Marketing No Comments

Buy-to-Let Landlords Target Long-Term Returns

Landlords Showing Faith in the UK Buy-to-Let Market

Landlords nationwide are optimistic about the buy-to-let market moving forward, according to Leaders Romans Group.

LRG conducted a nationwide landlord survey, trying to understand how landlords felt about the current market.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements.

How Do Landlords Feel About the UK Rental Market?

According to the survey, 75% of landlords see the current supply and demand issue as an opportunity to make money in the private rented sector.

Demand is currently up by 32% year-on-year. August 2023 saw 197 potential tenants register for property listings – up from 149 in 2022.

This robust demand for rented accommodation is opening the door for landlords to step into the market.

62% of landlords cited current market conditions as an opportunity to increase yields.

For instance, the average UK rent has risen by 10.09% in the last year (according to the Homelet Rental Index), while the UK House Price Index shows price growth has only increased by 0.2%.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division”

How Do Landlords Feel About the UK House Prices?

The survey shows landlords are also optimistic about property prices moving forward. 40% of participants expect house prices to go up from 2024 onwards.

There are numerous resources that back up this outlook. For instance, easyMoney predicts house prices to reach £300K by 2025 – they are currently at £291,044 according to the Land Registry UK House Price Index.

While inflation and rising interest rates have caused a price slump in the housing market, falling inflation and halted interest rates give some hope that the market will correct itself in the near future. It remains to be seen whether prices will improve in 2024. However, once interest rates come down and wages come up – people will have more money to spend, and we should see real movement in the housing market again.

Discover our Mortgage Broker services

How Does LRG View the Property Market?

LRG acknowledges the issues facing the current market but also anticipates that interest rates will decrease in the run-up to the 2024 general election, boosting the housing sector for landlords and homebuyers. If you are looking to invest in Property, now is a good time.

LRG’s National Lettings MD Allison Thompon said:

“Demand for rental properties has seen a 32% increase since last year, with rental prices continuing to rise. This shows the return on investment for landlords remains positive. Those landlords we have recently surveyed remain optimistic about the opportunities available in the coming year. LRG’s resounding message to landlords is to remain committed on the basis that property investment is a reliable and lucrative long-term option.

“Furthermore, due to high levels of demand for rental properties and a slow-down in property sales, we’re increasingly providing lettings advice to homeowners who need to move but are struggling to sell or don’t want to reduce their house price. Across the country, across different property types and locations, many people in this position are taking advantage of unparalleled demand in the lettings sector.”

LRG’s research shows landlords share the same optimism.

68% of landlords responded to the survey and said they would maintain the current holdings, while 6% looked to expand their investments.

While challenges still face the UK housing market, both landlords and industry experts believe there are plenty of positives in the BTL market for the foreseeable future.

By Dale Barham

Source: RW Invest

Marketing No Comments

Short-term lets and holiday homes surpass buy-to-let income

Short-term lets – and specifically furnished holiday lets – are now generating greater profits for owners than the traditional long-term buy-to-let model, but there are downsides.

In the aftermath of the pandemic, short-term lets surged in popularity, when staycations became the only way – or the preferred way – to take a holiday compared with overseas travel. Even after Covid restrictions were largely lifted, more people still opted to holiday in the UK than pre-pandemic.

But the property type had already been rising through the ranks as a property investment option for a number of reasons, including recent buy-to-let tax changes that meant some landlords paid lower levels of tax on holiday lets than buy-to-lets.

Some recent research conducted by Hamptons, using official data from HM Revenue and Customs, has revealed that in the 2020-21 tax year, income for short-term lets in the UK hit £15,600, while traditional buy-to-let income generated £13,400. This is the first time income has been higher for holiday lets.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements.

Long-term landlords moving to short-term lets?

However, while there have been many reports over the past three years indicating that some landlords have ditched the long-term for the short-term rental option, the data reveals that in fact only 1.5% of all landlords are holiday let owners.

