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Average buy-to-let home gained £15k in value during the pandemic

The value of the private rented sector in England, Wales and Scotland has grown 5.8 per cent to £1.4trillion following the housing market boom of the past year. The average buy-to-let property was worth 5.6 per cent – or around £14,500 – more in March 2021 than it was at the start of the pandemic, reaching approximately £259,000.

However, while the overall value of the buy-to-let sector increased, the number of homes available actually fell.

This was according to research from mortgage lender Shawbrook Bank into the effect the pandemic had on landlords.

It found that Wales, the North West and Scotland had seen the most dramatic increases in price, totalling 11 per cent, 10.7 per cent and 9.5 per cent respectively.

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Rising prices in these areas reflected the trend of people moving out of cities in search of more green space.

Meanwhile, prices in the capital increased 2.5 per cent over the last year – though London remained the most expensive region in the UK to buy a rental property.

The 5.6 per cent growth does not quite match the phenomenal price rises seen in the mainstream housing market, though it may have increased since the study was undertaken in March.

According to the latest Nationwide index, residential house prices jumped 10.5 per cent in the year to the end of July.

Landlords were able to benefit from the stamp duty holiday which saved them up to £15,000 by cutting the tax on the portion of any property purchase under £500,000.

However, they still had to pay the additional 3 per cent surcharge on second homes, which they have been liable for since 2016.

More than a quarter of landlords said they had bought a property this year because of the stamp duty holiday, rising to 43 per cent of those who owned four or more properties.

A further 13 per cent were in the process of buying a property when surveyed, as a direct result of the government incentive, according to Shawbrook.

Of those that had bought, or were in the process, 46 per cent of landlords said they would not have done so had it not been for the holiday.

John Eastgate, managing director of property finance at Shawbrook Bank, said: ‘Against the backdrop of the pandemic, the private rented sector has once again shown its strength and the important role it plays.

‘Landlords are looking to expand their portfolios due to a combination of rising house prices, attractive yields and growing demand from tenants.’

Where can landlords find the best rental yields?

For landlords looking to buy over the next year, Shawbrook revealed the regions that have the highest rental yields.

It found that the best returns could be had in Scotland, with an average yield of 5.8 per cent; the North West, with an average of 5.5 per cent; Yorkshire and the Humber, with an average of 5.4 per cent.

While London may generate the highest rents, yields for London buy-to-let properties were among the lowest at 3.9 per cent, below the UK average of 4.3 per cent.

Nearly a third of the landlords surveyed said they planned to buy their next property in a more rural location.

As well as considering the locations where they could get the best yields, landlords were also looking for property features that would make their homes more attractive to tenants in a post-pandemic world.

More than a third said they were looking for a property with a garden, while 27 per cent were seeking one with a ‘decent-sized’ living space.

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Sector’s value grew – but number of rented homes fell

While the value of the buy-to-let sector grew, its size decreased as some landlords decided to leave the market and sell their properties.

Numbers of privately rented homes fell by 2.6 per cent to 4.8million between March 2020 and March 2021, according to Shawbrook, now making up 17 per cent of total housing stock.

There has been an outflow of landlords in recent times due to factors such as a stricter tax regime, and tougher energy efficiency rules coming over the horizon.

According to separate data from the National Residential Landlords Association, the proportion of landlords intending to buy new properties saw a dramatic drop from 19 per cent in the first quarter of 2021, to 14 per cent in the second quarter, according to the NRLA.

In comparison, the proportion looking to sell up was 20 per cent, up three percentage points from the first quarter of the year.

Another possible reason for this was that landlords’ income took a hit during the pandemic, as they gave rent reductions and payment holidays.

According to Shawbrook 44 per cent of landlords reduced monthly rent for their tenants at some stage.

However, some landlords said the impact of the pandemic was not as bad as they initially expected.

Jackie Tomes, founder and chief executive of Kent-based property company Tomes Homes, said: ‘When the pandemic hit we were forecasting potential drops in rental income at 25-30 per cent, but the reality has been very different for us.

‘We have strong relationships with our tenants, and while some have (and continue to) struggle, we have been very successful at agreeing repayment plans.

‘We’ve also noticed that voids have been down because tenants haven’t been moving to a new house. So higher arrears, but lower voids.’

In the year to the end of March 2021, average rents increased by 1.6 per cent.

