Marketing No Comments

Buy-to-let mortgages reach their 25th birthday

The private rented sector has almost doubled in size since the first buy-to-let mortgage launched 25 years ago this Friday.

In 1996, the Association of Residential Landlords (ARLA) worked with a small group of lenders including Paragon and NatWest to develop a mortgage product specifically tailored to landlords.

Buy-to-let was devised to encourage new investment into a private rented sector (PRS) that had been in long-term decline.

The recession of the early 1990s exposed a lack of options for those for whom home ownership was out of reach, but who couldn’t qualify for diminished social housing provision.

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

The PRS had fallen from over 70% of homes post World War I to less than 10% by the late 1980s, fuelled by the growth of social housing, successive policies to encourage home-ownership and a legal landscape that afforded little legal protection to landlords.

The only way a landlord could finance a property portfolio before BTL mortgages were launched was through commercial mortgage terms.

Often offered a low loan-to-value and with high rates, these didn’t always make the most attractive option for investors.

As a result, it is thought that some landlords used standard residential mortgages but in cases where the tenants weren’t declared, the terms of the mortgage would have been breached.

That was until the launch of the first specialist buy-to-let mortgage in 1996.

At the time, John Major was prime minister, Princess Diana and Prince Charles divorced and mad cow disease was causing panic.

That same year the Spice Girls’ debut single, Wannabe, was released and England hosted the European Football Championships, cheered on by fans singing David Baddiel and Frank Skinner’s Three Lions (Football’s Coming Home).

The private rented sector (PRS) has almost doubled in size, expanding from 2.4 million households in 1996 to 4.4 million in England today.

Discover our Buy to Let Mortgage Broker services.

Now the PRS accounts for 19% of UK households, which is more than the social housing sector, which accounts for 17% of households.

The portion of homes in the sector classed as “decent” under government standards has consistently increased, rising from 53.2% in 2006 to 76.7% last year.

There has been a 272% increase in PRS homes with an energy rating of C or above since 2009 to 1.8 million today.

Paragon managing director for mortgages Richard Rowntree says: “Since being launched as a mortgage product specifically designed for landlords 25 years ago, buy-to-let finance has helped to transform the PRS.

“It is now a vital component of the UK’s housing provision, with renting no longer a last resort.

“The PRS is a tenure of choice as well as need and this is supported by the diversity of those who actively choose rented homes, benefitting from the flexibility they provide.”

Former Arla Propertymark president Robert Jordan says: “We at Arla realised that the housing market was at a low ebb; houses weren’t selling, which meant a lot of people were letting their homes to move to a new property.

“When the housing market picked up those properties sold and there was a need for more rented properties to fill the gap for tenants, but we couldn’t see where we would find more homes to let.

“It became clear that the mortgage options weren’t suitable, so together we designed a product, buy-to-let, that would enable more investors to purchase an investment property and let it under the new Housing Act 1988 regulations.

“Paragon and NatWest were the first two mortgage lenders we approached. Today, private landlords house approximately five million households across the UK at no cost to the exchequer.”

By Leah Milner

Source: Mortgage Strategy

Discover our Mortgage Broker services.

Marketing No Comments

New Mortgages for Energy Efficient Rental Properties

Paragon Bank has launched a range of buy-to-let mortgages with lower interest rates for energy efficient properties.

The 80% LTV mortgages charge a market-leading 3.99% interest, fixed for five years, exclusively for rental properties which earn an energy performance certificate (EPC) of A to C. The loans can be used for the purchase and remortgages of self-contained properties and houses in multiple occupation (HMO).

The lender hopes the new mortgages will encourage landlords to invest in the energy efficiency of their properties.

The number of properties in the private rental sector with an EPC of A to C has increased 272% over the past decade to 1.8 million. However, around six and ten homes in the sector still are at a grade D or lower.

