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Buy-to-let remortgaging is on the up

As we emerge out of the latest Covid lockdown we are seeing an increase in interest around remortgaging in the buy-to-let market.

BTL is a buoyant sector, you only have to look at the number of lenders who specialise in it as a well as most mainstream lenders. There is certainly choice for borrowers and rates are competitive.

The BTL sector has increased every year from 2009 to 2019, representing a decade of growth following the global financial crisis.

In 2008 there were 114,740 BTL remortgages but in 2009 cases fell sharply to 32,850 as a result of the GFC. In monetary terms the drop off was £14.61bn down to £3.39bn in 2009.

The figures from UK Finance show how the BTL market has grown since then and in 2019 remortgaging peaked at 187,900 loans with a value of £31.1bn.

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Then the Covid pandemic came along and led to a fall in all lending with BTL remortgaging numbers going down to 163,300 in 2020 and a subsequent fall in value to £27bn.

But we are seeing a pick-up now with Q1 2021 rising compared to the previous quarter as 39,700 loans were issued at a value of £6.9bn.

Remortgaging for equity

These figures resonate with us as we are also seeing a rise in remortgaging especially for people wanting to take out more equity.

Talking to our underwriters, most borrowers want to use the extra money for further property investment. I would say this applies to around 70% of our landlord customers. A large chunk of our mortgage book is portfolio landlords, but it is also smaller landlords who are wanting to grow their investment property business.

There is a combination of factors here as to why that is. The stamp duty holiday has had an influence on landlords buying more property as there has been less tax to pay. Some landlords brought their buying plans forward to take advantage of the tax break.

Another influential factor is that house prices have been rising, therefore LTVs are lower, and more equity can be taken out. Coupled with the fact that many five-year fixes maturing this year, we expect remortgaging to continue an upward trajectory going forward.

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Home improvements

The other reason for borrowers taking out equity on their remortgage is for home improvements, and this applies to around 20% of our customer base. Some are using void periods to spruce up their properties, others are making repairs, but a newer reason has been to make properties more energy efficient.

Since 2018 all rental properties must have an Energy Performance Certificate (EPC) rating of at least E, but the government has its sights on all homes being rated C or above by 2030.

Astute landlords have been making improvements with changes such as cavity wall and loft insulation and installing new condensing boilers. But others are going further by replacing windows with double or triple window glazing and even installing solar panels.

We expect more landlords will want to improve their EPC ratings and quite a few lenders now are offering green mortgages as an incentive for them to do this, including ourselves. In our case, discounted rates are given for properties with EPC ratings of A, B or C.

By Paul Brett

Source: Mortgage Strategy

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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.

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.

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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

“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.

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“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. Buy-to-let 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

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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.

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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.

“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.

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“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

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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 specialist reports surge in North West rent prices

Rents in the North West are growing faster than any other region in the UK, with rental growth in London continuing to slow over the past few months.

That is the claim by high-yielding student buy-to-let investment specialist Mistoria Group.

It said rental values in the North East, North West, East Midlands, Scotland, Yorkshire & Humberside, Northern Ireland and Wales all rose at a rate faster than the UK average. (Source: The HomeLet Rental Index, March 2020).

Average rents across the UK rose by 1.8% in March 2020 year-on-year, with the average monthly rent sitting at £959 per month.

When London is excluded, the average UK rental value was £793 in March 2020, up 1.4% on last year.

The data also reveals that rents rose from last year in nine out of 12 of the regions covered in the research.

Data from The Mistoria Group shows that rent prices in the cities and towns in the Northern Powerhouse have risen by an average of 17%, with rental cash yields of nine per cent in Salford, and seven per cent in Liverpool and Bolton.

With a capital appreciation of five per cent, investors are looking at total yields between 12-14%, which is extremely attractive. The group said if geared, the returns could be between 20% to as high as 35%.

The resilient property market in the North West is helped by the highly-successful regeneration of the area which has brought new jobs, transport links and a range of large housing projects, proving the strength of the economy as a whole in the region.

According to Mish Liyanage, managing director of The Mistoria Group, there is growing demand for high-end HMO (homes of multiple occupancy) accommodation among young professionals and students across the Salford, Bolton, Manchester and Liverpool areas

He said: “BTL (buy to let) investors can buy a luxury HMOs in the North West from £120k upwards. The return on investment is very attractive, too, with an average 13% yield (eight per cent cash rental and five per cent capital growth).”

By Neil Hodgson

Source: The Business Desk

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Buy To Let Property Investors Planning Investment In 2020

Buy to let property investors are positive about investment in 2020, according to research from The National Landlord Investment Show.

The research found that 60 per cent of UK landlords and property investors who attend The National Landlord Investment Show are looking to make investment in 2020, among some other interesting insights.

While the general narrative presented by the press about the future of UK landlords has been one that is negative due to high regulations of the private rental market and uncertainties of the UK buy to let market within a post-Brexit context, this new research seems to contradict that viewpoint.

The general feeling from the research was one of positivity looking ahead to the future for UK landlords and property investors is prominent as over half (54 per cent) expressed they are making an investment in 2020 into property to plan for a pension whilst 27 per cent admit they are landlords and property investors to build for their children’s future.