Therefore, the vast majority of landlords still see the highest value from their long-term rentals, putting paid to rumours of large numbers of landlords ditching the traditional buy-to-let model.

When looking at how the furnished holiday let industry has grown over the years, the study showed that 63,000 people made an income from 65,000 lets in 2020/21, up from 46,000 individuals who owned 50,000 holiday lets in 2011/12.

The report notes that there are two main reasons that the short-term lets sector has grown so much, the first being that the majority of such properties are used for both personal and commercial purposes. The commercial side in particular has grown in recent years, adding to the figures.

The other reason, as touched upon earlier, is the ‘staycation boom’ that boosted demand in the sector to a significant level, leading to more landlords and homeowners taking the opportunity to let out suitable properties to fill the need.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

More income, same profit

Interestingly, while the report demonstrates the overall increase in income generated from short-term holiday lets, it also notes that due to rising running costs, owners of both property types end up with “a similar amount of cash in their pocket”.

According to Hamptons, running costs for a holiday let consume around 43% of the total income, while costs for a buy-to-let are around 31% of the total rental income, not taking financing costs into account. Furthermore, incomes are also currently forecast to fall back to pre-pandemic levels.

The maintenance costs that come with a furnished holiday let can include regular cleaning services, more frequent replacement of equipment and appliances due to the higher number of different guests, and more general wear and tear to carpets, fixtures and fittings.

Discover our Mortgage Broker services

Often, landlords with holiday lets will employ an agency to deal with the general management of the property, including listings and comings and goings, which further adds to the costs of short-term lets.

On the plus side, aside from the higher income you could receive – particularly for a well-located, well-turned out property – you could also benefit from its use as a holiday home. The property must be furnished and available for at least 210 days per year to legally count as a holiday let, but the rest of the time you could you it yourself.

From a tax perspective, there can also be certain benefits to short-term lets, which you can read more about here. This article will also tell you more about the rules and regulations that apply to running a short-term let.

By Eleanor Harvey

Source: Buy Association

Marketing No Comments

Cash is king for London’s buy-to-let landlords

In times of high-interest rates and higher mortgages, cash is king for the London’s buy-to-let investors.

According to a new report from Hamptons International, more than two-thirds of London BTL buyers are paying without a mortgage altogether, coerced by sharp increases in the cost of home loans, particularly for rate-sensitive interest-only contracts.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements.

While the cash trend is prevalent in many parts of the country, London’s low-yielding rental sector has seen the biggest jump in cash investors in 2023.

“Investors are having to dig deeper into their savings to ensure the sums stack up on any new buy-to-lets,” Hamptons’ Beveridge added. “This is set to shrink the total mortgage bill for buy-to-let in 2023.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

So far this year, 12.1% of homes sold in Great Britain were purchased by a buy-to-let landlord, the same level as in 2022, yet 61% of investor purchases in the four Southern regions (London, South East, South West and East of England) were made in cash, up from 47% in 2022.

In the North, cash purchases fell from 62% in 2022 to 60% in 2023, making it the first time on Hamptons’ records that a landlord in the South is more likely to be a cash buyer than in the North.

Discover our Mortgage Broker services

“Overall, we estimate that this shift towards cash ownership will save new landlords across Great Britain around £61.9mln in mortgage interest payments this year,” said Hamptons’ report.

By William Farrington

Source: Proactive Investors

Marketing No Comments

Is buy-to-let still a good investment?

Knowing when it’s a good time to buy a house as a prospective homeowner is hard enough, nevermind when you’re thinking about becoming a landlord.

Ultimately, no investment is without risk, and with coming changes in landlord legislation and market fluctuations, investing in property can certainly feel overwhelming. Factoring in whether now is a good time to buy makes the decision even trickier, but learning how to read the market means you can make an informed decision.

What’s the market like right now?

