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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.

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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.

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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

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Most tenants happy with property and landlord: Paragon

Tired cliches” about renting have been disproven according to Paragon Bank, after commissioning research which showed the majority of tenants are happy with their experience.

Carried out by the Social Market Foundation (SMF), a survey of 1,300 tenants found over 80% were happy with their property and landlord.

Conversely, the greatest source of dissatisfaction among this population was the status of being a renter with 34% of respondents attesting to this.

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The report – entitled ‘Where next for the private rented sector?’ – also unveiled tenants’ ambitions.

Only half of respondents expect to leave the private rented sector in the next 15 years, suggesting many intend to remain renting for longer.

Specifically, 13% of respondents admitted they would be happy renting for the long-term.

This could mean a demographic shift among renters with average ages rising.

By 2035, SMF expects over half of private renting households to include someone aged 45 or older. Couples and families will also make up a rising proportion of renters.

Paragon Bank managing director of mortgages Richard Rowntree says these findings demonstrate how many views about renting are “outdated” or “tired clichés”.

“In our experience, the vast majority of landlords seek to provide a good quality home and enjoy a healthy relationship with their tenants; the significant investment in private rented property by landlords has helped drive up standards over the past 15 years and today homes in the sector are generally newer, larger and more energy efficient than ever before,” says Rowntree.

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“People from all walks of life now call the private rented sector home and we must strive to create a sector that meets everybody’s needs.”

The SMF includes several recommendations to the government.

These are to increase the stability of tenancy agreements (after 69% respondents supported 24 months as the minimum contract length), giving renters more control over their homes, increase accountability of landlords and improve the standards of private rented properties.

SMF economist, and one of the report’s authors, Aveek Bhattacharya says: “In contrast to the horror stories that get wide circulation, the majority of renters are satisfied with their living conditions and have decent relationships with their landlords.

“It is absolutely right that the government should seek to help the minority with poor standard accommodation and unprofessional landlords. At the same time, it needs to think harder about what it can offer the typical renter – who is largely happy with their circumstances today, but has doubts about whether they want to keep renting long-term.”

Source: Mortgage Finance Gazette

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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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Paragon: Landlord confidence at five-year high

The proportion of landlord respondents optimistic about different aspects of letting is at the highest level for five years, according to Paragon Bank.

As part of research carried out on behalf of Paragon Bank by BVA BDRC, landlords were asked to rate their expectations for rental yields, their own lettings business, capital gains, the private rental sector, and the UK financial market.

The proportion who deemed the outlook for these measures to be either ‘good’ or ‘very good’ exceeded levels seen in Q3 2016, the survey taken just before the Brexit vote, with investor optimism consistently rising following the record low levels seen in Q1 2020.

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The survey also highlighted a link between optimism and portfolio size, as 56% of landlords with 11 or more properties felt ‘good’ or ‘very good’, but this fell to 46% amongst those with between one and 10 properties.

A positive outlook was noted among 63% of those who had recently purchased a property, compared to 48% of all respondents.

More than three-quarters (78%) of landlords who planned to expand their lettings business in the next year were optimistic, whereas confidence was seen in a lower proportion (26%) among those looking to divest.

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Richard Rowntree said: “Understandably, landlord confidence fell sharply in the first quarter of 2020, as the extent of the pandemic became clear.

“It is fantastic to see optimism bounce back and rise in the time since; it is an indication of the strength of the sector.

“Landlords see the sector’s issues and opportunities on a daily basis so measuring their outlook can provide useful insight for the industry and, as we see here, investor confidence can have a real impact on behaviour.”

By Jake Carter

Source: Mortgage Introducer

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Portfolio landlords prefer to trust brokers to find the best loan

The majority (73%) of buy-to-let (BTL) landlords prefer to access finance through a broker, rather than going directly to lenders, according to Hodge research.

The research, which asked portfolio BTL landlords and brokers for their views, also found that 71% of larger investors (with portfolios of between £2m and £50m) specified that a broker had saved them money by getting them a good deal.

In addition, 40% of BTL landlords said they found researching a suitable mortgage product themselves to be frustrating, with annoyances including interest rates (35%), lack of clarity over charges (35%), and mortgage or loan underwriting (31%).

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Mike Clifford, head of commercial propositions at Hodge, said: “Our research shows borrowers clearly value the support of a broker to find them the best deal and trust them to find a lender that suits their needs.

“With so many borrowers putting their trust in brokers to find them a loan that suits them, brokers are seen as a key link between lenders and investors – with the added benefit of removing frustrations for landlords.

“The residential market is still very buoyant and many buy-to-let landlords are on the look-out for new properties to add to their portfolio.

“When it comes to lenders they want flexibility, speed and efficiency, something we strive to achieve here at Hodge.

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“Hodge has a small, specialist residential investment team who aim to provide a bespoke and flexible service to both brokers and investors.

