buy-to-let purchases -

Marketing November 22, 2021 No Comments

Stamp Duty holiday stimulated Buy-to-Let purchases in the South

London, the South East and the South West led the jump in buy-to-let house purchases during the Stamp Duty holiday, analysis by Paragon Bank has revealed.

Comparing the period when landlords received the full 3% Stamp Duty discount – July 2020 to June 2021 – with the last comparative period not impacted by Covid – July 2018 to June 2019 – showed the number of buy-to-let purchases increased by 52% in London.

Paragon’s analysis of industry data showed the South East recorded a 49% increase in purchase completions, whilst the South West saw buy-to-let purchases rise by 41%.

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At the other end of the scale, the West Midlands saw the smallest increase, with transactions rising by 12%, whilst Wales and Scotland, which had different housing stimulus measures, rose by 8% and 1% respectively.

The regions that saw the greatest increases were those where the Stamp Duty saving was greatest based on average house prices. Landlords could save up to £15,000 in Stamp Duty costs during the holiday period.

However, they were also the regions that saw the greatest falls in house purchases after the Stamp Duty 3% surcharge for buy-to-let and second homes was introduced in April 2016. Between 2015 – the last year before the surcharge was introduced – and 2019, buy-to-let purchases fell 55% in London and 51% in the South East, whilst the South West decreased 41%. Despite the Stamp Duty holiday, transactions during the July 2020 to June 2021 12-month period were still 30% below 2015 levels in London and 29% lower in the South East.

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Region	Stamp Duty holiday % increase vs July 18 – June 19	Proportion of BTL purchase (July 20 – June 21)	July 20 – June 21 % decrease vs 2015
Greater London	52%	15.5%	-30%
South East	49%	20%	-29%
South West	41%	8.4%	-17%
North East	29%	4.7%	6%
East Anglia	28%	3.8%	-15%
East Midlands	24%	8.2%	-4%
North West	17%	11.9%	-7%
Yorkshire & Humber	17%	8%	8%
West Midlands	12%	9.6%	2%
Wales	8%	3.7%	-5%
Scotland	1%	6%	-13%

Paragon Bank Managing Director of Mortgages Richard Rowntree said: “The impact of the Stamp Duty saving on regions where house prices are generally higher is clear to see, with transactions in London and the South increasing by approximately half. There were also strong increases in the South West, North East and East Anglia.

“Despite this, tenant demand still outweighs supply in large swathes of the country, which is leading to record levels of rental inflation, plus transactions still remain significantly below the level experienced before the Stamp Duty surcharge was introduced in 2016. As the Government pursues its Levelling Up agenda, it needs all facets of the housing market to be working effectively, including a sufficiently sized private rented sector to facilitate labour market mobility and provide good quality homes for those who cannot or don’t want to own a home”

Source: Property118

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Marketing November 22, 2019 No Comments

Property market rebounds as buy-to-let purchases slide

Mortgage lending grew by 4.6 per cent to £21.4bn year-on-year in September, driven by an energetic remortgage sector, while buy-to-let (BTL) cooled, according to UK Finance data.

In the new loans market, the volume of first-time buyer mortgages grew 1.6 per cent to 291,000 in September 2019 over the same month in 2018. The value was up five per cent to £5.1bn, the banking trade body revealed.

The volume of homemover mortgages rose 1.8 per cent to 29,050 and value grew 5.4 per cent to £6.6bn.

In remortgages, the volume of loans with additional borrowing was up 5.9 per cent to 17,740 and value increase 5.1 per cent to £3.3bn, with the average additional amount borrowed was £50,000.

Remortgages with no additional borrowing grew eight per cent to 19,140 by volume and 9.4 per cent to £3.4bn by value.

However, the BTL sector dragged behind. The number of purchase mortgages dropped 3.5 per cent to 5,500 and the value was down 11.1 per cent to £800m.

BTL remortgages were flat at 12,900 by volume and by value at £2.2bn.

Strong set of figures

Industry watchers welcomed the generally positive picture.

Nick Chadbourne, chief executive at LMS, the conveyancing provider, said: “We’re starting to see a shift in the balance of power within this market. Lower rates on two-year deals have sparked competition between lenders, aiming to turn the heads of remortgagers. Our recent data shows that although five-year fixes remain the most popular product, purchases of two-year deals have surged.”

John Phillips, national operations director at broker Just Mortgages, said: “This is a strong set of figures, with both new loans and especially remortgages showing a big improvement on the same time last year.

“The eight per cent rise in pound-for-pound remortgages in particular is a welcome reversal of recent trends, where the increased prevalence of longer-term fixes has been driving down volumes.

“This is somewhat offset by the quite steep fall in new BTL mortgages – more than 11 per cent by value. There have been a number of changes to regulations in recent years, not to mention the impact of the stamp duty surcharge for BTL. It would not be surprising if this was deterring landlords from expanding their portfolios and putting new entrants off altogether,” Phillips added.

