.48% with a £1,495 product fee, they would have saved £255, as the repayment would be £20,646 over two years.

“First-time landlords concerned about potential rate rises may instead consider a five-year fixed deal, and thankfully rates have fallen in this sector since 2014. In fact, the average five-year fixed rate for first-time landlords has fallen by 1.16% since July 2014, down from 4.68% to 3.52% today.

“As the market is awash with economic uncertainties and regulatory adjustments, consumers would do well to first seek independent financial advice if they are considering a buy-to-let investment, not just to find the best product, but to also review these impacting influences.”

*Based on £200,000 repayment mortgage over a 25-year term.

Source: Property118

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Buy-to-let regulation blamed as landlord arrears increase

Buy-to-let mortgage arrears increased in the first quarter of 2019, prompting concerns that disgruntled tenants are stopping paying rent as a result of landlords giving them notice and exiting the sector.

The latest arrears and repossession data from UK Finance showed that while repossessions in the buy-to-let sector were down, there were 4,620 landlord mortgages in arrears of 2.5% or more of the outstanding balance in the first three months of 2019 – up 3% annually.

Within the total there were 1,200 buy-to-let mortgages with arrears representing 10% or more of the outstanding balance, up 12% on the previous year.

UK Finance has claimed this is not an increasing trend, but Mike Pilling, managing director of Spicerhaart Corporate Sales, warns that it could be a consequence of landlords leaving the buy-to-let sector amid tax and regulatory clampdowns.

He said: “As a result of recent regulatory changes, there are many private landlords looking to get out of the sector, and this rise could be down to the fact that some tenants who have been given notice are now not making their rent payments.”

The figures also show the level of home owner mortgage arrears fell 4%, but 1,380 properties were taken into possession in the first quarter of 2019, 10% higher than in the same quarter of the previous year.

UK Finance said this was due to a backlog of cases and is still well below the levels seen between 2009 and 2014.

By MARC SHOFFMAN

Source: Property Industry Eye

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Over half of UK landlords feel optimistic about current Buy to Let environment

Recent research from Your Move, one of the UK’s largest estate and letting agency networks, reveals that attitudes towards being a landlord in the current economic and political climate remain optimistic. Your Move’s Landlord Sentiment Survey 2018 found that over half of landlords (52%) feel positive about the market, whilst only 16% felt negative. An additional 30% felt indifferent about being a landlord in the current economic and political climate.

This highlights that landlords remain largely confident in their outlook, despite the influx of regulatory changes over the past few years and changes to the wear and tear allowance, additional Stamp Duty surcharges on second properties, and stricter portfolio lending introduced last year.

Your Move’s Landlord Sentiment Survey – which gathered opinion from nearly 1,100 landlords in June further reveals that the two most important considerations to landlords are ongoing maintenance and upkeep costs (83%) and the potential to make long-term profit (80%). In comparison, the least important factors are the tenant fee ban (43%) and the potential impact of Brexit (32%).

Despite these concerns, Your Move’s research reveals that most landlords are deciding to hold out and think about the long-term when it comes to their investment – nearly two thirds of landlords (64%) surveyed revealed they are unlikely to sell a property in the next year.

 Martyn Alderton, National Lettings Director at Your Move and Reeds Rains, says:

“Given the number of regulatory and tax changes in the Buy to Let market over the last few years, it wouldn’t be surprising if landlords felt some trepidation about the future. However, it’s great to see that the landlords we surveyed do, for the most part, remain positive about the future.

“Our research shows the majority of landlords are in it for the long term and that’s important for the well-being of the Private Rental Sector, providing much needed homes for those who cannot yet afford, or do not wish to purchase due to lifestyle choices.”

Source: London Loves Business