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Rents rise as buy-to-let clampdown begins to hit landlord pockets

Landlords are raising rents after being hit by the buy-to-let clampdown in their tax bills.

ONS data shows rents rose 0.9% in the 12 months to May 2019, the highest annual growth since September 2017.

Across the UK, tenants saw rents rise 1.3% annually in May, up from 1.2% a month before.

Northern Ireland had the highest annual growth rate at 2.1%.

In England, private rental prices grew by 1.3% in the 12 months to May 2019, up from 1.2% in April 2019.

Rents grew by 1.1% annually in Wales, unchanged since February 2019, and Scotland saw a 0.8% increase, up from 0.7% previously.

Commenting on the figures, Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “After filing their 2017-18 tax returns, landlords are becoming more aware that ongoing changes to mortgage interest tax relief are increasing the financial challenges facing them.

“This is leading more property investors to reconsider their options and the pressure on some to increase rental prices will be mounting. We do not see it as a coincidence that several rental indices show that, following a protracted period of softness, average rents in London are once again increasing.

“Despite the current political and economic uncertainty, we hope a change in leadership will be seen as an opportunity for the Government to demonstrate its support for landlords, which goes hand-in-hand with helping people get on the property ladder.

“Growing pressure on landlords to increase rents in order to make ends meet will ultimately have a detrimental effect on renters’ ability to save for deposits to buy their own homes.

“The Government should be careful to ensure that any future regulation around the private rental market does not further shrink the appetite of private landlords to satisfy the growing demand of tenants.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Advisers warned clients do not understand BTL changes

Advisers should be aware that their buy-to-let clients are struggling to keep pace with recent reforms in the rental sector, as research showed more than a quarter of landlords do not understand the changes that were introduced to the market.

Market Financial Solutions polled 400 landlords and found that 30 per cent did not understand changes to Houses in Multiple Occupation licensing, which came into effect in October 2018 and expanded the scope for which landlords are required to obtain an HMO licence.

On top of this, 28 per cent were not aware the government was consulting on Section 21 orders, which allow landlords to evict tenants at the end of their tenancy without reason.

The recent tenant fees ban, live from June 1, also caused confusion. Some 27 per cent of those surveyed were uncertain about the ban, and a further 19 per cent said they were unsure how it would affect them.

This legislation bans most letting fees and caps deposits paid by tenants in the private rented sector.

Landlords have also been hit with tax reforms over the past year, but the poll showed one in four landlords was unaware that they had been given less tax relief on their mortgage payments since April of this year.

In general, the research found landlords were against the reforms. Almost half (44 per cent) of landlords said they were against the letting fees ban, compared to 23 per cent in favour, while only 16 per cent said they agreed with the proposed abolition of Section 21 orders and the changes in mortgage relief.

Paresh Raja, chief executive of Market Financial Solutions, said: “The legislation and regulation governing the UK’s rental market is constantly evolving, and this research clearly shows that landlords are struggling to keep pace with the change.

“From HMO regulations to the abolition of Section 21, these are significant reforms that, for the most part, are rightly designed to protect tenants.”

Mr Raja said despite this, there was evidently frustration among landlords who felt they were being unfairly targeted — especially when it came to stricter taxes — and said it was essential that those renting out a property understood the new reforms.

Carl Shave, director at Just Mortgage Brokers, said it was of no surprise that landlords were finding it tough to keep abreast of legislation when there was such an onslaught of changes in the sector.

He said: “Rental property owners together with the assistance of agents and advisers need to ensure the messages are getting through.

“The rental market is experiencing a change in its landscape with much of the current emphasis being on the tenant that arguably has been too easily dismissed in the past, but landlords serve a very valid role in housing and the right balance needs to be struck to ensure this continues.”

Chris Norris, director of policy and practice at the National Landlords Association, said the government’s haphazard approach had been confusing and damaging to both landlords and tenants, and stressed there needed to be a clear and more cohesive approach to regulation.