While there have been bumps in the road regarding mortgage rates, and many lenders pulled deals from the market after Kwasi Kwarteng’s 2022 mini budget announcement, investors can rest assured that it seems like the dust is settling.
Unfortunately, interest on buy-to-let mortgages has increased since the start of 2022 after historic lows. Like homeowners, those with existing fixed-year rates won’t see an impact on their finances now, but those looking to buy or refinance soon are likely to see fewer deals and higher rates for a while.

Although, it’s not all doom and gloom. With the close of the Help to Buy Scheme, there may be a larger number of first time buyers waiting to enter the housing market without the means to immediately do so. As such, they are naturally turning to rented accommodation as an alternative to buying. This is good news if you’re a landlord or are considering becoming one.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements.

Are you looking for a long or short-term buy-to-let investment?

While a transient first time buyer may only be a short-term tenant, it’s enough for you to get your foot in the door and give you time to start to think about your future buy-to-let plans.

Consider how long you want to be a landlord for, as this could impact whether it’s worth doing right now. If you don’t need easy and immediate access to the money you’re investing, then making a long-term investment is a good option. However, if you’re only in it for the short-term, then you may be subject to fluctuating house prices. That’s not to say that a return on your investment isn’t still possible, just less likely.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Understanding your local market

Planning is everything when it comes to investing in property, so taking the time to brush up on your local knowledge is invaluable, as each region differs from the next.

Get to know what the demand is like in your area by speaking to other landlords, estate agents, and by reading online forums. Doing your research and asking local experts means you’re able to make an educated decision about what is going to work best for you. For example, you might realise that buying a little further afield from where you originally planned is worth it if the rental market is flourishing in that area.

Landlord responsibilities

When making your final decision, keep in mind the purpose of letting out property is not solely to make money. You also have a responsibility to provide safe and secure housing to your tenants.

Discover our Mortgage Broker services

By RACHEL GEDDES

Source: Property Reporter

Marketing No Comments

How the looming recession will hit house prices and buy-to-let landlords

The prospect of a recession is looming as economic growth fell for the second consecutive month in April.

Gross domestic product dropped by 0.3pc year-on-year in April, according to the Office for National Statistics. This was below economists’ expectations of 0.1pc growth and followed a 0.1pc fall in March.

The economy is “on course for a sharp contraction”, according to analysts Pantheon Macroeconomics.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements.

A full blown recession is still “unlikely”, it said. But the property market is already at a turning point. Analysts have called the peak of house price growth and demand is disappearing fast.

Mortgage approvals for home purchases fell in April to their lowest level in two years, according to the Bank of England, dropping below the pre-pandemic average for the first time since the 2020 housing market shutdown.

Remortgage activity also fell below the pre-Covid benchmark, which suggests that interest rates have finally climbed high enough to put an end to the race to lock in cheap deals.

Savills estate agents has forecast house price falls of 1pc next year, following 7.5pc growth in 2022. After this will come three years of sluggish growth. Transactions in 2023 will fall by 13pc year-on-year, it said.

Soaring inflation is hitting real take-home pay just as rising mortgage costs are depleting buyers’ borrowing power and the cost-of-living crisis is destroying their ability to save.

Consumer confidence has plunged to a record low, meaning buyers will become nervous of taking on more debt and stretching themselves financially to purchase homes. As the chart below shows, in the past this has been linked to house price falls.

Sarah Coles, of fund shop Hargreaves Lansdown, said: “At this stage, the property market is positively festooned with red flags.”

Yet few analysts are anticipating a house price crash because there is still an extreme shortage of supply, and unemployment is at a record low. But how much could the economic outlook change?

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Will there be a recession?
British GDP rose by 0.8pc in the first three months of this year. But much of this growth was driven by high levels of government expenditure on Covid support measures. Pantheon Macroeconomics, has forecast falling Covid spending will detract a whole percentage point from quarterly GDP growth this spring, bringing a fall of 0.5pc compared to the first three months of the year.

“The risks to our below-consensus forecast that GDP will fall by 0.5pc quarter-on-quarter in Q2 now appear to be skewed slightly to the downside,” said Pantheon Macroeconomics.

