Marketing No Comments

BTL investors seek larger loans as they look to diversify

A majority of buy-to-let landlords are applying for larger loans as market conditions encourage borrowers to buy more expensive properties and diversify their portfolios.

According to buy-to-let lender Keystone Property Finance, three in five of its customers applied for a mortgage in its larger loans range, which offers loan sizes between £250,000 and £1m, since December.

The lender said the popularity of larger loans could be due to landlords being able to afford more expensive properties as a result of the stamp duty holiday.

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

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

“Undoubtedly, the [stamp duty holiday] 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.”

Chris Sykes, associate director and mortgage consultant at Private Finance, said with possible rent arrears during the pandemic, this had partly encouraged landlords to consider diversifying their portfolios, thus requiring larger loans.

A November survey from Citizens Advice found half a million private renters were behind on their rent. MPs have called on the government to support tenants to repay rent arrears caused by the pandemic, including funds for landlords to help them receive income and avoid evictions.

Sykes said: “We have many portfolio landlords who traditionally only did single let family homes for example, who now are looking into houses in multiple occupation, multi-unit freehold blocks, holiday lets, etc.

“Many are even going further afield than that and are looking into commercial or semi-commercial property or development opportunities for higher yields, perhaps more hands-on investments but the profits often are considerably higher and [often require] larger loans to get things done.”

Data from Hamptons shows 15 per cent of all sales agreed in November were to landlords, the highest figure for four years, with investors “rushing to complete” their purchases before the original stamp duty holiday March deadline, according to the estate and letting agent.

Matthew Fleming-Duffy, director at Cherry Mortgage & Finance, said his firm had seen over 60 per cent of its business come from landlords between December and mid-March.

Likewise Aaron Strutt, product and communications director at Trinity Financial, noted demand from borrowers purchasing expensive buy-to-let properties due to cheap rates.

Discover our Buy to Let Mortgage Broker services.

Strutt said: “We are getting more calls from borrowers who are keen to purchase an investment property.

“There are a lot of landlords with £250,000-plus mortgages keen to remortgage and get the best possible deal. There is also demand from borrowers purchasing expensive buy-to-lets because of the cheap rates.”

The figures from Keystone Property Finance also found that three in five applications (62 per cent) for its larger loan products were from landlords registered as a limited company.

Mark Harris, chief executive at SPF Private Clients, said his firm had seen a marked interest in setting up a buy-to-let limited company.

Harris said: “We have seen significant interest from landlord clients with regard to switching to a limited company and lenders are recognising this with a wider range of products at competitive pricing.”

By Chloe Cheung

Source: FT Adviser

Discover our Mortgage Broker services.

Marketing No Comments

Most profitable locations for buy-to-let landlords revealed

Brighton, Bangor, Portsmouth and Leeds are the top places for buy-to-let landlords, research from CIA Landlords has revealed.

Ranked at the bottom of the table is St Albans, with the poorest prospects for landlords this year, with some potentially making a loss of more than £700 a month.

Only six locations in London remain profitable, with the majority of boroughs losing money.

The research also reveals that profitability in the Capital has nearly halved since January 2020, amid a major exodus during the pandemic.

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

Brighton remains the most profitable place to be a landlord for the second year running, with landlords in the coastal town making a monthly profit of around £570.

The findings, which took into account rental fees charged to tenants and landlord costs placed Bangor in second place (£500.53), Portsmouth in third place (£479.27), Leeds in fourth place (£477.60) and Lancaster in fifth (£474.54).

Bristol, Coventry, Manchester, Nottingham and Salford rounded out the top ten.

Stuart Williams (pictured), director of Thirlmere Deacon, said: “Over the last few months, some landlords have seen their profits dented due to the Chancellors’ tax measures that are only now taking effect.

“Undoubtedly, it is becoming more difficult for amateur investors to make a profit in the buy-to-let market due to legislation changes and financial pressures, there is still a lot of money to be made if landlords and investors make the right investment decisions.

“If investors can purchase cheaper properties with higher yields, they will have the opportunity to protect and boost their profits in the longer term. For example, an average residential property in London is around £500k with rental yields of circa 2%, while a flat in a good area of Manchester could cost half the price and generate 6-7% rental yields on top of 4-5% annual capital appreciation.

Discover our Buy to Let Mortgage Broker services.

“Landlords should review their existing portfolio to see if they can boost rental income and protect profits, by attracting a different market. Landlords will often find the best returns in urban areas, with a concentration of students and young professionals.

“It is also worth landlords considering setting up a limited company and using this structure to hold their properties.

“This will enable them to continue deducting mortgage interest when they are calculating profits. Landlords can also benefit from just 20% corporation tax, instead of income tax of up to 45%.