He added: “More than two million individuals have an investment in residential property, but most have no access to up-to-date and timely information about frequent changes to the law.

“Landlords have an absolute obligation to keep up-to-date, but this is becoming increasingly challenging.”

Concerns have been raised recently that landlords are selling up as these tax and regulatory changes start to bite.

The number of buy-to-let properties up for sale increased by 25 per cent in April in a sign that more landlords were looking to exit the market.

Chief executive of buy-to-let specialist John Goodall said the “doom” surrounding the sector was overdone, however, and suggested the changes were likely to scare off smaller landlords and lead to a more professional industry.

By Imogen Tew

Source: FT Adviser

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The buy-to-let market stabilises

Following from regulatory and tax changes, the buy-to-let market seemed to settle in April, remaining unchanged from the previous year, UK Finance’s Mortgage Trends Update has found.

There were 5,100 new buy-to-let house purchase mortgages completed in April, the same as this time last year, and there were 14,400 remortgages in the buy-to-let sector, the same as this time last year.

Gareth Lewis, commercial director of property lender MT Finance, said: “The buy-to-let numbers really stand out because they have remained stable compared with the same period last year, suggesting sustainable activity.

“This is remarkable given all the negativity surrounding the sector and the harsher tax and regulatory environment. Tales of landlords exiting the sector in their droves seem wide of the mark: these figures suggest that isn’t the case at all.

“Part of the continued demand for buy-to-let is down to the lack of alternatives investments. Savings rates are low and monitoring the stock market is almost a full-time job.

“As long as you play the long game with property, there is more certainty of growth and people tend to trust bricks and mortar more than other investments.”

In 2015 the government announced it would start to phase in mortgage tax relief. In 2017 to 2018 the deduction from property income was restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction, in 2018 to 2019 the finance costs are down to 50% and during 2019/2020, 25%.

From 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

Andrew Montlake, director of the UK-wide mortgage broker, Coreco, added: “What’s interesting is that the impact of recent tax changes on the buy-to-let market appears to have settled down.

“The buy-to-let market is not what it was but has now reached a new equilibrium.”

Richard Pike, Phoebus Software sales and marketing director, said: “Even the buy-to-let sector is holding its head above water which, given the regulatory and tax changes that landlords have had to withstand, is somewhat surprising.”

Simon Heawood, chief executive and co-founder of Bricklane.com, was less pleased with the figures.

He added: “The number of new buy-to-let mortgages has fallen off a cliff over the last few years, with the total down 50% since 2016. Based on today’s stagnant numbers, we shouldn’t expect that trend to change in the near future.

“The rental market has become increasingly difficult for new and existing landlords to navigate. In addition to a raft of tax penalties, the recent introduction of the Tenant Fees Act and the proposed scrapping of ‘no fault’ evictions show that the market is moving in a pro-tenant direction.

“Landlords will soon be expected to provide a higher standard of service and, faced with diminishing profits and an increasing workload in the buy-to-let market, we expect to see more and more individuals revaluating their portfolios, with many then looking at alternative routes to invest in this asset class.”

There were 18,920 new remortgages with additional borrowing in April, up 0.3% year-on-year. For these remortgages, the average amount taken out in April was £54,000.

Furthermore, there were 19,140 simple pound-for-pound remortgages, with no additional borrowing, 6.2% fewer year-on-year. In total, there were 3.1% less fewer mortgages in April 2019 than in the same month a year earlier.

Jonathan Sealey, chief executive at Hope Capital, said: “In terms of the value, both simple refinance and equity remortgages are down.

“With a steady rise over the past few years in the trend for making home improvements rather than moving, this could suggest some homeowners looking to remortgage in order to add value to their homes ie for a larger equity withdrawal – are now looking to alternative funding for a more tailored service.

“Specialist lenders are continuing to see steady business coming through suggesting that customers increasingly turn to lenders who can offer them a more bespoke solution.”