The cost-of-living crisis is also taking its toll. “Evidence is now accumulating that the squeeze on real disposable incomes is throttling the economy,” it added.

But it does not expect there to be two consecutive quarters of decline, which is the official definition of a recession.

Yet there are different ways to characterise recessions. On a larger scale, the World Bank defines a global recession as a year in which the average citizen sees a drop in their real income.

This is already happening in the UK. Real regular pay flatlined in October and has since fallen for four consecutive months, according to the Office for National Statistics. In February, real pay was down 1.3pc year-on-year. The Office for Budget Responsibility, the fiscal watchdog, has forecast the biggest drop in real earnings on record this year.

During the global financial crisis, “real” pay fell by 1.5pc. This corresponded with an 18pc drop in house prices, according to Nationwide building society.

Discover our Mortgage Broker services

The cost of living crisis will hammer the rental sector
There is a risk that unemployment will rise, and this will hit lower income households first. This would bring a spike in tenants falling into arrears.

Neal Hudson, of BuiltPlace analysts, said: “It is renters I am most worried about. They were the worst hit by the pandemic, they are worst hit by the cost-of-living crisis, and they spend a higher proportion of their income on their housing costs. We will see the impact in the rental sector first, before the owner occupier market.”

If a large number of tenants fall into arrears, there could be a wave of forced sales from landlords, said Mr Hudson. “They are already feeling quite under pressure. A lot of them are reliant on debt; they are being squeezed by higher mortgage rates and by growing regulatory pressures.”

Landlords catering to lower income tenants will be most exposed, said Mr Hudson. Many of these places are also the areas in the North and Midlands that have seen huge buy-to-let investment over the last five to 10 years because low house prices have meant investors can achieve much higher yields than in London and the South.

“On paper, the yields in these places might look good, but when they factor in void periods and non-payments things will be pretty precarious,” said Mr Hudson.

Jumps in repossessions trigger house price falls
Forced sales, when homeowners have to accept discounts to sell fast, are one of the biggest drivers of house price falls. These are caused when people are no longer able to keep up with mortgage repayments, for example after losing their job.

The Centre for Economics and Business Research, a consultancy, has forecast that mortgage repossession claims will surge by 50pc by the end of this year. Over the next two years, they will jump 150pc; by 2024 it will be at the highest level since 2014, when the numbers were still inflated in the wake of the financial crisis.

But this anticipated jump is still small on a historical scale and analysts do not expect repossessions to escalate dramatically – partly because the value of lenders’ portfolios will suffer too if they enforce mass repossessions.

‘Stagnation rather than a crash’
Mr Hudson said: “The big thing the regulators and lenders learned in the early 1990s is that they want to avoid big numbers of repossessions and forced sales. They have a lot of flexibility and capacity for forbearance for existing homeowners. That is why I think we are looking at house price stagnation rather than a crash.”

But rising rates mean many homeowners may be pushed to sell up without being forcibly repossessed.

Ross Boyd, of mortgage comparison website Dashly, said: “There is going to be a remortgage crunch.” Many people are used to paying 1pc interest on their mortgages and will get a shock when they remortgage and find that rates have more than doubled, said Mr Boyd. Some will find they can no longer afford the repayments.

“It is starting now. The number of two-year fixed-rate deals that will expire in June is enormous because so many people bought from the summer of 2020,” said Mr Boyd.

By Melissa Lawford

Source: msn

Marketing No Comments

Rents rise 1% in most regions in April, says index

Rents in England have continued to increase in April as the market remains buoyant, according to the latest Goodlord Rental Index.

The average cost of rent for a property in England rose from £1,006 to £1,012 in April, an increase of 0.5%.

The index found that all regions saw an increase in prices of up to 1%, with the exception of Northern regions.

The North East saw a larger increase in the cost of rent, with prices up by 2.34%. The North West, however, was the only region to see a drop in the average, with a 1.6% decrease.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements

Goodlord’s index also showed that there was another rise in tenant incomes, with the month setting a new record for take-home pay.

