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Landlord purchases in Q1 2022, highest in six years – Hamptons

Investors purchased 13.9% of homes sold across Great Britain in the first quarter of 2022, up from 12% recorded during the same period of last year.

This was revealed in the latest Hamptons Lettings Index, which also found that this year’s figure marked the highest proportion recorded in the first quarter of any year since 2016, when investors rushed to beat the 3% stamp duty surcharge on second homes.

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Overall, investors bought 42,980 homes across Great Britain during the first three months of this year, equating to £8.5 billion worth of property, which is nearly twice the £4.6 billion recorded during the pre-pandemic first quarter of 2019.

The increase in buy-to-let purchases may help reverse the decline of the private rented sector which shrunk from a peak of 5.3 million homes in 2017 to five million in 2021. However, the increase may not be enough to cover the lack of supply, according to Aneisha Beveridge, head of research at Hamptons.

“While we expect investors to continue purchasing at around the same rate over the course of 2022, it’s unlikely to be enough to make up for the full loss of rental homes during the last five years,” Beveridge said.

A lack of stock has also meant that investors are increasingly having to pay over the asking price. According to Hamptons, for the first time since it began recording data, the average investor is paying over 100% of the asking price for a buy-to-let in England and Wales.

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Meanwhile, the average cost of a new let in Great Britain rose to £1,115 pcm last month, up 9.1% from its 2021 low of £1,022 pcm in March last year.

“A lack of rental homes is one of the reasons why rents have been rising at such pace over the last year. March set a new record for rental growth as rents bounced back from 2021 lockdown lows last March,” Beveridge said.

“But as these new buy-to-let purchases begin to feed into the lettings market over the coming months, we expect to see rental growth cool, particularly as the cost-of-living crisis weighs on affordability too,” she added.

By Rommel Lontayao

Source: Mortgage Introducer

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Landlords confident for buy-to-let market outlook

Two-thirds (67%) of landlords are confident about the buy-to-let market outlook in 2022, according to Stephanie Charman, head of strategic relationships at Sesame Bankhall Group.

The figures were revealed within Shawbrook’s recent Changing Face of Buy-to-Let Report, which also found that 34% of landlords are planning to purchase another property this year.

Turning to the percentage of landlord clients considering opening limited companies for their buy-to-let properties, almost a third of broker respondents (29%) said that more than 75% of their portfolio clients were debating the move.

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That was according to a poll conducted by intermediary-only specialist buy-to-let lender CHL Mortgages during a Lender Spotlight webinar session, held in conjunction with Knowledge Bank.

Charman said that the rise in the number of landlords planning to buy this year is encouraging and has been backed-up by anecdotal feedback from lenders.

She went on to explain that lenders have reported seeing an increase in purchase activity within the buy-to-let sector, especially from landlords diversifying and purchasing HMOs and semi-commercial units.

“Our own forecasts point to a buy-to-let market of around £44 billion in 2022. This is slightly down on last year, with fewer new purchases without the stamp duty incentives,” she added.

Even when recent interest rate increases are factored in, rising rents, alongside competitive product pricing, are providing attractive yields, according to Charman.

Despite these rising rents, a survey conducted by the Social Market Foundation (SMF) shows that 81% of renters said they are happy with their current property, and 85% said they are satisfied with their landlord.

In addition, the survey found that only half of renters expect to leave the private rented sector in the next 15 years, and 13% would be satisfied with long-term renting.

Looking to the average age of tenants, the data shows that, by 2035, more than half of private renting households are likely to include someone aged 45 or older. The Social Market Foundation also believes that couples and families will make up a rising proportion of renters.

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“Given the challenges facing prospective first-time buyers in stepping on to the property ladder, the private rental sector continues to play a vital role in fulfilling the UK’s housing needs,” said Charman.

Charman went on to say that other significant buy-to-let drivers include the continued impact of the new Minimum Energy Efficiency Standards.

All buy-to-let properties must now be E rated, with consultations taking place to raise this benchmark to a C rating for new buy-to-let tenancies in 2025 and existing tenancies by 2028.

Within the consultation document from late 2020, it was suggested that the minimum EPC rating should be raised to a band C for all new tenancies by 2025, and all existing tenancies by 2028.

According to Charman, market speculation has suggested these timescales could be pushed out further.

“However, one thing is clear, change is coming and the buy-to-let market will look very different in the future,” said Charman.

When the new rules are implemented, many landlords will have additional upgrade costs to deal with – Charman estimates that for improving EPC ratings, the costs will range from £5,900 to £10,400 per buy-to-let property.

According to Shawbrook Bank’s report, 17% of landlords have already made efforts to improve the energy efficiency of their property, rising to 22% of portfolio landlords.

Of the landlords that had undertaken a refurbishment, 22% had replaced the boiler and heating system in their property, a further 23% had replaced the windows, and 18% had installed new white goods.

