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Government urged to provide greater support for BTL landlords during this time

More money needs to be made available to support buy-to-let landlords during the existing Covid-19 pandemic, according to safeagent.

The letting agent accreditation scheme for lettings and management agents operating in the private rented sector has expressed fresh concerns that the challenges in the private rented sector are only going to increase as the pandemic continues to put a strain on the economy.

Safeagent is calling on the government to do more to help landlords with tenants who are facing financial hardship and unable to pay the rent, especially in light of the fact that repossession cases on the grounds of rent arrears will not be treated as a priority until tenants have built over a year’s worth of rent debts.

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Added to this is the six months’ notice that landlords now have to give. Where the case is disputed, even before the pandemic, courts were taking an average of almost six months to deal with cases, with the backlog now likely to be longer.

The Financial Conduct Authority (FCA) has issues its updated coronavirus guidance ‘Mortgages and Coronavirus: Payment Deferral Guidance’, stating that firms should allow customers to extend ongoing payment deferrals after 31 March 2021, to cover payments up to and including July 2021, but safeagent argues that a mortgage deferral alone is not the answer for buy-to-let landlords.

Isobel Thomson, safeagent chief executive, said: “It’s positive to see the FCA supporting borrowers impacted by the pandemic with this latest guidance which advises lenders should offer up to six months of mortgage payment deferrals and guarantee it won’t affect a landlord’s credit rating.

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“However, while buy-to-let landlords impacted by tenants’ rent arrears clearly need support, we question if deferral of mortgage payments is the answer, or if it pushes the problem further down the track. While lenders will be adhering to the guidance which provides up to six months deferral, we know it may take badly affected tenants much longer to get back on their feet, meaning landlords could be building up debt and struggling to meet mortgage payments for many months to come.

“We know the good work that agents and landlords are doing to sustain tenancies where tenants are in financial difficulties. But it’s vital that if we are going to keep landlords in the PRS, their financial viability is also maintained, ensuring no unnecessary reductions in the supply of rented housing and helping prevent homelessness.

“We believe there is more to be done. Our recent proposals for a sustainable post COVID PRS suggested that those landlords who build up debt because they are unable to pay entirely or are only partially paying what is due on their mortgage due to a shortfall in their tenant’s Universal Credit, should be eligible for a grant from the Government, similar to the coronavirus small business grant. This would recompense them for the shortfall on their mortgage and any additional interest over the period. This is particularly important for landlords with a small number of buy to let properties, who rely heavily on this income.

“safeagent is also calling on lenders to commit to no exclusions terms in new or existing buy-to-let products that prevent lettings to tenants who are claiming benefits. This is important to ensure tenants on benefits can continue to access the PRS now and in the future.”

By MARC DA SILVA

Source: Property Industry Eye

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Buy-to-let market proving more “robust” than residential

The Covid-19 pandemic has pushed landlords to broaden the types of property and locations they are looking to invest in, according to analysis from Leeds Building Society.

The mutual noted that industry data suggested that the volume of applications for buy-to-let mortgages held up better than for residential loans between March and the middle of July.

Matt Bartle, director of products at Leeds Building Society, said: “In terms of the volume of applications over this period, the buy-to-let market fell less steeply and recovered more quickly than residential.

“We’ve also seen increased purchase activity; suggesting landlords are taking advantage of a combination of factors, including stamp duty relief, low interest rates and tenant demand.”

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The society’s own research with landlords, as part of its ‘lockdown learnings’ series, supports this, with 79% of landlords who were considering purchasing a buy-to-let property before the pandemic saying their plans had changed. This doesn’t mean they are withdrawing though, with half saying they still want to buy but are taking a fresh look at their plans.

Of those surveyed, almost a third (29%) are reconsidering the type of property they want to invest in, while the same proportion are also looking at new locations. Around one in five (20%) of landlords are reassessing precisely how much they are willing to invest, with almost a quarter (22%) rethinking their timings.

However, half of the landlords surveyed saying they hadn’t been planning to buy before lockdown, and still have no plans to do so.

Bartle added: “Bearing in mind the changes that coronavirus has brought to all our lives it’s not surprising to see landlords reviewing future plans for their property portfolios as tenants’ needs and priorities are also affected by the pandemic.

“The recent Government announcement on stamp duty appears to be spurring prospective purchasers into action, including buy-to-let landlords.”

By John Fitzsimons

Source: Mortgage Finance Gazette

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BTL landlords should prepare to take advantage of Green Homes grants

Buy to Let landlords in England should be assessing the energy efficiency works that their properties require in advance of the opening of online applications for the Green Homes Grant in September, say tax and advisory firm, Blick Rothenberg.

Heather Powell, Property partner at the firm said:

“The applications for the grant will open in just over a months’ time so Buy to Let landlords need to assess their properties now and get their applications in as fast as possible because thousands of people will apply.

“It is also likely that the Government will tighten energy efficiency regulations still further in 2021, making these works essential for many rental properties.”

“The grant scheme will fund £2 of every £3 spent by a landlord, up to a maximum of £5,000, to improve the energy efficiency of their properties.

“Works can include wall and loft insulation, draught proofing and double glazing, all works that should improve the Energy Performance Rating (“EPC”) of a property.

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“Landlords cannot let properties with an energy performance rating of F or G (unless they qualify for an exemption) so they should be planning to undertake works that can be done with the grant funding that is being made available. Their tenants will also benefit as they will get a reduction in their annual fuel bills.”

“The 27 million homes in the UK, which generate up to 25% of the greenhouse gas emissions and energy demand in the UK, are some of the least heat efficient homes in Europe.

“The Government hopes the grants will improve these statistics and help the UK to meet the commitment to have net zero greenhouse gas emissions by 2050.

“Online applications by landlords will be passed to “registered local tradesmen” to do the necessary works – which the Chancellor expects to help generate a further 100,000 jobs in the “Green Sector.”

“There are c2.2m landlords in England, with an average of 1.8 properties each – a total of 3.96m buy to let properties.

“If landlords applied for grants to improve the energy efficiency of just 25% of their properties, and got an average grant of £3,300 for insulation, the Green Homes Grant funding would be £3.27bn, and 990,000 homes would have been improved.

“The Chancellor announced £2bn to fund grants in 2020/21, and stated he hopes 600,000 homes to be improved, but he made it clear that his funding was based on estimates of take up of the funding, and indicated it is not capped, which is good news for BTL landlords.”

“The full details of the Green Homes Grants has not been published, but given the Grant funding announced was only for one year it is important that Landlords start reviewing their housing, assessing what work should be done that is eligible for the grant, so that that they can apply for the funding.

“This is one of the few measures announced by the Government in the last three months that assists landlords, and they should make sure that they take advantage of the funding, and at the same time help the UK achieve net zero greenhouse gas emissions by 2050.”

Source: Property Industry Eye

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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