By Michael Lloyd

Source: Mortgage Introducer

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Buy-to-let trends which could continue in the second half of 2019

Without doubt 2019 has so far proved a year of change within the buy-to-let sector.

At a time of Brexit uncertainty, political and economic uncertainty, what can landlords expect from the private rental sector in the second half of 2019?

Setting the scene

The first half of 2019 has brought wide-sweeping changes to the private rental market and it will inevitably take time for stakeholders to become accustomed to the new requirements.

  • The Tenant Fees Act 2019 came into effect on June 1 and will have significant impact on the letting agent financial model.

Many expect agents to pass on extra costs to landlords, to compensate for the traditional revenue streams they had from tenant fees (now outlawed). This could result in landlords hiking rents.

  • The Homes (Fitness for Human Habitation) Act 2018, came into force in March of this year. This has put extra emphasis on landlords ensuring that defects within a rental home are quickly resolved. Tenants have new powers to take landlords to court, if major hazards are not addressed.
  • From April 1, 2019, any letting or property management agent who holds client money on behalf of a landlord or tenant, must belong to a government-approved Client Money Protection Scheme.

What else could happen over the coming months?

In early April, Housing Minister Heather Wheeler, told the annual conference of the Association of Residential Letting Agents that more legislative changes were on the way for the private rental sector.

We await those government announcements, but here is a selection of topics landlords need to stay on top of.

Section 21 changes

Landlords are braced for the next twist in government plans to revise the repossession process.

In April, the government announced that it wanted to scrap Section 21 “no fault” evictions, to offer tenants greater reassurance and stability. It said it would consult on the matter in the coming months.

However, the statement brought outrage and concern from some corners. The Residential Landlords Association warned that landlords need reassurance that their rights are carefully considered, if not that they could leave the sector in vast numbers, should Section 21 end.

The RLA has conducted its own survey on the issue and reported a record number of landlords got in touch to raise their concerns and share their experiences.

The Section 21 process is currently slow and whilst most stakeholders accept there needs to be change, the concern is that government amendments need to reflect everyone’s best interests, including landlords.

The suggestion is that in legitimate cases, the law should allow landlords to regain possession quickly and lawfully.

This emotive topic is one set to run for some time, whilst the government collates feedback.

Right to Rent clarity

The government’s controversial Right to Rent rules took effect from 2016, but were deemed in breach of human rights law and discriminatory, in the High Court earlier this year.

Right to Rent puts an emphasis on the landlord to carry out checks on prospective tenants, to ensure that they have the right to live in the UK. Failure to do so – and renting to an illegal immigrant, carries high penalties for a landlord.

This, the High Court contests, has motivated many landlords to “play safe” and only accept UK residents as tenants, discriminating against anyone else.

Brexit adds further confusion to this situation, as landlords, agents and tenants await clarity on the rights of EU citizens after the UK has left the European Union.

With Brexit’s date moved to October 31, 2019, the uncertainty is likely to roll on for several more months yet, as the government insists Right to Rent will continue, despite the legal challenges.

Could political change be a catalyst for buy-to-let revision?

Perhaps more of a long shot, but at the time of writing, Conservative MPs are queueing up to contest leadership of the party and become the next Prime Minister.

Among those with their names in the hat are former housing,  communities and local government secretary, Sajid Javid.

Will the next Prime Minister be politically savvy when it comes to housing and seek to curry favour and re-build bridges with landlord voters?

A recent National Landlords Association survey reported that 85% of landlords would vote against any political party proposing to remove Section 21, with 89% opposed to any party proposing rent controls.

Just one in six private landlords said they would support the Conservatives in an election, in light of the tax changes made to the buy-to-let industry in recent times.

A number of high profile Conservative MPs have over the past few months called for changes to what has been perceived as a damaging policy towards private landlords.

In March, former work and pensions secretary Iain Duncan Smith, told delegates at a landlord conference that landlords letting properties to social tenants should pay less tax.

