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Leeds doubles its buy-to-let cashback incentives to £1,000

Leeds Building Society has increased the cashback incentives available on selected 2 and 5-year buy-to-let cashback incentives from £500 to £1,000.

Highlights of the updated cashback range, which include a free standard valuation, include two buy-to-let mortgages at 60% loan-to-value, both with no fee. There’s a 2-year product at 2.69% and a 5-year at 2.74%.

Matt Bartle, Leeds Building Society’s director of products, said: “We’ve increased the cashback incentives available on some of our buy-to-let products while maintaining our product rates.

“Of course, landlords can choose how to spend the £1,000 cashback available. Cash freed up at the start of the mortgage could go towards redecorating costs and fees associated with finding tenants.

“Increasing cashback available on our buy-to-let range is a further example of how we’ve used our expertise and experience in the market to understand and respond to the needs of customers.”

The launch of the products follows the introduction of the ‘Easy Start’buy-to-let mortgage, with an interest rate of 0% for the first three months.

The society has reduced the rate of its 5-year Easy Start mortgage, which is available up to 70% LTV, by 0.21% to 3.03%, with a 0% interest rate for the first three months.

Source: Mortgage Introducer

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Fewer people purchasing buy-to-lets

Significantly fewer people acquired buy-to-let properties in Q3 2018, HMRC figures have showed.

Additional properties, for which stamp duty land tax is payable at the standard rate plus 3%, have seen a fall of 11% (7,400) compared to the same period in 2017.

And Hamptons showed that the number of homes bought by landlords had dropped by a third over the last three years with a 13% decrease last year alone.

Michael Lynn, chief executive at Relendex, said: “Property remains an investable asset class, however there is a trend borne out by these figures that people are moving away from investment in buy-to-let.

“There are several reasons for this including the higher rate of stamp duty land tax, the lack of access to funds and the uncertainty caused by Brexit.

“These factors all leave investors looking for new and innovative ways to maximise their savings.  Peer-to-Peer allows lenders to invest in specific property projects and access their money when they want it through an active resale market.

“What’s more, lenders can get high returns on their money, on average 8%, whilst having the security of knowing that they have invested in a stable asset. It is important that Peer-to-Peer investment properties are treated with the same care and attention that would be put into a buy-to-let.

“Loans should be secured on the properties themselves and have a loan to value ratio which safeguards the investment and that money will be paid back.

“If this is done correctly Peer-to-Peer allows lenders to get the returns associated with buy-to-let without having the hassle of managing the property themselves.”

The higher rate stamp duty land tax was introduced in 2016 for those purchasing second properties which includes buy-to lets.

Between Q2 and Q3 2018 additional dwellings transactions increased by 7% to 58,400. Compared to last year, it has fallen by 11% (7,400).

For the last four quarters additional dwellings have made up about 24% of all liable transactions and have generally increased as a proportion of residential transactions.

Source: Mortgage Introducer

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The Nottingham adds buy-to-let flats after broker demand

The Nottingham has responded to feedback from brokers who are looking for mortgages on buy-to-let flats.

The building society is offering mortgages with up to 65 per cent loan to value where the maximum loan is £500,000 and the term runs to a maximum of 35 years.

Properties in blocks of flats where there are no more than 10 floors, and with a valuation of at least £100,000, can be considered. But apartments above the fourth floor must have lift access.

Individual properties, which must have a footprint of at least 35 square metres, need to be at least two years old and previously occupied. The flats or studios must be leasehold with a minimum of 85 years left on the lease.

Nikki Warren-Dean, head of intermediary sales for The Nottingham, said: “Our business development managers across the country relayed that brokers were increasingly asking for us to consider lending against buy-to-let flats.

“That feedback, twinned with the strategic pillar of The Nottingham to grow and reward our membership, led to the decision to add buy-to-let flats to our criteria.”

Ms Warren-Dean added the new portfolio additions may appeal to landlords and mortgage advisers looking for a rental calculation of 160 per cent at 4.25 per cent.

The Nottingham, which offers a wide range of estate agent services including mortgages and savings, has 67 branches across 11 counties as well as an online estate agent presence.

Jorden Abbs, director of operations at specialist UK broker Commercial Trust, said: “We welcome any steps made by lenders to widen their criteria. Increasing choice can only be advantageous to landlords.

“I look forward to seeing how The Nottingham’s offering for buy to let flats evolves as they become more confident in this area of lending.”

Aaron Strutt, communications director at Trinity Financial, said: “We’ve not been aware of a particular issue with buy-to-let mortgages for flats. In many parts of the country this type of property is particularly popular with borrowers.

“Perhaps The Nottingham’s entrance to the market is in response to demand for mortgages on high rise flats, which some lenders may be less willing to offer. I could see that being an issue on occasion.”

