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Buy-to-let loan sizes jump £20k in one month

Buy-to-let loan sizes jumped by 13 per cent last month, meaning the average maximum loan available to prospective and existing landlords is now £421,053.

In December, this figure stood at £401,053, pointing to a £20,000 increase. This means loans for landlords are at their highest level since August 2020, according to research published by adviser platform Mortgage Broker Tools today (February 28).

The buy-to-let sector remained buoyant last year, despite some reports of landlords exiting their portfolios. Purchase activity reached £18bn, up 83 per cent on 2020, according to UK Finance.

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But while the average maximum loan size available to buy-to-let investors is approaching a two-year high, the spread between the average maximum and minimum loan sizes available to landlords has also “never been wider”, according to Tanya Toumadj, chief executive at Mortgage Broker Tools.

“For investor clients who want to maximise their leverage, it’s vital that brokers are able to easily identify those lenders that will offer larger loan sizes based on their individual circumstances,” she explained.

Legal & General Mortgage Club data also published today found searches for landlords with gifted equity grew by 82 per cent last month. This suggests that those in the buy-to-let market may be benefitting from financial support from family members to boost their borrowing power as the loan sizes available to them continue to increase.

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Richard Merret, head of strategic development at mortgage club SimplyBiz, told FTAdviser the pandemic has shown people “the robustness of houses as an asset”.

In 2021, the price of a typical UK home grew to £254,822, up nearly £24,000 over the year.

Merret also said an interest in holiday letting has increased, due to the tax benefits and the “ease” of arranging it via an app. “Airbnb has made being a holiday-let landlord more accessible,” said Merrett.

A series of regulatory changes to the buy-to-let sector has, however, made it harder to enter the market. So advisers can better understand these regulatory changes – which include a 3 per cent stamp duty surcharge, more stringent affordability tests and reforms to mortgage relief – SimplyBiz has launched a series of virtual academies.

Meanwhile, some investors are now looking to make gains off cryptocurrency rather than off a housing portfolio.

One investor told FTAdviser in December that with property producing average gains anywhere between 5 and 10 per cent a year, he was drawn to the minimum advised return of around 30 per cent to be made from cryptocurrency in just three to six months on less money.

By Ruby Hinchliffe

Source: FT Adviser

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Buy-to-let sector has increased by £239bn since 2017

New research conducted by the property lending experts, Octane Capital, claims that over the last five years the buy-to-let sector has increased by around £239 billion.

By analysing the level of privately rented stock across all UK regions the lending experts were able to obtain the worth of the buy-to-let sector. This was then compared to values during 2017 to uncover changes over the past five years.

Current buy to let market value

The findings show that based on current market values within the UK rental sector, the current value of the UK’s buy-to-let stock is £1.7 trillion.

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The capital of England makes up 19% of the UK buy-to-let properties as this has the highest total worth of the UK buy-to-let sector. It is estimated that around 1 million private rented homes are in London and these are worth more than £500 billion.

The second most valuable buy-to-let market is in the South East of England as the buy-to-let market has a value of £247 billion. This is then followed by the East of England which has a value of £168 billion, the South West is valued at £156 billion, and the North West is valued around £110 billion.

The property lending experts estimate that the UK’s buy-to-let market has increased by 16.8%. This means it has climbed by £239 billion since 2017.

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Buy to let market uplift

The figures show that London had the largest uplift in buy-to-let market value as it jumped by £57 billion. The South West increased by £34 billion and the East of England jumped £27 billion.

While the level of privately rented homes has remained low across the UK over the last five years, the total value of the buy-to-let sector has risen sharply because of house price growth.

Chief executive officer of Octane Capital, Jonathan Samuels, concludes: “The government has tried its hardest to dampen investment into the private rental sector in recent years, with a string of legislative changes around tax relief, stamp duty and tenant fees reducing the profitability of buy-to-let investments.”

“The pandemic has also proved problematic for some landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across our major cities, in particular.”

“Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.”