Fewer properties = fiercer competition among tenants
As the supply of properties decreased, the Shawbrook study suggested that demand from tenants for the homes that were available grew.

In total, 42 per cent of landlords that had remained in the market said they had seen demand increase for their properties in the past 12 months.

In addition, two thirds (67 per cent) of landlords said that they were confident about the future of the property market over the next twelve months.

Tomes continued: ‘Recently, we have seen an incredible surge of tenant demand. The locations we are invested in are seeing even more “DFL’s” (the Down from Londons) wanting to rent to test out a new lifestyle further from the city.

‘While all property types have seen increased demand due to limited supply in the market, larger 2-3-bedroom properties are seeing even more interest.’

This tallies with data from the NRLA which found that nearly 39 per cent of its members believed demand for homes to rent increased in the second quarter of 2021 (April to June) – a five-year high.

This could be a product of tenant demand coming back into the market, as many put off moves during the pandemic.

Shawbrook got its data from Office for National Statistics population projections and the English Housing Survey, as well as Ministry of Housing, Communities & Local Government figures.


Source: This is Money

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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.

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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.

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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

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Almost half of BTL landlords remain optimistic despite potential tax hikes

Property investors have been the target of many recent tax changes and may feel unfairly targeted at a time when they are facing potential Covid-related tax hikes to pay for the pandemic, and yet almost half of those who invest in the private rented sector remain optimistic going into 2021.

Despite the challenges of the coronavirus, almost half – 45% – of landlords say they are currently optimistic about the buy-to-let market, according to a new survey released today by Property Master.

The online buy-to-let mortgage broker found that less than a third – 29% – of those surveyed were pessimistic about the buy-to-let market, despite fears that the chancellor Rishi Sunak could increase taxes for those with additional homes, as part of the government’s attempts to claw back the cost of extra spending during the coronavirus pandemic.

Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.

Tax and regulation changes continue to have a negative impact on the buy-to-let market, with a number of landlords selling properties with a view to reducing their portfolio, or exiting the market altogether.

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But despite the concern that yet another proposed tax hike could see buy-to-let landlords exiting the market in droves before it is introduced, just 10% of the landlords surveyed by Property Master planned to exit the buy-to-let market in 2021 and almost 70% said they were not about to sell any of their properties in the new year.

Angus Stewart, Property Master’s chief executive, said: “For landlords, as for many other sectors, 2020 is a year that brought plenty of challenges. But in the case of landlords Coronavirus and the resulting economic uncertainty came on the back of a raft of regulatory and tax changes over recent years that have left the sector battered and which saw smaller landlords in their thousands throw in the towel.”

Stewart continued: “However, our survey shows the buy to let sector as a whole is a resilient one. Those landlords that have survived may well be stronger and our survey shows them as giving buy to let the thumbs up as we move into 2021.

“We see the year as being one of two halves. There is clearly continued turbulence forecast for the first half of the year as coronavirus and Brexit play out. But the fundamentals of the private rented sector remain and now more than ever an increased number of people need a good quality roof over their heads, and this will create plenty of opportunity for landlords to do well.”

The number of landlords surveyed by Property Master who planned to add to their portfolio in the new year was evenly split with those who had decided in 2021 to stick with their existing property portfolio.

Almost 43% of landlords said they planned to buy more property in 2021 and the same number planned to stick with the properties they already had. Almost 13% were undecided.

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In terms of buy to let mortgage rates, landlords seemed more relaxed about the outlook although many commentators have recorded an increase in rates in recent months.

Almost 54% of landlords surveyed thought that buy to let mortgage rates would stay the same as opposed to almost 38% who thought they would increase further. Just under nine per cent thought rates would decrease despite the rumours about a possible negative Bank of England base rate.

Stewart added: “A competitive and innovative buy-to-let mortgage market has proved to be a big plus for the private rented sector. Inevitably, the coronavirus has led to some caution amongst lenders especially around loan to value ratios, but we see this as easing as the year plays out.”


Source: Property Industry Eye

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Government urged to provide greater support for BTL landlords during this time

More money needs to be made available to support buy-to-let landlords during the existing Covid-19 pandemic, according to safeagent.

The letting agent accreditation scheme for lettings and management agents operating in the private rented sector has expressed fresh concerns that the challenges in the private rented sector are only going to increase as the pandemic continues to put a strain on the economy.