“Getting to know our customers, listening to their feedback and keeping them in the loop when it comes to criteria changes and product enhancements allows us offer greater flexibility and match the right product to the right investor.

“The Hodge portfolio buy-to-let loan allows landlords to control their assets under one loan, with the flexibility to remove and add properties, ensuring a far more streamlined, flexible product, which, according to our research, is just want landlords – and brokers – are looking for.”

By Jake Carter

Source: Mortgage Introducer

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Landlords invest £839m a year upgrading new rental property

Landlords spend an estimated £839m each year upgrading newly purchased rental property before letting it out to tenants, research from Paragon Bank has revealed.

A survey of approximately 900 landlords showed that nearly four in five (77%) invest in upgrading property after purchase, spending an average of £8,720 each.

Based on the average number of buy-to-let mortgages granted each year since 2015, this spend would equate to a £839m annual investment in upgrading private rental stock.

The most common work undertaken is general painting and maintenance (67%), electric or plumbing work (44%), and laying new flooring (37%). A third of landlords (32%) install a new kitchen or bathroom, with nearly a quarter (24%) installing a new boiler or upgrading windows (23%).

Richard Rowntree said: “Landlords typically will make significant improvements to a property before letting to tenants, helping to improve standards across the private rented sector.

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“Landlords will of course benefit from this investment through capital appreciation, but it always results in better quality homes for tenants.

“There is a clear correlation between buy-to-let investment and improving standards in the quality of private rental homes. Standards of property in the PRS have increased significantly over that period.

“Overall homes in the sector are newer, larger, warmer and more energy efficient than they were 10 years ago and tenants have more choice.

“Whilst we recognise more needs to be done to improve standards, since 2009 there are nearly three times the number of properties with an energy rating of C or above, a 100% increase in the number of homes built after 1990 and a substantial expansion in the types of property available to rent in the PRS.”

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Paragon’s new report, Driving Standards in the Private Rented Sector, highlights how the standard of property in the sector has improved over the past 10 to 15 years.

Since 2006, the portion of homes in the sector classed as ‘decent’ under government standards has increased from 53.2% to 76.7%. Overall, 3.6 million homes are now classed as decent, compared to 1.4 million in 2006.

Over that same period, 1.4 million buy-to-let mortgages for house purchase have been approved.

Conversely, the number of homes classed as non-decent in the PRS has not reduced significantly, with 1 million homes categorised as non-decent today compared to 1.21 million in 2006. This suggests that the growth in new properties coming into the PRS over that period is driving up standards for the sector overall and diluting the stubborn proportion that remains non-decent.

Source: Mortgage Introducer

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Third of landlords either bought or buying new buy-to-let properties

More than a third (34%) of landlords have recently purchased another buy-to-let property (BTL) or intend to buy one within the next nine months, a survey by The Deposit Protection Service (The DPS) and Zephyr Homeloans has found.

Results from the poll of 300-plus landlords suggest that the ‘opportunity to buy at a discount’ is the most commonly cited reason among those who have recently bought or soon intend to buy additional rental property.

Other key factors including long-term investment (35%), stamp duty savings (34%) and diversification by either location (26%) or property type (23%).

Paul Fryers, managing director at Zephyr Homeloans, said: “Understanding the purchasing motivations behind professional landlords is an essential factor for Zephyr and our mortgage broker clients.

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“It’s equally important to recognise and appreciate some of the challenges landlords have been facing during the past year and how they will affect their current and future applications.

“During the pandemic we saw a significant rise in the use of limited companies to buy and manage property portfolios, and it seems a significant proportion of landlords have made the most of the opportunities provided by the buoyant market conditions we have experienced over the past six months.”

Some 43% of landlords surveyed said that they had temporarily lowered rents during the pandemic to help tenants, with 22% saying they had refinanced their mortgages since the arrival of coronavirus.

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Matt Trevett, managing director at The DPS, added: “Although the buy-to-let market has remained more buoyant than some predicted, the last year has not been without its challenges for many tenants and landlords.

“The survey suggests a large proportion of landlords have been acting to support their tenants, with a significant proportion saying they had temporarily lowered rents during the pandemic.

“A recent survey from The DPS also showed that the pandemic has triggered movement from cities to towns and the countryside, so landlords seeking to rebalance their portfolios may look to make purchases that reflect that trend.”

Source: Mortgage Introducer

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Majority of landlords waiting for lockdown measures to ease before investing

Over half (59.8%) of BTL landlords are waiting for lockdown measures to ease before investing in properties, according to the National Landlord Index by

The research highlights that UK landlords still see the rental market as a safe place to invest especially as the stock market has been so volatile during the pandemic.

This desire from landlords to expand their property portfolios in 2021 is reflected in the demand for buy-to-let mortgages with the index revealing that nearly two-fifths (37.8%) of landlords are planning to apply for one this year.