“At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy-to-let investment and the value of the sector as a whole has increased substantially.”

“Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline in the process.”

By Yasmin Watson

Source: Introducer Today

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Buy-to-let landlords are adapting well to incoming EPC standards

The government’s proposal to ensure that all new rental properties have an EPC rating of at least a C by 2025 or 2026 is already shaping investor buying behaviour, according to the latest monthly lettings index from Hamptons, part of Countrywide.

While the proposal remains at consultation stage, many landlords are already hedging their bets, the agency says.

So far this year, the share of homes bought by investors with an EPC rating of A-C is running at 50%, the highest figure on record, and up from 39% in 2021 and 33% in 2020.

This uplift has been driven by two factors. Firstly, landlords have bought more energy efficient homes where improvement works have already been done. Secondly, there has been a shift towards investors purchasing newer homes, particularly flats, built within the last decade. These properties typically carry much better EPC ratings, with almost all awarded a B or C ranking.

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Investors move towards new build flats means London’s landlords tend to buy the most energy efficient buy-to-lets anywhere in England and Wales. Here, two-thirds – 66% – of new purchases made this year already had an EPC rating of C or above. While further North, investors are more likely to buy higher yielding but older and less energy efficient terraced housing stock. Just 34% of investors in the North East bought a buy-to-let with an EPC rating of C or above.

As well as reducing emissions, the push for higher EPC ratings will also save tenants money. The average tenant moving from a home rated D up to one rated C will save an average of £285 per year on their gas, electricity and water bill at current prices. A tenant moving from a home rated E to one rated C will save £725 annually. While most homes with an F or G rating can no longer be let, the savings from an upgrade to C stand at £1,348 and £2,404 respectively.

If all privately rented homes with an existing EPC rating of D-G were upgraded to at least a C, it would save tenants in England £844m in utility bills each year, or £396 per household. These improvements would leave the average privately rented household paying £326 less in utility bills than the average owner-occupier.

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Share of landlord purchases with an A-C EPC rating (2022)

London66%
South East56%
South West55%
East of England52%
East Midlands48%
West Midlands45%
North West42%
Yorkshire & Humber40%
Wales40%
North East34%
England & Wales50%

Rental growth continued to cool after hitting record highs over the summer months. January 2022 saw average rents rise 7.0% across Great Britain compared to the same time last year, with the rate of growth falling in all but one month since a peak of 8.7% was recorded in July 2021.  The moderation in growth has been underpinned by slowing rental rises across Northern England, which has in part been offset by faster growth across London in recent months.

After 21 consecutive months, January saw rents in Inner London return to pre-Covid levels.  Rents rose by a record 17.3% annually in Inner London to average £2,546 pcm – identical to the March 2020 figure and 29.6% above the mid-Covid low of £1,964.  Meanwhile in Outer London, where rents now stand 9.9% above their pre-pandemic peak, average rents rose 4.0% year-on-year to hit £1,851pcm.

Table 2: Average rent on a new let

Jan-21Jan-22YoY Change (%)YoY Change (£)
Greater London£1,842 £1,9626.5%£120
   Inner London£2,171 £2,54617.3%£375
   Outer London£1,780 £1,8514.0%£71
South East£1,177 £1,2264.2%£49
South West£907 £1,02012.4%£113
East of England£1,049 £1,0974.6%£48
Midlands£720 £7778.0%£57
North£686 £7377.3%£51
Wales£680 £7429.0%£62
Scotland£682 £76111.7%£79
Great Britain£1,055 £1,1297.0%£74
Great Britain (Ex London)£853 £9147.1%£61

Aneisha Beveridge, head of research at Hamptons, said: “By removing the least energy efficient rental homes from the market, government policy has already picked the lowest hanging fruit.  But extending this plan to upgrade homes with a D or E rating up to C will impact a far larger number of households, while generating smaller savings for tenants.  The policy will mean that the average tenant will eventually pay lower energy bills than the average homeowner, although it’s likely to remove some rental homes from the market, putting further pressure on stock levels.