Safeagent is calling on the government to do more to help landlords with tenants who are facing financial hardship and unable to pay the rent, especially in light of the fact that repossession cases on the grounds of rent arrears will not be treated as a priority until tenants have built over a year’s worth of rent debts.

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Added to this is the six months’ notice that landlords now have to give. Where the case is disputed, even before the pandemic, courts were taking an average of almost six months to deal with cases, with the backlog now likely to be longer.

The Financial Conduct Authority (FCA) has issues its updated coronavirus guidance ‘Mortgages and Coronavirus: Payment Deferral Guidance’, stating that firms should allow customers to extend ongoing payment deferrals after 31 March 2021, to cover payments up to and including July 2021, but safeagent argues that a mortgage deferral alone is not the answer for buy-to-let landlords.

Isobel Thomson, safeagent chief executive, said: “It’s positive to see the FCA supporting borrowers impacted by the pandemic with this latest guidance which advises lenders should offer up to six months of mortgage payment deferrals and guarantee it won’t affect a landlord’s credit rating.

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“However, while buy-to-let landlords impacted by tenants’ rent arrears clearly need support, we question if deferral of mortgage payments is the answer, or if it pushes the problem further down the track. While lenders will be adhering to the guidance which provides up to six months deferral, we know it may take badly affected tenants much longer to get back on their feet, meaning landlords could be building up debt and struggling to meet mortgage payments for many months to come.

“We know the good work that agents and landlords are doing to sustain tenancies where tenants are in financial difficulties. But it’s vital that if we are going to keep landlords in the PRS, their financial viability is also maintained, ensuring no unnecessary reductions in the supply of rented housing and helping prevent homelessness.

“We believe there is more to be done. Our recent proposals for a sustainable post COVID PRS suggested that those landlords who build up debt because they are unable to pay entirely or are only partially paying what is due on their mortgage due to a shortfall in their tenant’s Universal Credit, should be eligible for a grant from the Government, similar to the coronavirus small business grant. This would recompense them for the shortfall on their mortgage and any additional interest over the period. This is particularly important for landlords with a small number of buy to let properties, who rely heavily on this income.

“safeagent is also calling on lenders to commit to no exclusions terms in new or existing buy-to-let products that prevent lettings to tenants who are claiming benefits. This is important to ensure tenants on benefits can continue to access the PRS now and in the future.”


Source: Property Industry Eye

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One in 10 BTL landlords plan to add to portfolios

One in 10 buy-to-let landlords are currently planning to expand their property portfolio over the next few months, according to new research.

With buy-to-let continuing to deliver solid returns, a fresh report from Simply Business shows that 10% of buy-to-let landlords are planning to add to their portfolio in the near term, compared to just 3% at the end of last year.

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Despite a challenging time for the market, characterised by tax and regulatory changes, not to mention Covid-19, investment in buy-to-let continues to outperform most major asset classes, as demand from private renters grows.

With savers receiving poor returns from banks and building societies, thousands of people continue to turn to residential property as a means of supplementing their income, supported by low mortgage borrowing rates, growing demand from renters and the current stamp duty holiday, as buy-to-let consolidates itself as the investment of choice for many investors.

Alan Thomas, UK CEO at Simply Business, said: “The coronavirus outbreak and consequent lockdowns have been transformational in UK renters’ attitudes towards property, and therefore where landlords are looking to make their next investment.”

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He added “There appears to be a shift in terms of what is considered a desirable property by tenants, and residential landlords – crucial to both the economy and the local communities where they provide housing – along with the market in general, are reacting to this.

“What is clear though, is that the UK buy-to-let market is going through somewhat of a transition, driven by a move away from the previous demand for city centre properties.”


Source: Property Industry Eye

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Buy-to-let market proving more “robust” than residential

The Covid-19 pandemic has pushed landlords to broaden the types of property and locations they are looking to invest in, according to analysis from Leeds Building Society.

The mutual noted that industry data suggested that the volume of applications for buy-to-let mortgages held up better than for residential loans between March and the middle of July.

Matt Bartle, director of products at Leeds Building Society, said: “In terms of the volume of applications over this period, the buy-to-let market fell less steeply and recovered more quickly than residential.

“We’ve also seen increased purchase activity; suggesting landlords are taking advantage of a combination of factors, including stamp duty relief, low interest rates and tenant demand.”