Charman believes the speculation around the change in requirements could lead to some divestment and consolidation, particularly among landlords with older, less energy efficient housing stock.

As a result, she said the expectation is that landlords will bolster their portfolio with new build properties.

“With so much change on the horizon, it is vital for advisers and landlords to keep up to date with the latest buy-to-let developments,” Charman added.

By Jake Carter

Source: Mortgage Introducer

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Buy-to-let landlords targeting smaller UK cities and towns

Landlords buying in urban areas are increasingly shifting their purchasing activities to smaller, secondary towns and cities, data analysis from Paragon Bank’s own lending records has revealed.

“Landlord demand for city and town centre property was strong in 2021, with Paragon’s analysis showing completions for house purchases increasing by 100% compared to the previous year,” Richard Rowntree, director of mortgages at Paragon Bank, said.

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The strongest increases were seen in locations outside of the UK’s major city centres, according to Rowntree.

“The strongest growth was not necessarily in the UK’s major cities. Aside from London and Manchester, the top 10 growth locations were in secondary cities or large towns. The likes of Milton Keynes, Luton, Bristol, Northampton and Nottingham experienced strong double or triple-digit growth in completions during the year,” he said.

Milton Keynes experienced a 667% increase in completions in 2021 compared to the previous year. This was followed by Bristol with a 300% increase, Manchester (300%), and Luton (258%).

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Other urban locations in the top 10 included Plymouth (183%), Stoke (157%), Northampton (133%), Cardiff (70%) and Nottingham (64%).

Paragon said landlords have been reacting to changing tenant demand, and that is to retain urban living but in smaller towns and cities.

“There appears to be one of, or a combination of, three factors that each of these locations share. They are in commutable distance to a major city, they mostly have vibrant universities, and they have healthy local economies,” Rowntree said.

In London, Paragon’s figures show a 95% increase in buy-to-let completions in the capital during 2021, with landlords concentrating acquisitions in Zones 2 and 3 as they balanced the requirement for yield, availability of property, and tenant demand.

By Rommel Lontayao

Source: Mortgage Introducer

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Buy-to-let affordability hits record high

Buy-to-let properties have become more affordable to landlords as the average maximum loan size reached its highest level on record last month.

According to a report published by Mortgage Broker Tools (MBT), the average maximum loan in January was £421,053, a £20,000 increase in just a month.

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The figure also represents a 13% increase when compared to the average from January last year. MBT launched its buy-to-let affordability index in August 2020.

“The latest MBT Affordability Index shows that the average maximum loan size available to buy-to-let investors is now larger than ever before. However, the spread between the average maximum and minimum loan sizes available to landlords has also never been wider,” Tanya Toumadj, chief executive officer at MBT, said.

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“For investor clients who want to maximise their leverage, it’s vital that brokers are able to easily identify those lenders that will offer larger loan sizes based on their individual circumstances.”

By Rommel Lontayao

Source: Mortgage Introducer

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Buy-to-let sector has increased by £239bn since 2017

New research conducted by the property lending experts, Octane Capital, claims that over the last five years the buy-to-let sector has increased by around £239 billion.

By analysing the level of privately rented stock across all UK regions the lending experts were able to obtain the worth of the buy-to-let sector. This was then compared to values during 2017 to uncover changes over the past five years.

Current buy to let market value

The findings show that based on current market values within the UK rental sector, the current value of the UK’s buy-to-let stock is £1.7 trillion.

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The capital of England makes up 19% of the UK buy-to-let properties as this has the highest total worth of the UK buy-to-let sector. It is estimated that around 1 million private rented homes are in London and these are worth more than £500 billion.

The second most valuable buy-to-let market is in the South East of England as the buy-to-let market has a value of £247 billion. This is then followed by the East of England which has a value of £168 billion, the South West is valued at £156 billion, and the North West is valued around £110 billion.

The property lending experts estimate that the UK’s buy-to-let market has increased by 16.8%. This means it has climbed by £239 billion since 2017.

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Buy to let market uplift

The figures show that London had the largest uplift in buy-to-let market value as it jumped by £57 billion. The South West increased by £34 billion and the East of England jumped £27 billion.

While the level of privately rented homes has remained low across the UK over the last five years, the total value of the buy-to-let sector has risen sharply because of house price growth.

Chief executive officer of Octane Capital, Jonathan Samuels, concludes: “The government has tried its hardest to dampen investment into the private rental sector in recent years, with a string of legislative changes around tax relief, stamp duty and tenant fees reducing the profitability of buy-to-let investments.”

“The pandemic has also proved problematic for some landlords who have suffered lengthy void periods due to factors such as the tenant eviction ban and a reduction in rental demand across our major cities, in particular.”

“Despite all of this, the sector has stood tall and continues to provide the vital rental market backbone that so many are reliant on.”