“Given it will prove impossible for all homes to secure an EPC rating of at least a C without significant cost, it’s likely to mean older homes will become considerably less attractive to landlords.  Instead, investors may focus their strategy on buying new builds, with rental homes becoming concentrated in blocks or streets where properties already hold a C rated EPC certificate or where it’s possible to achieve this without significant work.

“The recovery in Inner London rents back to where they were on the eve of the pandemic marks a milestone for London’s landlords.  With Inner London recording the largest ever month-on-month increase between December and January, it appears the recovery in rents still has plenty of steam.  The level of pent-up demand coupled with a lack of stock is likely to support high rates of rental growth over the coming months.”

By MARC DA SILVA

Source: Property Industry Eye

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Average monthly rent in England now £993: Goodlord

The average cost of rent across England rose from £985 in December to £993 in January, according to the latest rental index from Goodlord.

Rents climbed to three-month highs at the start of this year, as tenant demand and stock shortages drove prices up past record rental averages seen in October 2021.

Average rents in Greater London now stand at £1,675, meaning they are 126% more expensive than in the North East, which houses the cheapest properties.

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However, the North East had the biggest increase in average rent prices over the month, with a 3% hike. Average costs rose from £716 to £740.

“The pace of the market throughout the winter continues to surpass predictions. Rents are continuing to creep up as tenants compete for the best properties and, as inflation bites, the rising cost of rent is beginning to outstrip salary growth,” says Goodlord chief operating officer Tom Mundy.

The speed at which properties changed hands, however, decreased slightly over the month from December, according to the lettings platform.

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The average void period in England rose slightly from 18 days in December to 20 days in January.

“We wouldn’t expect to see record-breaking low voids during January, particularly in light of the huge market activity seen in December, so the small increase in void averages we’re seeing this month isn’t unexpected,” adds Mundy.

According to Mundy, UK landlord optimism, despite being on the rise, could take a substantial hit as tenants struggle to pay bills over the course of 2022.

“The overall market picture is still very strong compared to 2021. Landlords won’t be struggling to find tenants over the coming months but the rising cost of living may start to affect certain regions sooner rather than later.”

Source: Mortgage Finance Gazette

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2022 set to be a strong year for BTL

It is hard to make predictions for the coming year without considering the impact of the pandemic. With vaccination levels increasing and hope that new COVID variants are less aggressive, light is appearing at the end of the tunnel as we hopefully transition back to normality. Looking back, the past year has been one of the most turbulent for the buy-to-let market with the pandemic causing some landlords and renters to struggle financially.

Despite the challenges, the buy-to-let sector has been incredibly resilient in 2021 and looks set to achieve around £41bn of loans in 2021.

The market is predicted to be relatively stable with IMLA forecasting £40bn of loans in 2022, and one of the key drivers will be the expected increase in rental yields.

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Rent looks set to rise

When considering the direction of rental prices in 2022, it is useful to look at the recent trends. According to Zoopla, a combination of high demand and landlords exiting the buy-to-let sector pushed rental price growth to a 13-year high during Q3 2021.

Zoopla also reported that rental growth across the UK reached 4.6% between July and September, with particularly strong markets in the South West, Wales, and the East Midlands.

But the more difficult question to answer, is which direction will rents take in 2022? Zoopla’s rental market forecasts have predicted average rental prices across the country could rise by another 4.5%, and growth in London is forecast to reach 3.5%, exceeding pre-pandemic levels. It also has predicted rents could rise above earnings in areas of the country where it’s currently cheaper to rent.

These rises in rents are fuelled primarily by an imbalance in supply and demand, with far more people looking for rental properties than there are places to accommodate them.

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Energy efficiency

Outside of rent prices, three letters will likely dominate landlords’ thoughts in 2022. No, not VAR, we are of course referring to EPC.

The government’s plans to increase minimum energy efficiency standards has certainly impacted some landlords plans for the future.