He also criticised landlord tax changes introduced by the present government, saying: “I think there have been some mistakes made. I think we really do need to ensure that we keep the social rented sector functioning, and with reasonable margins so that [landlords] stay in it, otherwise we’re going to be pushed to find rental properties for people and some of that pressure already exists.”

Jacob Rees-Mogg stated in 2017 that stamp duty must be cut “as a matter of urgency”, warning that a failure to do so, could cost the party the next election.

Meanwhile, Boris Johnson, another candidate for next Prime Minister, called for the abolition of stamp duty (which he described as “absurdly high”) in 2018.

With the private rental sector accounting for 19% of homesteads in 2017-18 (English Housing Survey) and homelessness an ongoing issue, will a new Prime Minister see the need to offer landlords the carrot rather than the stick?

Will bridging and alternative financing grow?

Brexit uncertainty, high house prices and lack of affordability have led to stagnation within the housing market.

This is true of buy-to-let every bit as much as the residential sector.

Many people are electing to stay put, rather than sell or move. A lot of those homeowners are choosing to further develop properties in the hope of improving living conditions and perhaps adding capital growth to the value of their home.

Within the buy-to-let sector, this makes sense for landlords who need to meet not only the requirements of the Homes (Fitness for Human Habitation) Ac 2018, but also tightening rules around Houses of Multiple Occupation (HMOs).

New planning application rules in England, are also encouraging people to extend properties.

Property owners will no longer need a full planning application to extend a home.

At the same time, permitted development rights will afford business owners greater flexibility when it comes to converting properties on the high street.

Landlords who own shops will be able to convert these to office spaces without having to apply for full planning application.

These legislative changes could serve as a catalyst for more people to look at conversions, potentially increasing demand for bridging loan finance and commercial or semi-commercial mortgage financing.

Economic change

The effects of inflation and Brexit continue to keep prospective Bank of England base rate changes in check.

At present, there is somewhat of a buy-to-let mortgage war, with the number of products the highest it has been for twelve years, according to Moneyfacts.

Lenders continue to operate with squeezed margins as they offer lower rates and incentives like cashback and free valuations, to undercut rivals and entice buy-to-let borrowers.

The question is of course, how sustainable is this trend and will we see rates rise before the end of 2019?

This question could equally apply to the Bank of England base rate.

Outgoing Governor Mark Carney, suggested in early May, that interest rate rises could be “more frequent” than expected, if Brexit is resolved and inflation and economic growth increase.

Any increase in base rate is likely to have an effect on lender rates.

With house prices having stalled in many areas, the plethora of competitive buy-to-let mortgage deals and the possibility of interest rates rising, the second half of 2019 might be an ideal time to take advantage of a buyers’ market.

More expat buy-to-lets?

Whilst on the subject of economics, one should not forget the impact of a weakening pound sterling.

A depreciating pound, as a consequence of Brexit, has perhaps played to the favour of expats, looking to invest in UK rental property.

Whilst there is no guarantee of future currency fluctuations, we have seen the number of lenders in the buy-to-let expat market increase over the last year.

However, there are a number of considerations for expats, when applying:

  • With most lenders, the applicant must be a UK citizen.
  • They will need to provide proof of income.
  • In most cases, the expat will need to be an experienced landlord.
  • In some cases, there is a better chance of being approved, if employed by a blue chip company.
  • Most lenders won’t lend if the expat lives in a UN-sanctioned country.
  • The minimum loan amount is normally £100,000.
  • Whilst the number of lenders offering expat buy-to-let mortgages has increased, it remains a limited market and interest rates are usually higher.
  • In most cases, the lender will expect an expat to have at least 30% of the property value as deposit.
  • It may be harder for an expat to keep up to date with domestic changes in legislation and to manage the property.

Increased professionalisation of the PRS

Finally, we can expect a greater degree of professionalism and a larger proportion of experienced landlords with existing portfolios, to dominate the buy-to-let sector.

The changes that have taken place over the past three years, have had more of an impact on landlords with smaller portfolios of one or two rental properties.