Energy inefficient properties are expensive for tenants to heat and frequently dangerously cold. A government survey of the country’s housing stock has found that homes below an energy efficiency ratio (EER) of C cost an average of £500 more to heat each year than properties that achieve a C or better. Those high costs leave a disproportionate number of private tenants in fuel poverty—25% in England, compared to 10% across the wider population.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The most energy inefficient rental properties are on average 2⁰C colder in winter than the most efficient homes, posing risk to tenant health.

Inefficient rentals are also responsible for high levels of carbon emissions. Nationally, energy use in homes account for around 14% of the UK’s greenhouse gas emissions and any pathway to net zero requires investment in insulation, double and triple glazing and low-carbon heating systems in homes.

Under proposed regulations, which the government began consulting on last autumn, all homes in the private rented sector will need a minimum EPC grade of C or better for new tenancies by 2025. All privately rental properties will need to achieve that grade by 2028.

Richard Rowntree, managing director of mortgages at Paragon Bank, said: “Landlords have made great strides in adding more energy efficient homes to the PRS – or upgrading properties to C or above standard—over the past decade. However, more needs to be done as the Government moves towards its net zero carbon target by 2050 and landlords have a key role to play in that.

Discover our Buy to Let Mortgage Broker services.

“Our new range of products at 80% LTV for homes with an energy rating of C or above will be an incentive for landlords to add energy efficient homes to the sector, benefitting tenants through lower energy bills and the environment through reduced consumption.”

Landlords, along with other homeowners, were extended some help in upgrading their properties with the government’s Green Homes Grant scheme. The initiative offered homeowners up to £5k to cover two-thirds of the cost of energy efficiency upgrades. However, the project was dogged by difficulties and was shuttered prematurely at the end of March, having issued just 28,000 vouchers for work and seen just 5,800 energy efficiency measures installed.

Source: Money Expert

Discover our Mortgage Broker services.

Marketing No Comments

BTL landlords reveal market confidence by opting for larger loans

Data from Keystone Property Finance has revealed that mortgage products designed to offer exclusive rates for higher loan amounts are the most popular product among BTL landlords, with more than half (58%) of Keystone clients applying for their larger loans range since December 2020.

The specialist BTL lender’s larger loan range caters for loan sizes of £250,000 – £1m and offers rates from 3.09%.

The rise in popularity for larger loans could be attributed to landlords looking to take advantage of the stamp duty incentive and being able to afford more expensive properties as a result of the tax saving. Data shows that landlords made up 15% of all sales agreed in November 2020, the highest level for four years, as a result of the stamp duty incentive.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Keystone’s figures also signal a growing confidence in the market, as landlords continue to take out larger mortgages in expectation of a continued uptick in future property prices and of positive rental yields post-pandemic.

The data also reveals differences in the types of landlords applying for the specialist lender’s larger loan products, with nearly two-thirds (62%) of applications coming from limited companies compared to 38% of applications from individual landlords.

Discover our Buy to Let Mortgage Broker services.

Elise Coole, managing director of Keystone Property Finance, said: “Our data shows that landlords remain confident about the BTL market, with the majority of customers looking to secure a larger loan to purchase their property.

“Undoubtedly, the SDLT incentive has played an important part in this and has presented landlords with an excellent opportunity to bolster their portfolios and invest in higher value properties.

“The private rental market plays a critical role for millions of people and at Keystone Property Finance, we’re committed to supporting our brokers and their landlord clients by offering a wide range of innovative solutions.

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

Buy-to-let product choice reaches one-year high, the analysis has revealed

Product choice in the buy-to-let market is broadening but rates are also on the rise, the latest analysis from Moneyfacts.co.uk has revealed.

Figures released today show availability of products is at a one-year high, having risen for the fifth consecutive month to reach 2,333.

Moneyfacts said the sector had recovered to 81% of pre-pandemic levels (compared to 68% recovery in the residential sector) and now offered the highest number of products seen since last March, providing landlords with a greater level of choice.

Yet, at the same time, the average two-year fixed rate was 0.28% higher year-on-year – at 3.05% was the highest recorded since June 2019 (also 3.05%).