“At the same time, the nation’s landlords have benefited from a considerable level of capital appreciation on their buy-to-let investment and the value of the sector as a whole has increased substantially.”

“Let’s just hope that whisperings of a higher rate of capital gains tax remain just that, as any further increase could spur a reduction in available stock, causing the total value of the market to decline in the process.”

By Yasmin Watson

Source: Introducer Today

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Paragon: Landlord confidence at five-year high

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

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

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

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

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

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

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

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

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

By Jake Carter

Source: Mortgage Introducer

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Annual rental income growth greater in outer city areas

While an inner city rental property still has a higher monthly rental income, rental homes in outer city areas have seen stronger growth over the past year, according to Sequre Property Investment.

On average across London, Manchester and Birmingham, the monthly cost of renting within an inner city area is £1,152 versus £908 per month in the outer city market, a difference of 27% or £244 per month.

London was home to the biggest difference, with rents across the inner city rental market coming in 37% higher on average, with a 26% difference in Manchester and a 9% difference in Birmingham.

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However, on average across all three cities, annual rental growth across outer city areas has remained largely flat, while across inner city rental areas it has fallen by 4.4% in the last 12 months.

Manchester has seen the strongest performance, with inner city rental values remaining largely unchanged in the last year, while across the city’s outer rental market values have climbed by 3.7%.

In Birmingham, outer city rental values are up 2.2% versus a marginal 0.3% uplift across the inner city.

And in London, there has been a 1.1% increase in rental values across outer city areas and a 7.8% drop across the capital’s inner city areas.

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Daniel Jackson, sales director at Sequre Property Investment, said: “It’s clear inner city rental markets are still struggling due to the decline in demand caused by the pandemic, despite a gradual return to normality from a social standpoint and with regard to the workplace.

“This is particularly evident across the London market, where rental values have plummeted across inner city areas, while they’ve also struggled in outer city areas.

“The good news is that elsewhere, outer city rental values are on the up, with both Manchester and Birmingham seeing very healthy levels of growth.

“This suggests that tenants are now starting to make their return and this is a trend that should soon reach our city centres and help boost values across inner city rental markets.”

By Jake Carter

Source: Mortgage Introducer

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Did the Stamp Duty Holiday Ignite a BTL Fever?

Despite the reduction in stamp duty bills, there is little sign that the stamp duty holiday led to large numbers of new investors purchasing buy-to-lets.

At their peak this year, investors purchased 14 per cent of homes sold across Great Britain in February, the month before the original end of the stamp duty holiday. However, over the entire course of the 15-month tax-break investors purchased 12 per cent of homes sold in Great Britain. This is marginally up from an average of 11 per cent during the 12 months before the holiday, but far from the 17 per cent recorded in Q4 2015 – the run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

This means there were a total of 215,000 investor purchases across Great Britain between July 2020 and September 2021. While this figure is up from 164,300 during the equivalent period in 2018 and 2019, more transactions have taken place by other buyer types. Both these numbers remain below the 242,400 purchases which were made during the 15-month run up to the introduction of the 3 per cent stamp duty surcharge on 1 April 2016.

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Over the course of the15-month stamp duty holiday, the average buy-to-let investor’s tax bill fell by 35 per cent – from £8,500 in the month before the holiday, to an average of £5,500 between July 2020 and September 2021. For the average investor, this equates to almost three months’ rent.

The average bill came to £5,300 during the first 12 months of the holiday when investors paid the 3 per cent stamp duty surcharge on the first £500,000 of any purchase. It then rose 17 per cent to £6,200 when the threshold fell to £250,000 between July and September 2021. Average bills are set to return to around £8,400 from 1 October 2021, just below what investors were paying on the eve of the stamp duty holiday.

Overall, the holiday meant that the average investor paid less in stamp duty than at any time since April 2016, when the 3 per cent stamp duty surcharge was introduced. Despite this, the average bill during the holiday remained twice the level it was before the surcharge was introduced. This is partly why there hasn’t been as much of an increase in investor purchases this time around.

There is little indication that investors used their savings from the holiday to buy bigger properties in more expensive areas. Instead, 83 per cent of investor purchases were under £250,000, meaning their savings from the holiday were significantly smaller than those enjoyed by home movers. It also means that investors have been less sensitive to the change in the nil-rate stamp duty threshold since they tend to buy cheaper properties.

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During the holiday the average price paid by a landlord rose by just 1 per cent to £181,000, despite house price growth of 10 per cent over the same period. This suggests landlords were happy to pocket the tax saving rather than use it to buy a property which would generate more rent.


Average rental growth across Great Britain hit 8.0 per cent in September, the third fastest annual rate of growth recorded this year. Nationally, regions in the South of England have continued to drive rental growth. The average rent on a new home rose 14.8 per cent in the South West, 14.7 per cent in the South East and 10.8 per cent in the East of England. September marked the sixth consecutive month where annual rental growth hit double figures in the South West.