The signs have all been pointing in one direction for some time, as since April 2020 it’s been illegal for landlords to let properties with an EPC rating of F or G, unless they have an exemption.

These measures will be ramped up in the coming years. From 2025, the minimum standard will be increased to C for new tenancies and this will be extended to existing tenancies from 2028.

Government estimates suggest that over three million rental properties currently have an EPC rating of D or below. As a result, many landlords will need to start begin the process of improving their energy efficiency ratings in 2022.

Tied to this push for more environmentally friendly housing is the trend for green mortgages, which is almost certainly set to continue in 2022.

Refurb-to-let

With house prices rising at unprecedented levels, some of those looking to invest in a buy-to-let are being priced out of the market.

Therefore, some landlords who are either handy themselves, or have a team of tradespeople on speed-dial are looking for more affordable properties that need some refurbishment. Whether this is a new bathroom, modernising a kitchen or even converting a property into a House in Multiple Occupancy (HMO).

For more ambitious landlords, the high-street may present some opportunities. As we are transitioning away from the traditional shopping experience with more and more people choosing to shop online, there will be commercial spaces that could be converted into residential properties.

Specialist sectors set to grow

This brings us on nicely to another area of interest for 2022, specialist properties. Despite doubts at the start of 2021 about the viability of HMOs due to concerns around the coronavirus, HMOs have been popular throughout the year.

The motivating factors behind renters choosing HMOs will still be highly relevant in 2022, with the social and financial benefits still applicable.

From the landlords’ perspective, HMOs offer increased yields with slightly less risk attached as if one tenant leaves, others will still be paying rent.

Alongside HMOs, holiday lets have been increasing in popularity as well, partly in response to the staycation boom. With international travel looking set to be restricted again in 2022, this trend should continue and more landlords may jump on this bandwagon.

5-year fixes coming to maturity

In 2017 new underwriting standards were introduced by the Prudential Regulation Authority and this resulted in a spike in borrowers opting for longer term products.

As 2022 marks five years since the new standards were introduced, a notable number of these longer-term mortgages may mature in the next 12 months, presenting a great opportunity for lenders and brokers.

There is hope on the horizon for an end to the pandemic and the restrictions it imposed. This wave of optimism extends to the buy-to-let sector, as rents are expected to rise, there are new opportunities for specialist properties and remortgages, therefore 2022 looks to be another strong year for the buy-to-let market.

By Andrew Ferguson

Source: Mortgage Introducer

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Buy-to-let product choice reaches 14-year high

There are signs of confidence in the buy-to-let sector, as data suggests demand for rental properties may remain strong in 2022, according to Moneyfacts.

According to Moneyfacts, there was an increase from December to January of 222 products on offer to landlords, bringing the current total to 3,528. It said it was the most since September 2007 and was nearly 1,000 more than in January 2020, before the Covid-19 pandemic.

The site also said the provision of mortgages for those with smaller deposits or levels of equity was a sign of confidence in the BTL sector, saying that 28 products were now available at 85% loan-to-value (LTV). This is the most since March 2020 when it was just 32 and a rebound from January last year when the figure was zero.

The average overall two-year fixed BTL rate has increased, Moneyfacts said, for the second consecutive month, rising by 0.04% to 2.94%, making it the highest since September when it was 2.94%. In contrast, the average overall five-year fixed rate had held steady at 3.18% since October 2021, the lowest it had recorded since the 3.06% in August 2020.

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More choice for landlords

Eleanor Williams, spokesperson at Moneyfacts, said: “The level of product choice available to landlords has continued to increase for the eighth consecutive month, with the number of options across all the LTV tiers improving.

“The rise of 222 deals is the highest month-on-month increase in availability that we have recorded since July 2021. At 3,528 total deals on offer, this is the largest number of BTL products we have seen in more than 14 years.”

This occurred, she said, despite the pandemic and changes to regulations and taxation.