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The five-year equivalent at 3.41% increased 0.17% compared to a year ago and was currently the highest since September of 2019, when it reached 3.44%.

Month-on-month, the only borrowing tiers where rates had fallen since February were at 60% loan-to-value (LTV).

Moneyfacts also revealed how the proportion of the fixed rate buy-to-let sector which was offering fee-free deals or incentives – such as free valuations or free legal fees – had also reduced year-on-year.

This, Moneyfacts, said, indicated landlords may have to search a little harder for deals with the right incentive package for them.

Meanwhile, the proportion of the market where cashback was available has risen to 25% – a 4% improvement on last year.

Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “There is no doubt that the impact of the pandemic has been polarising, with the buy-to-let sector not escaping from this trend.

Discover our Buy to Let Mortgage Broker services.

“There may therefore be landlords whose focus will be on cutting costs and increasing margins where possible, perhaps by refinancing their existing buy-to-let mortgages.

“Equally, there may be some who are now in the fortunate position of being able to consider investing in a rental property for the first time.”

Williams also explained how the only LTV tier where average fixed rates did not increase this month was at 60% LTV, where both the two and five-year average fixed rates fell by 0.38% and 0.27% respectively.

She added: “It is important to note though that these are averages, and therefore while representative of the market as a whole, there are some very competitively priced products available, with some – depending on LTV and criteria – available at below 2%.

Discover our Mortgage Broker services.

“Therefore, those who are hoping to refinance or take on a new deal would do well to shop around.”

Buy-to-let mortgage market analysis (Source: Moneyfacts)
Mar-20Feb-21Mar-21
BTL product count – fixed and variable rates2,8972,1002,333
BTL two-year fixed – all LTVs2.77%2.97%3.05%
BTL two-year fixed – 80% LTV3.56%3.97%4.14%
BTL two-year fixed – 60% LTV1.89%2.52%2.14%
BTL five-year fixed – all LTVs3.24%3.32%3.41%
BTL five-year fixed – 80% LTV3.98%4.11%4.29%
BTL five-year fixed – 60% LTV2.31%2.79%2.52%
Buy-to-let fixed mortgage market analysis (Source: Moneyfacts)
Mar-20Feb-21Mar-21
Deals with no product fee475 (19%)254 (14%)301 (15%)
Deals with free/refunded legal fees840 (34%)614 (34%)614 (30%)
Deals with a free/refunded valuation1352 (55%)774 (43%)789 (39%)
Deals with cashback531 (21%)307 (17%)503 (25%)
Data shown is as at first working day of month, unless otherwise stated. The % shown is the proportion of deals out of the fixed mortgage market. Source: Moneyfacts.co.uk

Source: Mortgage Finance Gazette

Marketing No Comments

Paragon Bank launches 80% LTV BTL range for energy efficient properties

Paragon Bank has launched a range of 80% LTV buy-to-let mortgages, including a market-leading rate for Houses in Multiple Occupation (HMO), specifically for properties with an energy performance rating of A to C.

The new range aims to encourage landlords to invest in energy efficient properties and increase the proportion of A-C rated properties in the private rented sector (PRS).

The number of properties in the PRS with an energy rating of between A-C has increased by 272% over the past decade to 1.8 million, but approximately six out of 10 homes in the sector are still at grades D or below.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

The five-year fixed rates start from 3.99% for purchase and remortgage and include free valuations, no product fees and £350 cashback. They are available for portfolio landlords on single self-contained properties and HMO.

Richard Rowntree, managing director of Mortgages at Paragon Bank, said: “Landlords have made great strides in adding more energy efficient homes to the PRS – or upgrading properties to C or above standard – over the past decade. However, more needs to be done as the Government moves towards its net zero carbon target by 2050 and landlords have a key role to play in that.

Discover our Buy to Let Mortgage Broker services.

“Our new range of products at 80% LTV for homes with an energy rating of C or above will be an incentive for landlords to add energy efficient homes to the sector, benefitting tenants through lower energy bills and the environment through reduced consumption.”