London rents have also continued to recover. Although Inner London rents fell for the twentieth consecutive month, the 4.4 per cent annual fall was the smallest decline this year, and smaller than the 22.1 per cent decrease recorded in April when the market bottomed out. In Outer London, rents grew 3.2 per cent annually in September, rising for the thirteenth consecutive month. This kept Greater London rents overall in positive territory, up 1.8 per cent year-on-year.

Source: Property Wire

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BTL availability reaches highest level since 2007

September started with 2,968 products on offer in the buy-to-let (BTL) sector, making BTL availability the highest on Moneyfacts records since October 2007 (3,305).

This is 71 products more than there were on offer pre-pandemic in March 2020 (2,897).

The average overall 2 and 5-year fixed BTL rates reduced in September by 0.03% and 0.04%, respectively.

At 2.94%, the 2-year fixed average was the lowest since January (2.89%), and at 3.25% the 5-year fixed equivalent was the lowest since December 2020 (3.25%).

At 85% loan-to-value (LTV), BTL availability remained unchanged at just 19 products this month, 13 less than were available in September 2019.

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The average 2 and 5-year fixed rates in this bracket of 5.61% and 5.83% were 0.88% and 0.44% higher than what was on offer two years ago.

Eleanor Williams, finance expert at Moneyfacts, said: “As we pass the 25th anniversary of the first BTL mortgages as we know them, our data gives landlords cause for positivity, as the number of products for them to choose from has risen by 153 this month, and at 2,968 is 1,162 higher than this time last year (1,806 Sep 2020).

“The resilience of this sector in the aftermath of a challenging 18-months is clear as choice now exceeds the number of deals available before the pandemic in March 2020 by 71 options.

“Further cause for celebration is that the interest charged on BTL mortgages is falling, with the average overall 2 and 5-year fixed rates dropping by 0.03% and 0.04% this month, to 2.94% and 3.25% respectively.

“Compared to a year ago, on face value borrowers will notice average rates are higher today.

“However, the rates a year ago were driven by the impact of the pandemic and product availability was low – particularly in the higher LTV tiers where rates are generally higher due to pricing for risk.

“As it stands, compared to a pre-pandemic September 2019, both the average 2- and 5-year fixed BTL rates are lower by 0.03% and 0.19% respectively, indicating rate pricing competition for those looking for new finance for an investment property.

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“As rental demand remains high, BTL could be a worthwhile investment and the rise in overall product choice and fall in average rates is positive.

“However, a note of caution as lenders’ enthusiasm to improve ranges seems to dissipate at the top end of the BTL LTV spectrum.

“The maximum 85% LTV bracket has not only seen availability stall at 19 deals, but also the average two- and five-year fixed rates on offer for landlords with just 15% equity or deposit are a quite staggering 0.88% and 0.44% above their September 2019 equivalents, indicating that while lenders are competing for business, this eagerness does not seem to extend to the riskier end of the market yet.”

By Jake Carter

Source: Mortgage Introducer

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NRLA: Demand for rental properties reaches five year high

The demand for private rented housing has reached a five-year high, according to research released by the National Residential Landlords Association (NRLA).

The survey of private landlords across England and Wales, conducted in partnership with research consultancy BVA/BDRC, found that 39% confirmed demand for homes to rent had increased in the second quarter of 2021 – 8% more than said so in the first quarter of the year.

In Yorkshire and the Humber, Wales, the South West and the South East more than 60% of landlords said that demand for homes to rent had increased.

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In contrast, just 15% of landlords in central London said demand had increased in the second quarter of the year, compared with 53% who said it had fallen.

Despite an overall increase in demand, the proportion of landlords intending to buy property has fallen from the four year high of 19% recorded in the first quarter of the year, to 14%.

In comparison, the proportion looking to divest has returned to 20%, up three percentage points from the first quarter of the year.

As COVID-19 restrictions are lifted, 55% of landlords said that their lettings business will continue to be negatively impacted as a result of the pandemic.

An estimated 81% of those in outer London and 78% of those in central London said they would be negatively impacted.

At the other end of the spectrum, 49% of those in Yorkshire and the Humber said they would be negatively affected.

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Chris Norris, policy director for the NRLA, said: “The evidence is clear that nationally whilst the demand for homes to rent is increasing, landlords are more reluctant to invest in new properties.

“The only losers will be tenants as they struggle to find the homes to rent they need.

“The Chancellor needs to recognise the harm being done by tax hikes imposed on the sector.

“It is clear that there is a significant flight of tenants from the capital in response to the COVID pandemic.

“With lockdown restrictions having ended, and offices beginning to reopen, the jury is out as to whether this trend will continue.”

By Jake Carter

Source: Mortgage Introducer

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