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The society’s own research with landlords, as part of its ‘lockdown learnings’ series, supports this, with 79% of landlords who were considering purchasing a buy-to-let property before the pandemic saying their plans had changed. This doesn’t mean they are withdrawing though, with half saying they still want to buy but are taking a fresh look at their plans.

Of those surveyed, almost a third (29%) are reconsidering the type of property they want to invest in, while the same proportion are also looking at new locations. Around one in five (20%) of landlords are reassessing precisely how much they are willing to invest, with almost a quarter (22%) rethinking their timings.

However, half of the landlords surveyed saying they hadn’t been planning to buy before lockdown, and still have no plans to do so.

Bartle added: “Bearing in mind the changes that coronavirus has brought to all our lives it’s not surprising to see landlords reviewing future plans for their property portfolios as tenants’ needs and priorities are also affected by the pandemic.

“The recent Government announcement on stamp duty appears to be spurring prospective purchasers into action, including buy-to-let landlords.”

By John Fitzsimons

Source: Mortgage Finance Gazette

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Buy-to-let sentiment on the rise

There has been a rise in rental property instructions in recent months in a sign the buy-to-let market is rebounding, according to a survey of chartered surveyors.

The July 2020 RICS UK Residential Survey, published yesterday (August 13), saw 6 per cent more respondents report an increase in new buy-to-let property coming to the market in the past three months than did not.

This means surveyors are seeing landlords starting to come back or existing ones purchasing more properties.

While the professional body described the figures as only “marginally positive”, it noted it was the first time since 2016 that the flow of landlord instructions had reportedly improved.

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The buy-to-let market grew rapidly after the financial crisis but has since taken a beating as a number of tax and regulatory changes have hit landlords’ pockets.

The changes led many to predict the buy-to-let market would shrink in size leaving only ‘professional landlords’ able to make viable returns, and many buy-to-let investors did leave the market earlier this year.

Meanwhile rents are also predicted to rise by about 1 per cent at national level in the next 12 months, according to the survey, although London was the only region where projections remained negative, at -1 per cent.

The sentiment survey found anecdotal evidence to suggest the chancellor’s stamp duty cut was playing a “significant role” in lifting demand for house purchases, although respondents did not expect this to continue when wider government support measures are phased out later in the year.

Simon Rubinsohn, chief economist at RICS, said: “The strong impetus provided to the housing market is evident both in the results of the RICS survey and many of the anecdotal comments from respondents.

“However, it is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll. Significantly, some contributors are now even referencing the possibility of a boom followed by a bust.”

The government’s coronavirus support schemes for furloughed employees, the self-employed and mortgage borrowers are due to end in October.

In the survey 57 per cent more respondents saw an increase in agreed sales in July than did not, indicative of a strong pick-up in transaction levels after the hefty declines reported during the crisis.

However, 10 per cent more respondents predicted a decline in sales over the year ahead.

By Chloe Cheung

Source: FT Adviser

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BTL landlords should prepare to take advantage of Green Homes grants

Buy to Let landlords in England should be assessing the energy efficiency works that their properties require in advance of the opening of online applications for the Green Homes Grant in September, say tax and advisory firm, Blick Rothenberg.

Heather Powell, Property partner at the firm said:

“The applications for the grant will open in just over a months’ time so Buy to Let landlords need to assess their properties now and get their applications in as fast as possible because thousands of people will apply.

“It is also likely that the Government will tighten energy efficiency regulations still further in 2021, making these works essential for many rental properties.”

“The grant scheme will fund £2 of every £3 spent by a landlord, up to a maximum of £5,000, to improve the energy efficiency of their properties.

“Works can include wall and loft insulation, draught proofing and double glazing, all works that should improve the Energy Performance Rating (“EPC”) of a property.

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“Landlords cannot let properties with an energy performance rating of F or G (unless they qualify for an exemption) so they should be planning to undertake works that can be done with the grant funding that is being made available. Their tenants will also benefit as they will get a reduction in their annual fuel bills.”

“The 27 million homes in the UK, which generate up to 25% of the greenhouse gas emissions and energy demand in the UK, are some of the least heat efficient homes in Europe.

“The Government hopes the grants will improve these statistics and help the UK to meet the commitment to have net zero greenhouse gas emissions by 2050.