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As the UK starts to see the benefits the vaccination has on the economy, says it is “clear” that landlords are optimistic that this recovery will be reflected in house prices long-term.

Aaron Short, founder and chief executive at, said: “We are always listening to our landlords and tenants to understand the needs of the market and this is why the National Landlord Index remains so important.

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“Understanding how BTL landlords are being impacted by lockdown measures and what their plans are post-pandemic help us to understand the future lettings market. It is great to see landlords looking to expand portfolios and generally positive about the future and this certainly mirrors the growth we have seen at

“We have been at the forefront of updating this archaic industry and we believe our award-winning model offers tenants and landlords the best solution in the current market.”

Source: Property Wire

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Value of BTL portfolio rises despite drop in landlord numbers

The latest figures by estate agent Barrow and Forrester show that despite the number of landlords operating in the buy-to-let sector dropping by 8% in two years, the value of the average BTL portfolio has risen by almost £40,000 in the past 12 months.

Across Britain, the average landlord’s buy-to-let portfolio consists of 1.9 properties and with the current average house price sitting at £254,525, it equates to an estimated value of £491,234.

This is an increase of £38,820 in the value of their buy-to-let portfolio in one year.

The South West has seen the most considerable uplift in portfolio value with an increase of £49,000 in the past year.

The East Midlands has also seen a notable jump of £41,000 in value, with the East (+£38,000) South East (+£37,000) and West Midlands (+£36,000) also climbing considerably.

London still leads in terms of the most valuable landlord portfolios.

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With the average landlord owning two properties in the capital, the total value of their property investment is almost £1m having climbed by £34,000 in the last year.

The South East has not only seen one of the largest annual increases in portfolio value, but at £641,093, landlords in the region are also seeing the second-highest total sum.

The East (£575,187), South West (£530,890) and East Midlands (£427,942) are also home to some of the highest buy-to-let portfolios per landlord.

James Forrester, managing director of Barrows and Forrester, said: “A sharp increase in property values brought on due to the current stamp duty holiday has caused a considerable jump in the value of BTL investment portfolio up and down the nation.

“However, true to form, it seems as though the government will do their best to spoil the party with an increase in capital gains tax via next month’s budget.

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“This is quite astounding given the string of changes already implemented to stamp duty tax thresholds and tax relief and the impact it has had on landlord numbers.

“They don’t seem to understand that the BTL sector is the backbone of the rental market and fewer landlords means fewer properties and even less affordable rents.

“Who will provide the much needed rental accommodation if not the buy-to-let sector?

“Because it certainly won’t be the government, who have proved time and time again that they’re incapable of implementing any meaningful strategy where the delivery of property market stock is concerned.”

By Jessica Nangle

Source: Mortgage Introducer

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Landlords intend to continue purchasing after SDLT deadline

BTL landlords intend to continue purchasing rental property after the stamp duty holiday has reached its conclusion, according to Foundation Home Loans.

The data revealed that 16% of landlords intend to purchase over the next 12 months, 48% plan to do so in Q1, 41% in Q2, 28% in Q3, and 29% in Q4.

In addition, just 14% of landlords said that they would abort their transaction if completion before the SDLT deadline did not look achievable.

Of those landlords intending to purchase in Q1, 65% said they were very or quite confident they would complete by 31 March.

When the respondents were questioned whether they believed the government would extend the stamp duty deadline, 28% said yes, while 31% disagreed.

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In addition, only 4% of those surveyed said they were purchasing because of the availability of the stamp duty holiday

A quarter of those intending to purchase in 2021 said they were holding off purchasing as they believed property prices were currently inflated.

The research was undertaken by BVA BDRC and carried out between December and January with the results based on 846 online interviews.

George Gee, commercial director at Foundation Home Loans, said: “As we know landlords think long and hard before adding to their portfolios and, as our research reveals, they are unlikely to just confine any purchase activity to the first quarter of this year in order to simply benefit from the stamp duty holiday.

“There are a number of positive results to come out of our exclusive research, not least landlords’ continued intention to keep on purchasing after the deadline has passed, and the news that many BTL landlords will not abort their transactions if there is no extension and they look unlikely to complete by 31 March.

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“In that regard, the next month and a half is very important for the sector.

“Foundation has put in place significant extra resources to our completions team in order to ensure we can complete as many cases as possible by the end of March.

“Looking beyond Q1, there will clearly be ongoing opportunities for advisers active in the landlord borrower space, and all the signals point to significant activity taking place in both the purchase and remortgage sectors.

“We should not forget that many landlords’ special rates are coming to an end over the months ahead, especially those that bought prior to the last stamp duty surcharge increase for additional homeowners back in Q1 2016.

“Foundation’s new range of buy-to-let products and our new limited edition limited company deals should offer landlord clients a variety of options, in order to achieve their aims through 2021.”

By Jake Carter

Source: Mortgage Introducer

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