The so-called ‘accidental landlord’ has found their margins squeezed by ongoing tax changes while landlord obligations have become more strenuous.

Landlords with larger portfolios and more equity, have arguably been better placed to make additional purchases – and are often better prepared, or more willing, to cope with change. They may well snap up properties sold by anyone leaving the sector.

Specialist lender Paragon, reported a significant increase in the number of landlords with large portfolios, applying for buy-to-let lending in the first half of 2019.

Indeed, the lender said that 88% of its total buy-to-let business came from landlords using limited companies operating large portfolios, an increase of 16% year-on-year.

Despite so much upheaval – and with more likely to come, there remains an upbeat note for landlords who retain their appetite for buy-to-let.

Market conditions remain conducive for borrowers and there are some terrific deals out there reflecting low interest rates and incentives.

However, with so much change within the industry it is imperative that landlords keep up to date with what is happening and how it impacts them.

By Andrew Turner

Source: Mortgage Introducer

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Buy-to-let mortgage choice at 12-year high

The number of buy-to-let (BTL) products available has hit its highest level since the beginning of the financial crisis in October 2007, data shows.

Over the past 12 months, the total number of available BTL products has risen by 21 per cent to 2,396 in June, from 1,929 in the same month a year ago, according to Moneyfacts, the financial data firm.

In June the number of buy-to-let products has increased month-on-month by 143 from May 2019 when it stood at 2,253.

Meanwhile, average BTL mortgage rates have also risen over the past 12 months, with the typical two-year fixed rate increasing by 0.17 per cent from 2.88 per cent in June 2018 to 3.05 per cent this month.

The average five-year buy-to-let fixed rate rose by 0.11 per cent to stand at 3.54 per cent.

However, both rates still stand significantly lower than they were in October 2007 at 6.36 per cent and 6.39 per cent.

Rates steady despite increasing competition

Moneyfacts spokesman Darren Cook said that product competition within this specialised mortgage area is continuing to grow.

“The largest concentration of BTL product choice can be found at the maximum 75 per cent loan-to-value (LTV) tier, where there are currently 352 two-year fixed rate products available and 374 five-year fixed rate products available,” he said.

“Coincidently, the average fixed rates at the 75 per cent LTV tier for the two- and five-year sectors are currently 3.05 per cent and 3.55 per cent respectively, equalling or near-equalling the average rates for both terms across all tiers.

“The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling.

“This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”

Written by: Antonia Di Lorenzo

Source: Your Money

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Buy-to-let market doom ‘overdone’

The buy-to-let market is in better shape than many might think, a lender has said.

John Goodall, chief executive of specialist buy-to-let lender Landbay, said recent industry commentary that states the market is on a downturn and that regulatory changes are forcing landlords to sell up was “a little overdone”.

Last week research from Arla Propertymark showed there had been a 25 per cent increase in the number of landlords selling up their property and those at the coalface said regulatory changes and a reduction in tax relief had stopped many viewing the buy-to-let market as a profit maker.

But Mr Goodall disagrees. Speaking to FTAdviser, he said: “There’s always been a churn in the market. Of course there are some people selling up property and getting out the market but that’s always been the case.

“At the moment, the highlight is on those selling rather than those buying. But those buying do still exist. Some small buy-to-let investors are getting out but it’s still only a small fraction.”

Mr Goodall cited UK Finance figures which showed that, in terms of outstanding stock, the buy-to-let market grew from £237bn to £243.9bn over the course of 2018 — an equivalent of 2.7 per cent.

Landlords have been subject to a number of regulatory changes in recent years, with the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016, which was closely followed by cuts to mortgage interest tax relief.

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Mr Goodall said the changes are more likely to scare off smaller landlords with only a few properties, which would eventually lead to a more professional industry.

he said: “Small investors that hold property in their own name have seen the biggest changes in terms of tax and stricter regulations are likely to affect smaller landlords more.

“But this has raised standards in the market and means most portfolio owners now act like a small, formal business.