“Online applications by landlords will be passed to “registered local tradesmen” to do the necessary works – which the Chancellor expects to help generate a further 100,000 jobs in the “Green Sector.”

“There are c2.2m landlords in England, with an average of 1.8 properties each – a total of 3.96m buy to let properties.

“If landlords applied for grants to improve the energy efficiency of just 25% of their properties, and got an average grant of £3,300 for insulation, the Green Homes Grant funding would be £3.27bn, and 990,000 homes would have been improved.

“The Chancellor announced £2bn to fund grants in 2020/21, and stated he hopes 600,000 homes to be improved, but he made it clear that his funding was based on estimates of take up of the funding, and indicated it is not capped, which is good news for BTL landlords.”

“The full details of the Green Homes Grants has not been published, but given the Grant funding announced was only for one year it is important that Landlords start reviewing their housing, assessing what work should be done that is eligible for the grant, so that that they can apply for the funding.

“This is one of the few measures announced by the Government in the last three months that assists landlords, and they should make sure that they take advantage of the funding, and at the same time help the UK achieve net zero greenhouse gas emissions by 2050.”

Source: Property Industry Eye

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Most attractive cities for BTL landlords revealed

London and Manchester has been named by landlords as the most attractive cities to invest in buy-to-let (BTL) properties in 2020 according to Simply Business.

The research shows that the two cities were where landlords expect the BTL market to be most robust this year, with both receiving over a third of votes when asked which city represents the best investment opportunity.

Liverpool and Birmingham followed closely behind as BTL hotspots, with both cities securing 10% of the vote amongst landlords when considering where their next investment in 2020 lies.

Bea Montoya, chief operating officer at Simply Business, said: “Buy-to-let landlords are crucial to the UK economy, contributing a combined £16.1bn through pre-tax spending.

“The sector also now houses 20% of British households and has a huge presence up and down the country, so it’s wholly encouraging that landlords view a broad spread of regions as attractive areas to invest this year.

“London usually comes out on top for being the most expensive city to invest in property in the UK, but falling house prices are making it an attractive place to invest once again.

“We know a quarter of landlords are planning to sell at least one property this year, largely due to government reform and tax changes, so it’s reassuring to see that landlords are still eyeing up investment opportunities up and down the country.”

By Jessica Nangle

Source: Mortgage Introducer

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First Time BTL choice up and rates down

Competition within the first-time landlord buy-to-let mortgage market has increased significantly over the last five years seeing a rise in the number of products available and a reduction in rates, research from reveals.

Over the last five years, the number of products available for first-time landlords has increased from 645 in 2014 to 1,405 today. As well as this, rates for both two-year and five-year fixed mortgages have also fallen, with the average two-year fixed rate decreasing from 4.01% in 2014 to 2.97% today and the average five-year fixed rate falling from 4.68% to 3.52% during the same period.

Buy-to-let market analysis – First-time landlord products

Jul 2014 Jul 2017 Jul 2018 Jul 2019
Average two-year fixed rate 4.01% 2.85% 2.83% 2.97%
Average five-year fixed rate 4.68% 3.63% 3.94% 3.52%
Number of overall products 645 1,034 1,268 1,405

Rachel Springall, finance expert at, said: “Fixed rates for first-time landlords start below 1.50% on a two-year fixed deal, but the associated upfront product fees must be considered carefully. Borrowers must ensure they weigh-up the true cost of any deal before they commit; for example, choosing the lowest two-year rate in the market from Barclays Mortgage at 1.46% would cost £20,901 in repayments after the first two years, which includes its £1,795 product fee*. However, if they opted for a deal with a lower fee, such as the mortgage from Post Office Money® priced at 1.48% with a £1,495 product fee, they would have saved £255, as the repayment would be £20,646 over two years.

“First-time landlords concerned about potential rate rises may instead consider a five-year fixed deal, and thankfully rates have fallen in this sector since 2014. In fact, the average five-year fixed rate for first-time landlords has fallen by 1.16% since July 2014, down from 4.68% to 3.52% today.

“As the market is awash with economic uncertainties and regulatory adjustments, consumers would do well to first seek independent financial advice if they are considering a buy-to-let investment, not just to find the best product, but to also review these impacting influences.”

*Based on £200,000 repayment mortgage over a 25-year term.

Source: Property118