“BTL lenders seem keen to entice borrowers,” Williams added, “as there are almost 1,000 more products available now than there were two years ago in January 2020, before the onset of the pandemic.”

“Following the increase in base rate by the Bank of England last month, we have seen the average two-year fixed rate for all LTVs rise by 0.04% since last month to 2.94%, a shift which echoed recent changes in the residential mortgage sector.”

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Landlords looking to secure a five-year fixed rate in the brackets between 65% and 80% LTV, she said, “will find that the average five-year fixed rates in these tiers fell month-on-month, which is great news for those hoping to protect themselves from potential future rate rises with the stability of a mid-term fixed rate deal.”

As an example, she said that landlords who “took out a 75% LTV five-year fixed rate in 2017 and are looking for an equivalent deal now will find that, at 3.19%, the average rate is 0.70% lower now than when they secured their previous deal.”

However, she added, “Landlords who have a smaller level of deposit or equity, however, may find that, as with the two-year fixed rate, the average five-year fixed rate in the top 85% LTV tier has risen. Increasing by a significant 0.30% this month, at 5.52% this is now 0.23% above where the equivalent rate sat in January 2017.”

More risk in a niche lending area

Williams said buy-to-let lending remained a “niche” area as it was viewed as high risk by lender.

She added: “Therefore, it takes very little movement, or just a slight adjustment from any of the handful of lenders who operate in this arena, to make a notable impact to the average rates.”

Citing the latest rental market report from Zoopla, she said that “rental demand grew to a 13-year high in the third quarter of 2021, and while demand for property continues to outstrip supply, it also recorded an increase in average UK rents of 4.6% over the year.”

She added: “Our latest data suggests that providers seem prepared to offer a variety of deals for landlords who are either investing in property or are looking to lock into a new deal, so anyone considering their next move in the BTL arena would be wise to seek advice from an independent broker to assess the changing market.”

Written by: Su Fowler

Source: Your Money

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Average rents up for fifth consecutive quarter

Average UK rents increased for the fifth consecutive quarter during Q4 2021, according to data collected by The Deposit Protection Service (DPS).

Average rents reached £834 during the final three months of 2021, an increase of £16 (1.96%) on the previous quarter and a £42 or 5.30% increase on Q3 2020.

South West rents, which traditionally lag behind the national average, drew level for the first time, rising by £19 (2.33%) during Q4 2021, and by £54 (6.92%) from £780, the largest regional percentage increase during the past 12 months.

Average rents have increased across all property types since Q3 2021, with those on detached properties increasing the most; on average by £26 (2.33%) to £1,143, and also rising £88 or 8.34% from Q3 2020.

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The organisation also said that Q4 2021 rents also rose across most of England, with London, the South West, and Yorkshire seeing the largest value rises, contributing to an annual UK average rent increase of just over 4% for 2021.

York saw one of the highest increases, up £71 (9.49%) from £748 to £819 during Q4 2021, a rise of £120 or 17.17% from £699 since Q4 2020.

Conversely, Southampton saw one of the largest falls in rental value during Q4 2021, decreasing £122, (15.12%) from £807 to £685.

Average rents in the North East, traditionally one of the cheapest regions in the UK to rent, increased by £5 (0.91%) from £549 to £554 during Q4 2021, with rents increasing £34 (6.54%) during the past 12 months.

During Q4 2021 London rents increased for the second consecutive quarter, ending 2021 at £1,381, an increase of £42 (3.14%), the highest value regional increase, and a £64 (4.86%) increase on the same quarter during 2020.

The London borough of Islington saw the sharpest value rise in rent during Q4 2021, an increase of £273 (19.6%), from £1,393 to £1,666, added the organisation.

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Matt Trevett, managing director at The DPS, said: “During Q4 2021 rents increased in the vast majority of UK regions and across all property types, with demand for detached properties driving the greatest increase in rental value for these properties.

“Our figures also show that renters were less likely to move during the past 12 months, suggesting lower availability of stock and therefore perhaps more limited options for moving.