Written by: Liz Bury

Source: Your Money

BTL products buy-to-let mortgages Buy-to-let purchases limited company

Marketing November 9, 2019 1 Comment

Buy-to-let purchases through limited companies on the rise

Almost two-thirds of landlords plan to make their next purchase within a limited company vehicle, Foundation Home Loans has found.

This is up from 55% of those surveyed in the second quarter of 2019.

Jeff Knight (pictured), director of marketing at Foundation Home Loans, said: “The rise in limited company usage by landlords shows no sign of tailing off, particularly as we have a more professional landlord community who recognise the benefits of using such a vehicle.

“It’s therefore perhaps no surprise to see a growing number of landlords signaling their intention to make their next purchase through a limited company, and as a lender it’s incredibly important that our product range reflects this, and we can offer advisers and their portfolio landlord clients access to quality products, an excellent underwriting process and a high level of overall service that taps into the needs of limited company borrowers.

“There has also been a notable uptick in limited company remortgaging at Foundation, and whether these are larger portfolio landlords or not, it’s quite apparent where the market has moved to and the growing need for limited company expertise.”

Previously, landlords with larger portfolios of 11 plus properties were more likely to say they would purchase in a limited company, but now landlords with smaller portfolios are equally likely to use the strategy.

Some 62% of those with one to 10 properties said they would purchase via a limited company next, while 65% of those with 11 plus properties would do the same.

Of those landlords who said they would purchase via other methods, 26% said they would purchase as an individual, up from 24%.

Some 8% said it would depend on the circumstances at the time, down from 13% while 6% said they would purchase in the name of a partner or spouse, a drop from 10%.

The rest said they would either purchase via another means or they didn’t know.

The research also revealed a potential step-change in the type of properties landlords were adding to portfolios and where they were likely to concentrate in the future.

HMOs continue to generate the highest rental yield for landlords at 6.5%, with 20% of landlords now having an HMO property within their portfolio.

HMOs are particularly popular in Wales where 31% of landlords have at least one. This was followed by the East Midlands at 26%.

By Michael Lloyd

Source: Mortgage Introducer

Marketing July 27, 2018 No Comments

Buy-to-let investors looking for cheaper higher yield properties

Buy-to-let investments will continue to offer attractive rates of return compared to other asset classes, but investors will increasingly search out cheaper and higher yielding properties, research commissioned by The Mortgage Lender has found.

The report, authored by the UK’s leading housing economist, Martin Ellis, also predicted that interest rates are set to rise by a quarter of a point in the next few months and that house price growth will have slowed to between two and three per cent a year by the end of 2018.

Peter Beaumont, The Mortgage Lender deputy chief executive, said: “Our special report on the buy-to-let market looks at the macro and micro economic environment for buy-to-let investors and the factors that are likely to influence landlords’ investment choices over the coming years.

“It also highlights the need for a flexible and competitive buy-to-let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased.”

The private rented sector has grown substantially in recent years. One in five (4.7 million) households in England now rent privately. Nearly half of 25 to 34 year olds live in the private rented sector (46%), almost double the percentage in 2006 (24%).

There has also been a considerable increase in the proportion of 35-44-year olds in the private rented sector over the past decade, rising from 11% to 29%.

Buy-to-let mortgages play a vital role in supporting housing supply in the private rented sector, with the market representing nearly 13% of new UK mortgage lending.

The market grew from 840,000 buy-to-let mortgages outstanding with a total balance of £93.2bn at the end of 2006, to 1.8 million buy-to-let mortgages with an aggregate balance of £214bn by the end of 2015; growth of 114% and 130% in the number and value of balances outstanding respectively.

In recent years, buy-to-let was typically the strongest performing sector of the mortgage market. There were annual increases in the number of buy-to-let loans to fund house purchase of 21% in 2014 and 17% in 2015.

New buy-to-let mortgages increased by nearly 200% between 2010 and 2016 with their share of all mortgages rising to 20% in 2015.

There was, however, a significant fall in the number of buy-to-let property sales following the introduction of the stamp duty charge for additional properties in April 2016.

Buy-to-let house purchase declined sharply immediately, but has remained broadly flat since then, albeit at a much lower level.

Buy-to-let house purchase activity in 2017 was more than a quarter (-27%) lower than in 2016, with buy-to-let purchases made with a mortgage averaging 6,240 a month in 2017 compared with 8,500 in 2016.

In value terms, buy-to-let house purchase lending fell by 28% in 2017, from £14.9bn in 2016 to £10.7bn. Despite this decline, the total for 2017 was still 67% higher than the annual average during the period from 2009 to 2013.

There has been a further weakening recently with the number of buy-to-let house purchase loans in the first three months of 2018 totalling 11% lower than in the same period of 2017.

In contrast to house purchase buy-to-let lending, buy-to-let remortgage activity has been very stable with the volume of lending in 2017 only 0.6% lower than in 2016. As a result, remortgages’ share of total buy-to-let mortgage lending rose from 60% in 2016 to 67% in 2017 in volume terms.