Source: FT Adviser

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Mortgage lending for buy-to-let home buyers falls by nearly a fifth year-on-year

Mortgage lending for buy-to-let house purchases fell by around a fifth annually in September as the market remains subdued, a trade association has reported.

Lending to first-time buyers and home movers was also down compared with a year earlier – while re-mortgaging plateaued, UK Finance said.

Some 5,200 new buy-to-let home purchase mortgages were handed out in September, marking an 18.8% decrease on the same month a year earlier.

There were 29,400 new first-time buyer mortgages completed in September, 4.5% fewer than in the same month a year earlier.

And a further 29,400 new home mover mortgages were completed – 8.4% down compared with September 2017.

Meanwhile, 35,600 new home owner re-mortgages were completed in September, edging down 0.6% on the same month a year earlier.

And there were 12,300 new buy-to-let remortgages completed, slightly down by 0.8% on September 2018.

Buy-to-let investors have faced various tax changes in recent years, including a stamp duty hike on the purchase of second homes.

Jackie Bennett, director of mortgages at UK Finance, said re-mortgaging for both residential and buy-to-let properties has levelled out after a period of strong growth.

She said: “This reflects the number of fixed-rate loans reaching maturity.”

Ms Bennett continued: “Buy-to-let home purchases have eased again in September, suggesting lending in this market remains subdued as a result of recent tax, regulatory and legislative changes.

“Demand for house purchases for both first-time buyers and home movers has also lessened, as affordability constraints continue to bear down on consumer demand for new loans particularly in London and the South East.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “Buy-to-let investors are still not returning to the market or buying for the first time in sufficient quantities to provide support at the bottom end of the market and first-time buyers are not taking up the slack.

“The result is a bit of a standoff until clearer political and economic direction becomes apparent.”

Source: Yahoo Finance UK

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Andrew Turner: Buy-to-let mortgage rate rises expected

Buy-to-let mortgage rates are expected to rise so landlords should take advantage of the current low rate deals while they are still available, Andrew Turner, chief executive, at specialist buy-to let broker Commercial Trust, has argued.

He said at the moment there are some historically low rates for both tracker and fixed rate buy-to-let mortgage products.

Turner said: “This has been the case for some time and is reflective of a hugely competitive market place, where lenders are trying to outdo one another with enticing mortgage deals, encompassing low rates, low fees, or incentives such as cash-back or free valuations.

“With over 2,000 products in the buy-to-let marketplace it is clear that there is a myriad of choice for investors. This volume of choice brings with it complexity, where the lowest rate does not necessarily equate to the cheapest overall deal.”

The Bank of England’s Monetary Policy Committee (MPC) has implemented two base rate rises in the last 12 months, yet the added cost to lenders has not shown itself in any significant way in the deals they are offering.

Turner added: “In my view this will have to change. The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and in any event, there is not too much scope for reduction.

“My view is that the overall picture for the next decade is a gradual upward trend in rates.”

UK Finance buy-to-let data shows strength in remortgaging, whilst the changes in buy-to-let have tempered purchases somewhat.

In November, its statistics indicated that buy-to let remortgaging activity in 2018 would exceed its forecasts by approximately £3bn, while a similar figure would represent a shortfall in its forecasts for buy-to-let purchase business in the year.

Turner said: “It can be no coincidence that there has been a surge in landlord activity around buy-to-let remortgages, with such uncertainty affecting their businesses.

“For this reason, if you are concerned that rates are set to trend upwards, fixing now at a competitive low rate and for a period suited to you, could bring you a great deal of security through turbulent times.”

Source: Mortgage Introducer

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Buy-to-let mortgage lending for house purchase falls way short of forecasts

The trade body for the mortgage sector has warned that buy-to-let purchase lending is set to come in at below its forecasts for 2018.

UK Finance had predicted £12bn of buy-to-let lending for house purchase this year, but Jackie Bennett, director of mortgages, has warned this is heading for around £9bn.

Speaking at UK Finance’s annual mortgage conference, she said: “Our forecast for 2018 was for around £12bn for buy-to-let purchase. The market looks like it will considerably undershoot this, coming in more around £9bn.

“This is undoubtedly the impact of the various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector.

“With the 2018 tax bills dropping through landlords’ letterboxes, or more likely in their inboxes these days, we are yet to see what further impact this may have on the market.”

She was more positive about the overall mortgage market, predicting gross lending would hit a decade-high of £270bn this year.

Bennett also expressed caution about the growth of online mortgage brokers.

She said: “The Financial Conduct Authority  wants it to be easier for customers to understand the products they may be eligible for earlier in the process. This is a laudable aim.