Under Government proposals, homes in the PRS will need a minimum EPC rating of C for new tenancies by 2025 and all homes in the sector will require this rating by 2028.

Richard Rowntree concluded: “If landlords are to improve the energy efficiency of PRS stock, they need the finance to enable them to do so. Making sure there are attractive options to add new stock, whilst recognising the efforts to upgrade existing properties, is an important element of this.”

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

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 Accommodation.co.uk.

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.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

As the UK starts to see the benefits the vaccination has on the economy, Accommodation.co.uk 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 Accommodation.co.uk, 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.

Discover our Buy to Let Mortgage Broker services.

“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 Accommodation.co.uk.

“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

Discover our Mortgage Broker services.

Marketing No Comments

BTL mortgage availability at pandemic high

The availability of buy-to-let mortgages has remained relatively high during the pandemic, giving landlords cause for optimism, according to Moneyfacts.

Figures from the data provider showed there were 1,976 buy-to-let products available in mid-January, fewer than before the pandemic began but more than the 1,455 available in May.

The provider also suggested lender confidence as the number of deals available in the 80 per cent LTV tier has risen by 26 since December.

Average rates have also increased, with two- and five-year fixed rates standing at 2.92 per cent and 3.29 per cent respectively for all LTV brackets, the highest levels recorded by the provider since November 2019.

But Eleanor Williams, finance expert at Moneyfacts, warned the market has been “volatile” since the start of this year.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

She said: “Lenders have been adjusting their offerings and consequently availability continues to fluctuate – there are now 27 fewer mortgage products on offer than there were just a couple of weeks ago, and so those considering exploring a new BTL mortgage could do well to secure the knowledge and advice of a qualified adviser, to ensure they keep abreast of any relevant changes.”

Buy-to-let mortgage market analysis

PRODUCT NUMBERSJan-20Mar-20May-20Dec-20Jan-2115.1.21
BTL product count – fixed and variable rates2,5832,8971,4551,8182,0031,976
All 80% LTV BTL products – fixed and variable rates2973681974100100
AVERAGE RATESJan-20Mar-20May-20Dec-20Jan-2115.1.21
BTL two-year fixed – all LTVs2.82%2.77%2.51%2.89%2.89%2.92%
BTL five-year fixed – all LTVs3.19%3.24%2.94%3.25%3.27%3.29%
Data shown is as at first working day of month, unless otherwise stated. Source: Moneyfacts.co.uk

The Intermediary Mortgage Lenders Association has meanwhile highlighted the opportunity for remortgage business from landlords who took out five-year deals before the stamp duty surcharge was introduced in 2016.

Discover our Buy to Let Mortgage Broker services.

The trade association predicted the five-year anniversary of the surcharge would enable demand in the mortgage market to stay strong this year despite the end of the stamp duty holiday.

A survey by Paragon Bank also found that half of buy-to-let brokers said they would focus on five-year remortgage business when the stamp duty holiday ends.

But Kevin Dunn, director at Furnley House, commented that he expected demand to fall.

Mr Dunn said: “Whilst demand has remained strong in this area over the last six months, I expect demand in buy-to-let mortgages to decrease once the stamp duty holiday ends at the end of March, however not quite in the same way it fell off a cliff when the stamp duty surcharge was announced at the beginning of 2016.”

By Chloe Cheung

Source: FT Adviser

Discover our Mortgage Broker services.

Marketing No Comments

Number of UK buy-to-let landlords has increased by 49% in five years

The number of UK buy-to-let landlords has risen 49% in the last five years to an all-time high of 2.7 million, research from ludlowthompson estate agents found.

The residential market has stayed relatively strong during the coronavirus pandemic, though the commercial property market has fared poorly, as 54% of tenants have held discussions with their landlords about taking a rent holiday.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Stephen Ludlow, chairman of ludlowthompson, said: “The buy-to-let market has continued to provide a reliable return on investment for landlords, even during the worst of the pandemic when other forms of investments went through a period of intense volatility.”