“Landlords need to do a serious portfolio review and work out how the tax changes affect them and what options there are to save, or make more money. For example, remortgaging to get a better deal or renovating some old stock – these costs will be tax-deductible.

“Alternatively, landlords could consider selling some properties or increasing the rent.”

By Ryan Fowler

Source: Mortgage Introducer

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

Number of prospective tenants continued to rise in February

In February, the number of new prospective tenants in the UK rose for the second consecutive month according to the latest Private Rented Sector report by ARLA Propertymark.

The data showed that the average number of new prospective tenants registered per branch continued to rise in February to 82, from January’s figure of 81. Year-on-year this remains the same as February 2020 but is a huge leap from the previous February figure of 65 in 2019.

Regionally, the West Midlands had the highest number of new tenants registered per branch with an average of 126, with the East Midlands having the second highest of 123 new tenants. Northern Ireland and The Isle of Wight both recorded the lowest number of new prospective tenants, with an average of 26 registered per branch in February.

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

The number of tenants experiencing rent increases jumped in February as half (49%) of agents saw landlords increasing rent compared to 39% in January. Year-on-year this figure is also up from 40% in February 2020. The number of tenants successfully negotiating rent reductions remained the same at 2% in February. Year-on-year, this is the same as during February 2020.

The number of properties managed per letting agent branch fell for the third month in a row from 196 in January to 195 in February. Regionally, the North East had the highest number of properties managed per letting agent branch with a figure of 284. Rental stock was the lowest in London, with an average of 94 properties managed per branch.

The number of landlords selling their buy-to-let properties remained the same for the fifth month in a row, at four per branch in February. Year-on-year, this figure is slightly lower than the February 2020 figure of five.

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

Mark Hayward, chief Policy Advisor at Propertymark, said: “Today’s report demonstrates that the rental market continues to show no sign of slowing down, as demand for rental properties rose yet again in February.

“Letting agents have continued to support landlords and their tenants throughout the ongoing COVID-19 difficulties, and it is essential that tenancies are maintained wherever possible to ensure rent keeps flowing.”

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

Growing interest from new investors in BTL market

Interest from new investors in the buy-to-let market is growing, according to Knowledge Bank’s latest tracker results.

The analysis of brokers’ searches in February found intermediaries are working with potential new landlords, and the furlough scheme is still of interest in the residential market.

For the tenth month in a row, buy-to-let brokers reported interest from ‘first-time landlords’, with the criteria reaching the top five, and in February it was the most-searched term by brokers.

Knowledge Bank believes this demonstrates the interest in the rental market from investors, who would normally look to deal in stocks and shares, but are now shifting attention to buy-to-let.

‘First-time buyer’ also featured in the top five most searched for terms by brokers for the second consecutive month.

Looking to the residential market, ‘soft footprint at DIP stage’ returned to the top five most-searched terms after a month’s absence.

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

The firm said this suggests brokers are looking for processes that will not impact future applications, due to clients having lower credit scores.

The rest of the top five were unchanged from January, with furlough again top of the searches.

‘Maximum age at end of term’ was again the second top searched term, with older clients looking for finance.

There was also more interest from those who are self-employed, with ‘self-employed – one year’s accounts’ in the top five for the tenth consecutive month.

The second charge market once again saw an interest in managing debt as two of the terms in the top five related to debt management.

In the bridging sector, ‘second charge loan’ was in the top five for the first time since October 2020.

Matthew Corker, operations director at Knowledge Bank, said: “The rental market in the UK is receiving a lot of interest at the moment.

“Perhaps as a result of the volatility in the stock market due to the pandemic, investors are turning to what they see as a safe investment.

“With house prices increasing in the past year and interest in rental properties also on the increase, this trend could be set to continue.

Discover our Buy to Let Mortgage Broker services.

“However, with the government announcing they would back 95% loan to value mortgages, this may help more first-time buyers onto the housing ladder, and may see less looking to rent in the future.

“The furlough scheme was again at the top of the list for brokers in the residential market, and the latest extension to the job support scheme will undoubtably result in more lenders adjusting criteria.

“The stamp duty extension may bring a raft of new clients to the market. However, they will need to move quickly as even with the extra three months, the deadline is still tight for those who have not already started the process.

“With these latest government decisions, lenders are certain to continue adapting criteria to keep up with the evolving market.

“With changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

By Jake Carter

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Marketing No Comments

House Purchase Lending In Q4 At 13-year High

House purchase lending in Q4 2020 reached its highest quarterly level since 2007, UK Finance’s household finance review has found.

With buy-to-let Q4 2020 saw the highest purchase activity since Q1 2016.

In December lending levels were 31% higher than the same month a year earlier.