As prices continue to creep up, so do salaries, according to Goodlord, reflecting the pressure on employers in a competitive labour market.

In April, the average annual salary of a tenant living in England rose from £29,549 to £30,044, a 1.7% rise, representing another index record.

Renters in London are earning the most, taking home on average £44,920.38, compared to the North West who are the lowest earners, taking home an average of £24,403.69.

Discover our Buy to Let Mortgage Broker services.

On a yearly basis, renters are now earning 16% more than they did at the same time in 2021.

However, voids rose slightly during the months, as the pace of deals cooled in some regions. The average void period for the country in April increased by three days, up from 16 days to 19.

The biggest shift was seen in the North West, where a rise of 37% was recorded. This was followed by Greater London, which saw voids increase from 11 days to 14, a 27% rise. The index showed that London still has the lowest void periods in the country.

Goodlord chief operating officer Tom Mundy says: “The rental market continues to move apace. Rents are at the top end of what we’d expect for this time of year, but tenant salaries are keeping pace with this rise and continue to break records. And whilst voids have lengthened compared to March, all the signs point to a very buoyant market with a high demand for available housing stock.”

By Becky Bellamy

Source: Mortgage Finance Gazette

Discover our Mortgage Broker services.

Marketing No Comments

How to invest in buy-to-let: the in-demand cities unlocked with a budget of £100,000

Soaring rents have enticed property investors back to the buy-to-let market to take advantage of the demand.

Asking rents outside London were up 11pc year-on-year in the first three months of 2022, according to property website Rightmove. In the capital, they jumped by 14.3pc – the largest annual increase recorded in any region since its records began.

A dire shortage of homes to let means rental bidding wars are commonplace and a record number of landlords are achieving over asking price.

Buyers must still contend with rising house prices, but a budget of £100,000 is enough to invest in some of the most in-demand cities in the UK.

We previously looked at where landlords could invest with budgets of £25,000 and £50,000, which largely ranged across Wales and the north east of England.

In the three locations below, an initial investment of £100,000 is enough to buy a property with the potential to earn more than £10,000 each year, according to research by estate agency Hamptons.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements

Bristol

Bristol ranked as the best city for landlords to invest in for 2022, according to Aldermore bank.

More than a quarter of the South West city’s population lives in rental accommodation, and a shortage of properties to let has pushed rents skyward. The average rental yield is 6.5pc.

A £100,000 budget would cover a 25pc deposit and stamp duty on the average flat and terraced house in the city– costing £70,180 and £96,870 respectively – with cash to spare.

A flat in Bristol brings in roughly £11,092 of rental income a year, once mortgage payments and a 10pc provision for maintenance costs have been deducted, according to Hamptons. Annual income rises to more than £14,826 for a terraced house, among the highest for this type of property in the country.

An initial lump sum of £100,000 would be enough to cover the deposit on a semi-detached house in the city, at an average of £96,550, but stamp duty would push the total investment to £117,450. Landlords who can stretch their budget to this size could expect annual rental income after expenses of £17,681.

Manchester

Manchester has enjoyed a similar post-pandemic rental boom to Bristol. Tenants have flooded back to the city and snapped up any available lets, with new-build flats proving particularly popular, according to Rhiannon Durston, of agency Reside.

She said: “The city has become increasingly popular with investors as a result. Landlords are targeting lots of different price points, ranging from those looking to invest their savings in just one property, to those buying multiple.”

Discover our Buy to Let Mortgage Broker services.

The average rental yield in the city is 6.4pc, and a typical flat costs £175,380. Landlords will need to make an initial investment of £50,120 to cover the deposit and tax bill, and can expect profit after expenses of £7,885 a year.

Investing in terraced houses and semi-detached homes in the city is also possible with a £100,000 budget. An initial stake of £55,520 for a terraced home and £74,390 for a semi are needed to cover the deposit and tax bill on each of these property types.

Landlords can make profits after expenses of £8,694 from a terraced house and £11,496 from a semi-detached house, according to Hamptons.