“We’re also seeing definitive signs of recovery in London, particularly the return of the popularity of flats in some areas, suggesting that some tenants are coming back to the capital.”

Paul Fryers added: ”There is currently significant pressure on rental stock across the country.

“Reasons are complex, but they include landlords selling up to capitalise on high sale prices, plus a shortage of new build homes as a result of supply chain and raw materials issues.

“We’re hearing stories of landlords receiving unprecedented levels of interest, with some renters willing to pay rents upfront and even stories of some tenants willing to pay over the odds to secure properties.”

By Jake Carter

Source: Mortgage Introducer

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Record 47,400 Buy-to-Let Companies Set Up in 2021

Last year saw a record number of companies set up to hold buy-to-let property. In total there were 47,400 new buy-to-let companies incorporated in 2021 across the UK according to Companies House data.

This is nearly twice the number that were set up in 2017 when it was announced that investors with properties in their personal names would no longer be able to claim mortgage interest as an expense. While individual landlords are effectively taxed on turnover, company landlords are taxed on profit. This has meant that for some landlords – particularly those who are higher rate taxpayers – it has become more profitable to move their buy-to let(s) into a company.

However, the rate of growth in new incorporations fell compared to previous years, with a 14% increase recorded between 2020 and 2021, down from a 30% increase recorded between 2019 and 2020.

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While the number of buy-to-let companies up and running in the UK passed through the 200,000 mark as the country emerged from the first lockdown, by 2021 this figure rose to a new total of 269,300. 61% of these companies have been set up since the withdrawal of mortgage interest relief which began in April 2017.

The average buy-to-let company has been operating for 9.2 years, a figure which has fallen amid the rising number of new incorporations over the last five years. At the other end of the scale, 7,900 or 3% of companies have been running for more than 50 years, while 440 have been going for more than a century.

50% of new buy-to-let mortgages in 2021 were taken out by a company rather than someone buying in their personal name, meaning we estimate that around half of all new landlord purchases last year used a company to hold their buy-to-let. 40% of these new purchases went into a company which was less than a year old, suggesting newer landlords still account for a sizable proportion of growth.

Buy-to-let companies currently hold a total of 583,000 mortgaged properties, accounting for around 29% of all existing buy-to-let mortgages nationally. This figure has increased from 26% over the last 12 months.

The bulk of new buy-to-let companies set up in 2021 were in London and the South East, with the two regions together accounting for 45% of all new incorporations. These two regions have long led the incorporation charge given higher rents mean the tax advantages from incorporation are generally larger. Only the North East, the cheapest region in the country, saw fewer (-6%) buy-to-let companies set up in 2021 than in 2020.

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Northern Ireland (36%) has seen the biggest annual increase in the number of new buy-to-let companies set up, albeit from a low base.

While the number of buy-to-let incorporations has continued to grow, around 25,100 have closed their doors since the onset of the pandemic. 15,200 companies closed in 2021 which equates to around 6% of all buy-to-let companies up and running today. The average company closed down after 5.8 years, a figure which has fallen steadily in recent years as the number of incorporations has increased.

RENTAL GROWTH

Despite rental growth across Great Britain peaking over the summer months, an annual growth figure of 7.2% recorded in December 2021 means that rents were rising at around twice the rate recorded in December 2020. This compares to a peak of 8.7% in July 2021 and 7.9% in November 2021.

For the sixth month running, rents grew faster in the South West (12.8%) than in any other region. This growth means that average rents have now surpassed £1,000 per month in all four Southern regions of Great Britain: London before our records began in 2012, the South East in July 2016, East of England in December 2020 and the South West in December 2021.

Rental growth continued to strengthen in Greater London on the back of a recovery in Inner London. Inner London rents rose 8.6% over the last 12 months, the fastest rate since March 2016. This leaves the average rent here just 2.0% below where it was on the eve of the pandemic in January 2020.

Rental growth (3.7%) in Outer London has remained considerably more stable, returning to its pre-pandemic trajectory.