“For example, of course it’s a good thing that houses of multiple occupancy have stricter licensing rules but this could turn off smaller landlords.”

According to Mr Goodall, more business-like landlords entering the market was a good thing would eventually help tenants.

He added: “I think it’s far better for the tenants to think their landlord is committed to it and that they are not just in it for the short term.

“If someone’s doing it on the side and alongside a full time job, the service is going to be worse for the tenant and the tenant does not have as much security.”

Observers in the industry have commented that a reduction in landlords could increase the price of renting and hurt consumers.

Mr Goodall refutes this, saying the market was self-regulating and “if rents go up, that entices more landlords, so more competition and the market would work itself out”.

He also pointed out that the buy-to-let market does not represent the entire private rental sector — as many who buy property can do so without a mortgage or some may inherit property.

The UK’s stagnant housing market — annual house price growth remaining under 1 per cent and home-mover rates on the decline — is often put down to political uncertainty and consumers holding back on decisions until after Brexit.

Mr Goodall agreed with this analysis and suggested uncertainty was more likely to be the cause of any dip in the buy-to-let market.

He said: “Brexit uncertainty is a more pressing issue. People will not invest at the moment.

“Landlords should be getting into it with a five to 10 year plan, but people don’t want to make those kind of big changes with Brexit on the horizon. There’s a little bit of sitting on the sidelines.”

Rachel Lummis, adviser at XpressMortgages, also said she had yet to see any evidence of a sell off of buy-to-let stock from their landlords.

She said: “We are seeing more landlords purchase via a limited company now rather than in their personal names which is resulting in landlords with portfolios with a mix of ownership in their private name and ltd company.”

Ms Lummis added that the type of property landlords liked — typically a two bed flat — had shifted to more high yielding properties such as HMOs and student accommodation, while many were also looking further afield, out of London and Surrey..

By Imogen Tew

Source: FT Adviser

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Glasgow Rental Returns Quickest In UK For Buy To Let Property Investment

Glasgow rental returns have been found to be the best the UK for returning buy to let property investors original outlay.

With Glasgow rental returns averaging £10,140 per annum, the original average property cost of £129,764, plus property tax of £5,190, giving a combined total of £134,954 was recouped in just 13.3 years.

The next best city in the UK for returning property investment quickly was Belfast, which took 15.8 years on average, with another Scottish city, Aberdeen, taking third place at an average of 17.8 years.

The report, carried out by letting agent Benham and Reeves, looked at the average house price plus the cost of buy to let stamp duty and annual rent, and ranked each area on the number of years it would take for this annual rent to recoup the cost of buying in each area and paying taxes such as land and Buildings Transaction Tax in Scotland and Stamp Duty south of the border.

With Glasgow rental returns coming top and Aberdeen in third place, it is hardly surprising that when it comes to countries as a whole, Scotland offers the quickest return on property investment with the annual rent returning the original asking price in 17.7 years. This despite Edinburgh taking average 21.6 years to recoup the cost of the average property price of £263,868.

Northern Ireland was the second quickest country to return the full initial investment through rental at 18.9 years, followed by England at 25 years and finally Wales at 26.4 years.

Nottingham was the quickest area in England to see rental income recoup the initial costs of buying a property at 18.4 years, followed by Newcastle at 18.5 years.

Director of Benham and Reeves, Marc von Grundherr, said: ‘Buy to let investment is a complicated business, even more so given the changes to the sector of late, however, the primary indicator of a good investment is always going to be the rental yield available.’

With relatively low initial purchase costs, good Glasgow rental returns could amount to good financial sense for aspiring buy to let property investors wherever they are based in the UK.

Source: Residential Landlord

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Scotland offers the quickest return on buy-to-let investment

Scotland offers the quickest return on buy-to-let investment, London estate and letting agent, Benham and Reeves has found.

Benham and Reeves looked at average house price plus the cost of buy-to-let stamp duty and annual rent and ranked each area on the number of years it would take for this annual rent to recoup the cost of buying in each area and paying stamp duty.