Out of the 60 per cent of UK landlords and property investors who are looking to make investment in 2020, nearly three quarters (71 per cent) have expressed a preference to invest in residential property.

The findings further present a detailed insight into the portfolios of UK landlords and investors attending the show with three quarters (75 per cent) indicating they do not own their properties within a limited company.

Additionally, an increasing number of UK landlords and investors are showing an interest in commercial as well as residential investment opportunities with almost 1 in 4 (23 per cent) now confirming they own commercial properties in their portfolio.

Tracey Hanbury, Director and Co-Founder of The National Landlord Investment Show commented: ‘What this research has shown is that contrary to other opinions within the industry there are exciting times ahead for UK landlords and property professionals.’

Source: Residential Landlord

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Further rule changes would damage BTL market

Regulation in the mortgage market is helpful but any more interference may create problems for brokers and their clients, delegates at the FTAdviser Financial Advice Forum in London were told.

In a panel session entitled “Buy-to-let: how professional landlords can overcome tax and legislative hurdles”, Andrew Montlake, director of Coreco, and Martin Stewart, director of London Money, said the current regulatory environment was generally positive for clients.

Mr Stewart said: “Regulation is nothing for people to be afraid of. A good broker with a good moral compass will always do a decent job for their clients. I don’t mind regulation per se.”

Mr Montlake agreed, saying: “Regulation has created an environment where good brokers can demonstrate their professionalism. This shows the public you are responsible and generally I think we are in a good position.”

But he cautioned: “I don’t want more regulation for the sake of it. If it does get rid of the amateur landlords, the charlatans, the so-called ‘dinner party property investors’, then I am all for regulation that helps make buy-to-let a more professional market.

“What I fear is there may be more changes ahead, that makes things more complicated and doesn’t really focus on what the client really wants and needs.”

Both men agreed there had been a change in the mortgage market, largely driven by government tinkering with stamp duty and tighter controls to weed out bad landlords.

This was visible in a slowdown in new buy-to-let enquiries for London Money and some delegates in the room.

Mr Stewart said he was pleased to see more “amateurs” leave the market and free up housing for first-time buyers but he felt regulation could do more to raise standards further.

However, while there has not so far been a glut of housing dumped back on the market by disgruntled buy-to-let investors, a “perfect storm” could be caused due to Brexit uncertainty, new governments and unknown elements that might see more of an exodus in 2021.

Most buy-to-let lenders are regulated by the Bank of England’s Prudential Regulation Authority (PRA).

In 2017, among other regulatory changes that endeavoured to take some of the heat out of the buy-to-let market, the PRA implemented rules on how much can be lent to potential buy-to-let investors, based on how much rent was being charged.

The rule is that when making a loan, the rent must cover at least 145 per cent of the mortgage payment when the interest rate is at least 5.5 per cent.

This followed the government’s reform of the rules governing BTL, which included a 3 per cent stamp duty surcharge for second homes and cuts to landlord tax relief.

As some delegates in the room commented, higher taxes and a lack of upward movement on rents – especially in London – have meant some landlords with smaller portfolios are not making enough of a profit to continue as a buy-to-let investor.

When asked what their clients are doing, some said their clients were selling, going outside of London, creating limited partnerships or getting their residential property exposure through property funds.

“We are certainly having to be much more holistic now as brokers”, said Mr Montlake. “Professionals can really add value to clients.”

By Simoney Kyriakou

Source: FT Adviser

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5 year BTL fixed rates and BTL purchases at record lows

Given the significant changes that have occurred in the buy-to-let (BTL) market in the last few years, not to mention the recent base rate increases, it’s no wonder that many landlords are feeling uncertain about their future. Thankfully, it seems lenders are feeling less nervous, as the average five-year fixed BTL rate has fallen to its lowest level on records this month.

“The BTL market has been on a rollercoaster ride in recent years, with not only two base rate rises to contend with, but multiple regulation and tax changes thrown into the mix,” commented Charlotte Nelson, finance expert at Considering all of this, it’s rather surprising that rates have fallen, with the long-term fixed rate down by 0.05% on average month-on-month.

Oct-16 Oct-17 Apr-18 Oct-18
Average five-year fixed BTL rate 3.77% 3.43% 3.55% 3.40%


At the same time, the number of BTL property purchases has been going down, with UK Finance’s latest Mortgage Trends Update showing an 11.1% decrease in July compared to the previous year. This may be why providers are making their deals more attractive, to try and entice borrowers back into the market, as a result of which competition in the BTL market remains high.

“In the aftermath of August’s base rate rise, many BTL borrowers will be looking to remortgage from their standard variable rates (SVRs), with several of these landlords potentially considering longer-term options to act as a buffer against any future rises,” Charlotte said. “It is this extra business providers are likely wanting to attract.”

The focus on five-year fixed mortgage products would allow landlords to secure their repayments and hopefully ride out any overall rate rises likely to happen in the next few years. Additionally, Charlotte pointed out that “savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates,” giving even more reason for competition to focus on the five-year BTL market.