Eric Leenders, managing director, personal finance at UK Finance, said: “Homebuyers looking to take advantage of the stamp duty holiday were behind the housing market’s strongest quarter for purchases in 13 years, in the final quarter of 2020.

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

“The stamp duty holiday helped to boost activity at the end of 2020, and it is likely many of these purchases have been brought forward in order to take advantage of the savings.

“The Chancellor’s announcement in the Budget to extend the Stamp Duty holiday until the end of June before then phasing it out will prevent a cliff edge, reducing the risk of house sales collapsing and will prove beneficial for all parties involved in the housing market.”

Despite the strong end of the year, annual purchases for the whole year were around a tenth lower than the previous year, due to a complete shutdown of the market in the first lockdown.

Richard Pike, Phoebus Software sales and marketing director, said: “The housing market, like many things, is more than the sum of its parts and, with the overall picture painted by these figures from UK Finance, it is evident that the number of mortgage approvals is only part of the story.

Discover our Buy to Let Mortgage Broker services.

“The stamp duty holiday obviously did as it was intended, stimulating the market in difficult circumstances. It has also created increased demand in a market where there isn’t enough property to meet that demand, which in turn is pushing prices up across the country.

“With many transactions in the pipeline the extension to the SDLT holiday, announced in the Budget yesterday, will go some way to ensuring that more of these complete before the new deadline.”

BY RYAN BEMBRIDGE

Source: Property Wire

Discover our Mortgage Broker services.

Marketing No Comments

Buy To Let purchase surge likely thanks to SDLT extension

A property lawyer is forecasting a surge in buy to let purchasing in the coming months as the stamp duty extension and the promise of low interest rates form an irresistible combination for investors.

That’s the view of property law firm Wilsons which believes Chancellor Rishi Sunak’s Budget will spur new investors.

In the fourth quarter of 2020, 61,800 buy to let properties were purchased, the highest quarterly figure since 2017. Wilsons says the SDLT holiday was a significant contributor to this upturn in property transactions.

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

Buy to-let investors have purchased 102,267 properties since the SDLT holiday came into effect in July 2020.

Imogen Lea, a tax consultant at Wilsons, says: “The welcome three-month extension to the SDLT holiday gives potential property investors a second chance to purchase with no SDLT up to £500,000.

“The extension to properties valued at £250,000 or less, which will be introduced in July and run to September 30 could see more sustained growth in buy to let investments in parts of the country where property prices are lower, or in smaller dwellings.

Discover our Buy to Let Mortgage Broker services.

“The million-dollar question, is whether this will be enough to keep the market buoyant in the medium and long-term?

“Landlords are also hoping that the end of the lockdown will see young professionals, many of whom have spent much of the crisis staying at their parents’ homes, return to renting in city centres.”

Lea concludes: “Interest rates in the UK are likely to remain low for the foreseeable future, which should attract more investment to the residential property market versus virtually zero interest on bank deposits and government bonds.”

Source: Letting Agent Today

Discover our Mortgage Broker services.

Marketing No Comments

Buy-to-let Investment – Newcastle Named As a BTL Hotspot

Newcastle is the top location for buy-to-let investment, according to data from lettings platform Mashroom.

For the most profit per calendar month excluding any fees such as interest and insurance, Newcastle is the best place for a buy-to-let scheme, gaining a profit of £233.76.

Mashroom looked at the average cost to buy a home in the millennial hotspot areas and compared it to the average monthly rent to find out where the most profit can be gained from buy-to-let investment.

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

In contrast, millennials who are investing in a buy-to-let scheme within London are losing an estimated amount of £253.83 a month.

The data also shows the happiest tenants are in London, Manchester and Birmingham.

Mashroom found that three quarters of tenants describe relationships with their landlord as “good” and “very good” and 89% of landlords feel the same.

In addition, searches for let-to-buy schemes rose by 614.29% over the past year.

Stepan Dobrovolskly, chief executive of Mashroom, said: “Tenants and landlords often see each other as enemies, but a lack of communication is usually the reason why relationships break down.

“This could be because a letting agent or property manager is acting as the go-between but isn’t relaying the information correctly.

Discover our Buy to Let Mortgage Broker services.

“When landlords and tenants communicate directly, the results are better – whether it’s arranging repairs or paying the rent on time.

“From what we’ve seen, by having strong lines of communication, both landlords and tenants have more respect for each other.

“This builds healthier relationships that create a better renting environment for everyone involved.”

By Jake Carter

Source: Mortgage Introducer

Discover our Mortgage Broker services.

Marketing No Comments

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.

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

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.

Discover our Buy to Let Mortgage Broker services.

“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

Discover our Mortgage Broker services.