Scotland offers the quickest return, with the annual rent returning the original asking price in 17.7 years. Northern Ireland was the second quickest at 18.9 years, followed by England (25 years) and finally Wales at 26.4 years.

Marc von Grundherr, director of Benham and Reeves, said: “Buy-to-let investment is a complicated business, even more so given the changes to the sector of late, however, the primary indicator of a good investment is always going to be the rental yield available.

“While a buy-to-let investment includes all sorts of additional concerns such as contingency budgets, capital growth and so on, we wanted to highlight on a more digestible level where offers a good investment option when it comes to recouping the cost of that investment via your rental income.

“What this research demonstrates is that while buy-to-let remains a lucrative business despite the government’s attempts, it should be viewed as a long-term one and not a method for making a quick buck.

“For those serious about the sector whether it be as a professional or amateur landlord, it’s important to understand the commitment before diving in if you wish to see a profit.”

In the capital, Tower Hamlets is the best buy-to-let investment for the fastest return, with annual rental income taking 21.4 years to return the average house price and stamp duty costs of £452,821.

Barking and Dagenham (22 years), Newham (23 years), Greenwich (23.5 years) and Enfield (25.7 years) were also amongst some of the best options in the capital.

With Scotland and Northern Ireland home to the quickest return on a top level, it’s no surprise that they account for the top three quickest areas in the UK, with Glasgow the quickest of them all at 13.3 years, followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

Nottingham was the quickest area in England to see rental income recoup the cost of buying a property at 18.4 years, followed by Newcastle at 18.5 years.

By Michael Lloyd 

Source: Mortgage Introducer

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More landlords fleeing the private rented sector or hiking rents

Letting agents have reported a spike in landlords selling up.

The exodus was ahead of the tenant fees ban, to be implemented tomorrow, and which is expected to result in higher costs for landlords and the abolition of Section 21.

ARLA Propertymark’s April report found that letting agents saw the highest number of landlords selling their buy-to-let properties since May last year.

The number of landlords exiting the market rose to five per branch, up from four in March.

There were also signs of rents rising ahead of the fee ban, with 33% of agents reporting a rise, up from 30% in March.

The number of tenants successfully negotiating rent reductions fell from 2.9% in March to 1.9% in April – the lowest figure seen since May 2016 when it stood at the same.

Rental supply was marginally down from 203 properties per branch to 202, but this is still up 13% annually.

Demand from prospective tenants also decreased over the month, with the number of house hunters registered per branch falling to 64 on average, compared with 67 in March.

David Cox, ARLA Propertymark chief executive, said: “As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy-to-let properties.

“Tomorrow, the Tenant Fees Act will come into force in England.

“This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.

“As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions.

“In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Investors Selling Up Buy To Let Properties Before Fee Ban

Many buy to let property investors are selling up before the tenant fee ban comes into force according to the latest figures from Arla Propertymark.

The number selling up buy to let properties in April reached its highest level since May 2018, rising from an average of four landlords leaving the market per lettings agency branch in March to five in April.

However, this could lead to higher yields for those landlords holding fast and not selling up. The proportion of agents who reported that landlords had increased rents rose to 33 per cent last month, up from 30 per cent in March.

The number of tenants negotiating rent reductions fell in April, from 2.9 per cent in March, to 1.9 per cent last month – the lowest figure seen since May 2016.

Despite some landlords selling up, tenants had a greater number of rental properties to choose from in April than a year ago, at 202 instead of 179 per lettings branch.

This could imply that larger portfolio property investors are using the opportunity to increase their portfolios as other landlords leave the market.

Demand from prospective tenants fell slightly in April, with the number registered to look for properties declining from 67 in March to 64 last month.

Arla Propertymark chief executive David Cox commented: ‘As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy to let properties. In just a few days’ time, on 1 June, the Tenant Fees Act will come into force in England. This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.’

He continued: ‘As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions. In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.’

Source: Residential Landlord