“However, as customers have ever more complex circumstances – multiple incomes, self-employment, contracting to name but a few – it is more difficult for any ‘tool’ to narrow down the products available for a particular customer. Based on our conversations with lenders it would take several hundred questions to ensure that all bases were covered.

“That’s not to say that technology developments won’t help more standard customers – they will do and they are – but I think we have to be realistic about what proportion of the market can be served in this way.”

Source: Property Industry Eye

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UK Finance: Buy-to-let purchase activity well below expectations

Buy-to-let purchase lending will likely reach just £9bn this year – £3bn short of UK Finance’s £12bn forecast at the start of the year.

Jackie Bennett, director of mortgages at UK Finance, told delegates of the stark news at the trade body’s annual mortgage conference this morning.

She said: “Buy-to-let has not fared so well this year.

“Our forecast for 2018 was for around £12bn of buy-to-let purchase – the market looks like it will considerably undershoot this, coming in at more around £9bn.

“This is undoubtedly the impact of various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector.

“And with the 2018 tax bills dropping through landlords’ letterboxes, or more likely in their inboxes these days, we are yet to see what further impact this may have on the market.”

She wasn’t all doom and gloom however.

Buy-to-let remortgaging has gone the other way, with lending likely to reach £27bn, up from the £24bn forecast at the start of the year.

Bennett also brought up the subject of product transfers in buy-to-let, as this data isn’t currently available, unlike with residential.

She said “it wouldn’t surprise me” if buy-to-let product transfers are “as strong as the residential market”.

Later in the day Yolande Barnes, professor of real estate, Bartlett Real Estate Institute, UCL, did little to quell fears about buy-to-let.

Indeed she said the market will likely be moderately down again on current levels come 2023.

Source: Mortgage Introducer

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Buy-to-let lenders criticised for tenant discrimination

The Government is facing calls to end the “discrimination” against benefit claimants by buy-to-let mortgage providers.

The Residential Landlords Association (RLA) has urged action against the “unjust practices” after its research found 66 per cent of lenders representing 90 per cent of the buy-to-let market did not allow properties to be rented to tenants in receipt of housing benefit.

The research was carried out last year by the association’s mortgage consultants, 3mc, and found TSB, Virgin and NatWest were among the lenders which imposed the renting restrictions.

David Smith, policy director at the RLA, said: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.

“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”

The RLA wrote to the Treasury minister responsible for banking, John Glen, calling for the Government to use its influence as a shareholder in certain banks to end the “discriminatory” practices.

The association also asked the Financial Conduct Authority and Bank of England to investigate the extent of the problem and prepare plans to end it, claiming the practices breach the FCA’s ‘Treating Customers Fairly’ agenda.

The letter also suggested the Equalities and Human Rights Commission carry out a review of whether the lenders’ practices breach equalities law.

The RLA’s calls came after news a buy-to-let borrower had her mortgage revoked when the lender discovered she rented to a benefit claimant.

Helena McAleer, a landlord from Northern Ireland, contacted her bank, NatWest, to discuss releasing equity from her property – but instead Ms McAleer claims the lender revoked her buy-to-let mortgage citing its policy prevented rentals to benefit claimants.

Ms McAleer said the bank instructed her to “seek an alternative tenant” but it is understood NatWest did not tell her to evict the tenant.

NatWest’s buy-to-let eligibility criteria reads: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

A NatWest spokesman said: “The bank has specific lending criteria and is not able to offer mortgages in certain circumstances, which are made clear on a customer’s terms and conditions.

“There are alternative providers who may be better suited for customers in these circumstances.”

Ms McAleer has launched a petition and online campaign page calling for measures to close these “loopholes”.

However, a UK Finance spokesperson said most lenders do not place restrictions on landlords letting to benefit claimants.

He said: “Any landlord wanting to let to tenants in receipt of benefits should be able to find a lender that will allow this.

“We always encourage individuals to speak to their lender if they have any concerns and research the market to find the best possible deal for their needs.”

Source: FT Adviser

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Five-Year Fixed Buy To Let Rates At Lowest Point

Five-year fixed buy to let rates have plummeted to a record low of 3.4 per cent, according to the latest data released by Moneyfacts.

Five-year fixed buy to let rates have declined from 3.55 per cent in April, with fierce competition in the sector as well as a tumultuous market stimulating the swift drop.

Finance expert at Moneyfacts, Charlotte Nelson, said: “The buy to let market has been on a rollercoaster ride in recent years, with not only two base rate rises to contend with, but multiple regulation and tax changes thrown into the mix. With all these elements, many would have assumed that rates would rise as a result. However, the opposite appears to be the case, particularly for the long-term fixed rates, with the average five-year fixed mortgage rate falling by 0.05 per cent in just one month to reach the lowest on record.’