Ms Durston added: “Many of the new build sites are now sold out. One-bedroom rentals fly out and three-bedroom homes are very popular too, but there are few of these available on the market.

“Splitting bills three ways between tenants makes the let more affordable, which is why they are in such high demand.”

Winchester

Higher property prices in the sought-after hotspot of Winchester limits landlords with a £100,000 budget to investing only in flats. They require £68,550 to cover the average deposit and stamp duty.

Buyer appetite for houses with gardens has surged since the pandemic, meaning landlords will be up against stiff competition for bigger properties. The average terraced house in the area requires an initial investment of £115,080.

However, investors who can afford to tap into the Winchester market will benefit from strong tenant demand.

Bill Jarvis, of estate agency Winkworth, said: “Landlords are now in a position to choose who they let their property to because demand is so high, whereas they couldn’t before.

“We frequently see tenants offering on a property without even viewing it.”

The average rental income from a flat in Winchester is £10,332 a year, after costs, according to Hamptons. If landlords can stretch their budget to a terraced or semi-detached house, annual rental income rises to £16,535 and £19,509 respectively.

“A lot of tenants are willing to pay guide price and above to secure a property, but especially so if they have pets,” added Mr Jarvis.

“There is a real lack of landlords who are willing to allow animals in their rentals, so tenants are offering higher bids to persuade them otherwise, sometimes to the tune of hundreds of pounds extra each month.”

By Rachel Mortimer

Source: Telegraph

Discover our Mortgage Broker services.

Marketing No Comments

Landlord purchases in Q1 2022, highest in six years – Hamptons

Investors purchased 13.9% of homes sold across Great Britain in the first quarter of 2022, up from 12% recorded during the same period of last year.

This was revealed in the latest Hamptons Lettings Index, which also found that this year’s figure marked the highest proportion recorded in the first quarter of any year since 2016, when investors rushed to beat the 3% stamp duty surcharge on second homes.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements

Overall, investors bought 42,980 homes across Great Britain during the first three months of this year, equating to £8.5 billion worth of property, which is nearly twice the £4.6 billion recorded during the pre-pandemic first quarter of 2019.

The increase in buy-to-let purchases may help reverse the decline of the private rented sector which shrunk from a peak of 5.3 million homes in 2017 to five million in 2021. However, the increase may not be enough to cover the lack of supply, according to Aneisha Beveridge, head of research at Hamptons.

“While we expect investors to continue purchasing at around the same rate over the course of 2022, it’s unlikely to be enough to make up for the full loss of rental homes during the last five years,” Beveridge said.

A lack of stock has also meant that investors are increasingly having to pay over the asking price. According to Hamptons, for the first time since it began recording data, the average investor is paying over 100% of the asking price for a buy-to-let in England and Wales.

Discover our Buy to Let Mortgage Broker services.

Meanwhile, the average cost of a new let in Great Britain rose to £1,115 pcm last month, up 9.1% from its 2021 low of £1,022 pcm in March last year.

“A lack of rental homes is one of the reasons why rents have been rising at such pace over the last year. March set a new record for rental growth as rents bounced back from 2021 lockdown lows last March,” Beveridge said.

“But as these new buy-to-let purchases begin to feed into the lettings market over the coming months, we expect to see rental growth cool, particularly as the cost-of-living crisis weighs on affordability too,” she added.

By Rommel Lontayao

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Marketing No Comments

Boom in the buy-to-let property market

Demand is growing for buy-to-let properties across the north and north-east as investors seek to capitalise on good rental returns and the rising property market.

Local estate agent Galbraith has reported a boom in the buy-to-let market with a typical two-bedroom apartment in Inverness expected to sell for £165,000 with a prospective landlord achieving rent of between £750 to £775 per month.

Marsaili Macleod, a lettings adviser with Galbraith, says there are two key reasons why there has been a shift in the market.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements

Strong demand from tenants

“In recent years investors have been more interested in the holiday lets sector as these were often considered a more profitable option than residential lets,” said Marsaili.