“While it is great news for landlords that the long-term deals are cheaper, borrowers know all too well that with the potential for further base rate rises in the future, these low rates are unlikely to last,” Charlotte concluded. “Therefore, any borrower sitting on their SVR or coming to the end of their term would be wise to consider a new deal now before it’s too late.”

Source: Property118

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Buy-to-let investors told to widen search for yield

Buy-to-let investors may have to look to alternative regions if they want to secure a decent yield from their property.

Research by Direct Line for Business showed rental yields varied significantly depending on where investors bought.

Direct Line found that while house prices had risen 17 per cent over the past three years, rents were up just 4.7 per cent.

While the average yield achieved across the UK is 3.6 per cent, some buyers could earn as much as 7.1 per cent.

Burnley had the highest annualised rental yield in the country, according to the analysis. Average house prices in the town were £76,300 while the typical annual rent landlords could achieve was £5,388.

Making up the rest of the top three are the City of Glasgow and Belfast where yields were 6.9 per cent and 6.4 per cent respectively.

By comparison, homes in London, the south east and east of England had the poorest yields, largely because property prices were higher.

In London landlords achieve average annual rents of more than £20,000 but, with the average house price more than £480,000, the yield was 4.4 per cent.

In the east of England, where the typical property cost £289,000, the average rent was the lowest in the country at just 3.5 per cent.

Daniel Bailey, principal at Middleton Finance, said: “Most of my buy-to-let investors don’t tend to pay more than £125,000. If they go beyond that then the yield tends to not be as good.

“Purchase price is a major factor and some areas will attract a better monthly rent. I have some clients achieving yields of 7 to 10 per cent .

“There are still good yields to be achieved but it is important to speak to a broker and property tax expert to understand all of the implications.”

Direct Line said increased competition in the private rented sector was hitting yields.

Christina Dimitrov, business manager at Direct Line for Business, said: “While property prices have increased in recent years, it’s a different story for the rental markets where growth in rents in lower than wage growth.”

Source: FT Adviser

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Is this the death of buy-to-let?

In one way or another, we all participate in the property market – whether that’s as renters or owners of our homes. But for two million people, the UK property market has also been an investment vehicle of tremendous wealth generation across recent years, with buy-to-let attracting £1.4 trillion in capital.

Buy-to-let has been a national obsession. In the past, it was an investment that seemed to require little in the way of privileged financial markets insight. It was simple to understand and manage, and boasted a steady (and in many cases heady) performance record – comfortably outstripping inflation and enriching those fortunate enough to participate.

Under scrutiny, the returns for many property investments have barely compensated for the hassle

That’s not to say there were never any downsides.

The hassles of managing tenants and maintaining properties have been routinely underestimated, typically to the detriment of tenants.

And though rental incomes ought to provide steady cashflows to defray ownership costs, the reality of buy-to-let has always been closer to running a business than sitting on a hands-off yielding investment.

Under scrutiny, the returns for many property investments have barely compensated for the hassle – let alone for the risks and costs of tying up so much capital in inflexible, undiversified assets.

Pressures on buy-to-let have intensified in recent years, particularly from HMRC.

A slew of changes to tax and lending rules and the prospect of tenant-focused legislation – which appears to have cross-party political support – have made direct investment more financially unattractive.

As tax returns are filled in and re-mortgage applications processed, landlords would be remiss not to consider whether the maths on their buy-to-let properties really adds up any more.

So where does this leave would-be investors?

Buy-to-let as an investment structure may be dying, but property as an asset class remains undeniably attractive.

In fact, recent data from the Office for National Statistics revealed that almost half the population think that property is the best way to save for retirement.

Sitting somewhere between cash savings and financial markets investments, bricks and mortar has proved its value and resilience.

Taking rental yields into consideration, UK-wide property market returns have only been negative in 23 quarters since 1980, and are down more than three per cent in only five quarters.

Compare that to the FTSE, which fell nine per cent between January and March of this year.

There’s simply a difference in volatility of performance and defensiveness of the asset class that makes residential property investment attractive.

Behind the sensationalist property market headlines of late, the fact remains that there’s a shortfall of somewhere between 50,000 and 100,000 houses built per year, adding to a standing deficit of more than one million, according to Yorkshire Building Society.

People will always need somewhere to live.

So how can you invest in property more flexibly and tax-efficiently, and minimise transaction and ownership costs?

Few other assets are traded as inefficiently as property is today, but technology has been slow to transform the market’s structure despite the clear market opportunity.

Options are beginning to appear, such as peer-to-peer or equity crowdfunding platforms that specialise in – and help finance – property.

There are now opportunities to lend to property developers and buy-to-let landlords, albeit some would question how close such a debt product is to property investment at all.

For true investment in bricks and mortar, there are a host of property crowdfunding sites offering fractional ownership of individual properties, as well as platforms offering tax-efficient investments in portfolios of residential property around the UK.

Whatever tomorrow’s property investors choose, they should be careful not to throw out the “common-sense” principles that abandoned the buy-to-let market a long time ago.

These principles include diversification, using Isa and Sipp allowances where possible, and a recognition that buy-to-let investors would rather not be called about a broken boiler at 3am.

Source: City A.M.