Landlords have faced a turbulent market, and many are seeking a break. The number of buy to let property purchases were down 11.1 per cent year on year in July 2018. Providers are therefore aiming to encourage borrowers by revitalising their deals and absorbing some of the costs themselves in order to keep prices down for potential customers.

Nelson continued: ‘Competition in the buy to let market remains high. In the aftermath of August’s base rate rise, many buy to let borrowers will be looking to remortgage from their standard variable rates, with several of these landlords potentially considering longer-term options to act as a buffer against any future rises. It is this extra business that providers are wanting to attract. Not only would a five-year fixed mortgage protect landlords from future rate rises, but savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates. This could be yet another reason why competition is now homed in on the five-year fixed rate mortgage market.’

Source: Residential Landlord

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Buy-to-let mortgages through a Ltd company explained

Since April 2017, mortgage interest tax relief has reduced by 25% every tax year.

With the new changes in tax for the buy-to-let arena, investors have been looking for ways to alleviate the pressure and recoup some of the losses that they’d make under the legislation.

One such way is to put your buy-to-let mortgage through as a Ltd company.

Because Ltd companies are taxed differently; it’s thought that it’ll be more tax advantageous for them to switch to this sort of business structure.

However, if you’re looking to do this, you may have found that an inexperienced broker has turned you away.

Simply put, it’s because most high-street lenders won’t offer this sort of arrangement and stick to the standard black and white mortgages rather than getting involved with the more complex products.

And if you aren’t aware of the wider lender market, the chances are that you’ll end up borrowing money personally rather than as a Ltd company, meaning you miss out on a number of benefits.

Regardless of the size of your portfolio, there are massive tax benefits to buying your property through a Ltd company, especially if you’re on the higher tax bracket.

It can also be beneficial if you’re looking to buy property as a collective rather than two separate individuals, or if you’re wanting to distance yourself from personal liabilities if something were to go wrong.

Usually, specialist mortgage lenders are only likely to approve companies that deal solely in property, though there are a handful of lenders that will consider those trading in other areas.

BECOMING A SPECIAL PURPOSE VEHICLE…

If you’re registered as a Ltd company and only trade in rental property, then you’ll be known as a Special Purpose Vehicle (SPV) and will be classified by lenders according to the Standard Industry Classification (SIC) code that is given to your company by Companies House.

Examples of these SIC codes include:
68100 – Buying & sell own real estate
68201 – Renting & operating of housing association real estate
68209 – Other letting & operating of own or leased real estate
68320 – Management of real estate on a fee or contract basis

THE LENDERS…

Despite there being a number of main lenders that specialise in Ltd buy-to-lets, with high street lenders becoming tighter and stricter with their lending, a specialist broker will be who you need to see to access this sort of mortgage. Loan-to-values begin at 85% and vary in rates and types so the number of products, whilst limited, is still huge in depth.

WHAT IF YOU’RE ALREADY AND LTD COMPANY BUT AREN’T AN SPV?

There is still a small number of lenders who will look at buy-to-let lending to Ltd companies that trade in other areas. You will usually need a 25% deposit as a minimum, as the number of lenders is greatly restricted and they will require greater security to counteract the risk.

WHAT IF YOU’VE ONLY JUST REGISTERED AS AN LTD COMPANY?

If you’re a newly-created Ltd company, buy-to-let mortgages are still possible with a handful of lenders.

The Ltd company would need to be created when you apply and would benefit from being registered as an SPV to give you access to a wider panel of lenders and a greater chance of being approved.

As the mortgage is for a new company, there will be no trading history or track record of success that the lender can base their decision to lend on.

You will need at least two, or one if it’s a sole Ltd, directors that will have to be credit-checked to ensure that the Ltd company is creditworthy, as it won’t have a history of its own.

Because of this, lenders may ask for personal guarantees from the director(s), meaning that, if the mortgage isn’t paid, the director(s) become responsible.

The director(s)’ will also need to verify their income to establish that there is an underlying affordability.

Again, loan-to-values begin at 85% and the lenders will base your affordability on the rental yield, with your income needing to be at least 125% of your total mortgage payment.

WHAT’S THE CATCH?

Other than those that we’ve already discussed, there aren’t really any more.

There are a limited number of lenders, which means the criteria and product choice is restricted and leads to higher rates and it’s slightly more complicated to set up when compared to a standard buy-to-let.

But it can be hugely tax advantageous, and with limited liability, you won’t be forced to sell your personal assets if things don’t go to plan – unless you’ve given it as a guarantee.

HOW DO I START?

As you can see, this sort of mortgage can be a complicated process and requires a wider knowledge of the mortgage market.

It’s imperative that you speak to a whole-of-market mortgage adviser that has access to a wider panel of lenders to ensure that you have the best chance of getting your mortgage approved.

Source: Property Forum