“The historic resilience of residential property means many private investors are still looking to add to their holdings, particularly before March 2021 when the stamp duty holiday ends.”

Discover our Buy to Let Mortgage Broker services.

“We would advise existing and prospective landlords to consider re-purposing their properties to meet the changing needs of tenants.

“With people spending more time at home, having extra space both in and outdoors has become more important than ever. Outdoor areas and home offices are both in very high in demand, as is accessibility to high-speed WiFi.”

BY RYAN BEMBRIDGE

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

BTL brokers showing increased confidence

Four out of 10 BTL brokers expect to write more business in the next 12 months, Paragon Bank’s Financial Adviser Confidence Tracker (FACT) Index has revealed.

The survey of more than 200 intermediaries showed that 41% of advisors said they expect more buy-to-let business, a slight dip on the 43% recorded in the first quarter of 2020, but up on the 38% from the final quarter of last year.

Just over a quarter (28%) of intermediaries expect buy-to-let mortgage levels to remain stable.

Richard Rowntree, Paragon Bank Managing Director of Mortgages, said: “Despite the buffeting that coronavirus has caused to the mortgage market, and housing sector more broadly, there is clearly still strong and stable demand for buy-to-let via intermediaries, which is reflected in the results of this survey.

To find out more about how we can assist you with your BTL Mortgage please click here

“We have seen a solid rebound in buy-to-let business since the housing market reopened in mid-May and landlords have been unlocking capital to invest and grow their portfolios further. We expect to see increased demand for rented property underpinning growth in the coming months as people delay house purchase or cannot obtain a mortgage with the removal of higher loan to value products in the residential market.”

Of those intermediaries forecasting an increase in buy-to-let business, confidence was stronger amongst directly authorised firms (46%) than appointed representatives (36%). Confidence was also firmer in sole adviser organisations (47%) than firms with between two to three advisers (34%) and four or more advisers (37%).

Richard added: “Coronavirus has had a clear and damaging impact on the economy and the UK as a whole, but the long-term fundamentals underpinning demand for buy-to-let remain unchanged. The UK has a growing population with increasing numbers of households and the private rented sector will provide a good quality home for many of them.”

Source: Property118

Marketing No Comments

HSBC returns to pre-lockdown timetable for valuations and revives buy-to-let

HSBC is making buy-to-let mortgages available once again and has cleared its backlog of physical valuations in England and Scotland.

Easing of restrictions have enabled the lender to make the changes which will mean physical valuations will now work to a pre-lockdown timetable.

It also announced it would be re-starting physical valuations in Northern Ireland today (Monday). Meanwhile, in Wales, physical valuations were due to start when the country’s lockdown restrictions are eased.

News of the return of its buy-to-let mortgages will come as good news to landlords who can now apply for these products through online or telephone applications direct from HSBC UK.

To find out more about how we can assist you with your BTL Mortgage please click here

Restrictions on the movement of people and access to properties introduced as part of the Covid-19 lockdown meant that HSBC – along with many other lenders – was forced to change the way it approached the valuation of properties to ensure it was providing responsible lending.

Michelle Andrews, head of buying a home, at HSBC UK explained: “Where we could we expanded our use of desktop and automated valuations, so mortgage applications could continue.

“In some cases, like higher LTV applications and buy-to-let mortgages it is an essential part of the process, so unfortunately those applications had to be paused.

“I am pleased to say that we have now, with the help of our corporate valuations partners, addressed our backlog of physical valuations in England and Scotland and those mortgages that were on hold are progressing, taking those buying a home one step closer to a potentially dream move.

“Plus, as we are now in a position where we can satisfy our requirement for a physical valuation in a safe compliant way, we are also able to provide buy-to-let mortgages again for landlords.”

Andrews added: “We have shown we can work with our valuers at pace when physical valuations become possible, with appointments already in the diary in Northern Ireland for Monday.

“We are looking forward to being able to progress with physical valuations in Wales as soon as the lockdown rules ease.”

By Kate Saines

Source: Mortgage Finance Gazette