“Now we are talking to more landlords who are interested in the core residential lets market for two reasons.

“Firstly, strong demand from tenants and lack of supply means that rental prices are rising and the landlord can pick and choose from waiting tenants.

“Secondly the value of the property itself will rise over the term of ownership because property prices have risen considerably in Scotland over the past two years.

“Many of our clients are planning ahead and investing in a buy-to-let property which will achieve good capital growth and fulfil their financial objectives while offering security.”

Lenders are currently offering capital and interest mortgages, or interest-only mortgages, for buy-to-let properties with monthly repayments lower than the likely monthly rental fee.

Discover our Buy to Let Mortgage Broker services.

According to Marsaili, this offers the potential to achieve a return each month even taking into account that a purchase of this kind is subject to the Land and Buildings Transaction Tax at 4 per cent on second homes.

And with the cost of borrowing remaining low, Marsaili also believes that this is playing a part in the market change as people are using it as an opportunity to invest in their future.

Low borrowing costs

“Although interest rates are rising, the cost of borrowing remains historically low,” said Marsaili.

“The potential returns in the buy-to-let sector are good, coupled with the likely significant rise in value of the property itself over the term of ownership.

“Clients are considering whether to buy a property which can be let now to a tenant and in five or 10 years’ time potentially made available to their children as a first home or for when they go to university.

“Having evaluated the returns from the holiday lets sector and the potential returns from residential tenancies, clients are choosing the residential lets market.”

Galbraith currently lets over 1,000 homes to residential tenants for clients across Scotland and the north of England.

By Rosemary Lowne

Source: The Press and Journal

Discover our Mortgage Broker services.

Marketing No Comments

Property rents rise as Scotland catches up with England & Wales

Scottish property rents have continued to rise at a higher rate than the rest of Britain after years of low increases according to analysis of the latest data from property firm DJ Alexander Ltd, part of the Lomond Group which is the largest lettings and estate agency in Scotland.

The latest data up to February 2022 shows that the annual increase in rents was 2.6% compared with 2.1% in England and 1.4% in Wales. The Scottish annual rate has been higher than England and Wales each month since July 2021. However, over the long term since 2015, rents in England and Wales have risen at a higher rate than Scotland.

Get in touch with Mortgage Broker UK today to discuss your residential and Buy to Let Mortgage requirements

David Alexander, the chief executive officer of DJ Alexander Scotland, commented:

“The current increases in rents across Scotland reflects growing demand but is also a sign that the market is correcting itself. This data shows that Scotland’s rent increases have consistently been lower than England and Wales since 2015 and the current increases are simply a sign of Scotland catching up.

“It also needs to be remembered that a 2.6% annual increase in rents is still quite low given that inflation is now running at around 6 to 7% which means that this increase is actually a reduction in real terms.

“The Scottish government’s own data reveals that two-bedroom private rented sector (PRS) rents over the last eleven years have risen at a rate similar to inflation (25.1% rent increase compared to inflation of 24.3% over the same period).

Discover our Buy to Let Mortgage Broker services.

“Too often the focus on rent rises produces a headline figure rather than one which is adjusted for inflation. This is like saying a pint of beer should be the same price in 2022 as it was in 2010. Everybody knows that is ridiculous but when it comes to the private rented sector many people seem to ignore the fact that rents, like all goods and services, must rise each year by at least inflation.

“I do believe that rents will increase much more in the coming year due to skyrocketing inflation and the cost-of-living crisis. Hardest hit will be those properties which are let on an all-inclusive basis including bills as the soaring cost of utilities will be a particularly strong driver of rising prices.

“Landlords, investors, and agents should all take care in explaining the reasons for rent increases whilst tenants, their representative organisations, and politicians must also take a realistic approach. Rental prices must rise to keep up with inflation and that such increases are entirely necessary to cover greater costs.”

Source: Property Industry Eye

Discover our Mortgage Broker services.