Source: Property Wire

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15% of landlords unaware of upcoming EPC changes

An estimated 15% of landlords said they have no knowledge of upcoming legislative changes to Energy Performance Certificates (EPCs), according to research from Shawbrook Bank.

From 2025, all newly rented properties will be required to have an EPC rating of C or above.

Currently, properties only require an EPC rating of E or above. Existing tenancies will have until 2028 to comply with the new rule changes.

A quarter (25%) of landlords surveyed said they had little to no knowledge of the forthcoming changes to the required EPC rating.

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With a large proportion (36%) of landlords with properties built pre-1940, Shawbrook’s analysis showed that a significant number of landlords will be required to make changes.

On a regional level, four in 10 landlords said that their properties in London were built prior to 1940, with a similar picture in the South West, Scotland and Wales.

Victorian properties make up 13% of private rental housing stock nationally, according to landlords.

Emma Cox, sales director at Shawbrook Bank, said: “The true extent of what this legislation could mean for the market has not yet been properly realised.

“Inaction could see a considerable percentage of the private rental sector declared unrentable or unsellable within a matter of years if landlords don’t take important steps now.

“Making changes to improve a property’s energy efficiency rating will help to improve the overall energy efficiency of the UK housing stock and to assist the government in meeting the ambitious net-carbon zero targets set out earlier this year.

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“But on a more direct level, making the improvements ahead of the impending 2025 deadline will ensure that properties remain commercially viable for the short and long term for landlords.

“Putting off making necessary changes could leave landlords exposed to extended void periods when their property can’t be rented out while works are being completed.

“Mortgage lenders, and key players in the market, have a big role to play in supporting landlords by helping them to understand the new legislation, the potential impact this could cause and how to take action, if required.

“Our research indicates a clear gap in landlord’s understanding of how the changes will impact them and their current yields.

“As well as these risks to landlords,, renters may also be put in an even worse position as they compete for a smaller number of properties that are rated C or above after the 2025 deadline.”

By Jake Carter

Source: Mortgage Introducer

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UK Finance: BTL purchase lending up 83% in 2021

UK Finance has predicted that buy-to-let (BTL) purchase activity will have increased to £18bn this year, up 83% on 2020.

UK Finance said the main driver of lending in 2021 was for house purchases at £200bn, up 53% on 2020; however, homeowner remortgaging activity was slightly down on last year at £62bn.

The predictions outlined that total house purchase transactions, including cash purchases, will reach 1.5 million in 2021, some 47% higher than 2020, and the highest number since before the Global Financial Crisis.

UK Finance estimated that gross lending overall would peak at £316bn, up 31% on 2020, then moderate to £281bn in 2022, before increasing again to £313bn in 2023.

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Looking ahead, UK Finance said that while the 2022 and 2023 gross lending figures will be reductions on the 2021 peak, they will be higher than the 2020 and 2019 figures, representing a return to more stable levels of activity.

James Tatch, principal, data and research at UK Finance, said: “2021 has been a bumper year for mortgage lending amid the stamp duty holiday and homeworkers moving from cities.

“The outlook for the housing and mortgage markets over the next two years is for a return to more stable, balanced picture following the upheavals of the last two years.

“While risks remain, both to new lending and ongoing affordability, the market looks to be emerging from the pandemic in a better place than previously anticipated, supported by a much-improved wider economic outlook.”

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Elise Coole added: “It has been an enormously busy year for the buy-to-let market, with pent-up demand from the pandemic and the end of the stamp duty causing a spike in activity.

“UK Finance has predicted a significant slowing of purchase volumes in the buy-to-let sector next year, but this is not surprising given how pumped up the market was by artificial stimuli this year.

“What’s important though, is that UK Finance expects another strong year of lending next year, both for purchase and remortgage, with remortgage activity being driven by the tax changes introduced by George Osborne when he was Chancellor.”

By Jake Carter

Source: Mortgage Introducer

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