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Third of landlords either bought or buying new buy-to-let properties

More than a third (34%) of landlords have recently purchased another buy-to-let property (BTL) or intend to buy one within the next nine months, a survey by The Deposit Protection Service (The DPS) and Zephyr Homeloans has found.

Results from the poll of 300-plus landlords suggest that the ‘opportunity to buy at a discount’ is the most commonly cited reason among those who have recently bought or soon intend to buy additional rental property.

Other key factors including long-term investment (35%), stamp duty savings (34%) and diversification by either location (26%) or property type (23%).

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Paul Fryers, managing director at Zephyr Homeloans, said: “Understanding the purchasing motivations behind professional landlords is an essential factor for Zephyr and our mortgage broker clients.

“It’s equally important to recognise and appreciate some of the challenges landlords have been facing during the past year and how they will affect their current and future applications.

“During the pandemic we saw a significant rise in the use of limited companies to buy and manage property portfolios, and it seems a significant proportion of landlords have made the most of the opportunities provided by the buoyant market conditions we have experienced over the past six months.”

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Some 43% of landlords surveyed said that they had temporarily lowered rents during the pandemic to help tenants, with 22% saying they had refinanced their mortgages since the arrival of coronavirus.

Matt Trevett, managing director at The DPS, added: “Although the buy-to-let market has remained more buoyant than some predicted, the last year has not been without its challenges for many tenants and landlords.

“The survey suggests a large proportion of landlords have been acting to support their tenants, with a significant proportion saying they had temporarily lowered rents during the pandemic.

“A recent survey from The DPS also showed that the pandemic has triggered movement from cities to towns and the countryside, so landlords seeking to rebalance their portfolios may look to make purchases that reflect that trend.”

Source: Mortgage Introducer

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Rise in first-time buyers searching for buy-to-let properties

Demand has grown among first-time buyers who want to enter the buy-to-let market, according to Legal & General Mortgage Club.

Data from its mortgage criteria search tool found the search combination for first-time buyer, first-time landlord and non-owner occupier increased by 18 per cent since the start of September.

The mortgage club also found that ‘holiday lets’ was the second most searched for term among advisers this month.

According to Legal & General, its findings showed many first-time property investors were looking to purchase buy-to-let properties in response to an increase in demand from consumers to holiday in the UK, rather than abroad, amid international travel restrictions.

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Kevin Roberts, director at Legal & General Mortgage Club, said: “Despite the impact of coronavirus, we are seeing rising demand across the housing market with buy to let in particular enjoying a mini-boom.

“Our latest findings from SmartrCriteria suggest a growing number of first-time buyers are searching for mortgages for buy-to-let ventures, including those engaging with the growing trend towards staycations this year.”

Mr Roberts added: “Amidst this continued high demand we are seeing in the mortgage market, thousands of borrowers are clearly turning to independent advisers to help them with their plans and these experts are playing a vital role for consumers”.

Akhil Mair, managing director at Our Mortgage Broker, commented: “The data L&G have shared today is a very accurate reflection on the type of business and enquiries we have been receiving in the last few months.

“We are witnessing an unprecedented amount of first-time buyer, first time landlord enquiries, including expat and foreign nationals wishing to invest in the UK property market.”

Mr Mair added the “huge interest” his firm had encountered was due to incentives such as the stamp duty holiday.

By Chloe Cheung

Source: FT Adviser

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Fewer people purchasing buy-to-lets

Significantly fewer people acquired buy-to-let properties in Q3 2018, HMRC figures have showed.

Additional properties, for which stamp duty land tax is payable at the standard rate plus 3%, have seen a fall of 11% (7,400) compared to the same period in 2017.

And Hamptons showed that the number of homes bought by landlords had dropped by a third over the last three years with a 13% decrease last year alone.

Michael Lynn, chief executive at Relendex, said: “Property remains an investable asset class, however there is a trend borne out by these figures that people are moving away from investment in buy-to-let.

“There are several reasons for this including the higher rate of stamp duty land tax, the lack of access to funds and the uncertainty caused by Brexit.

“These factors all leave investors looking for new and innovative ways to maximise their savings.  Peer-to-Peer allows lenders to invest in specific property projects and access their money when they want it through an active resale market.

“What’s more, lenders can get high returns on their money, on average 8%, whilst having the security of knowing that they have invested in a stable asset. It is important that Peer-to-Peer investment properties are treated with the same care and attention that would be put into a buy-to-let.

“Loans should be secured on the properties themselves and have a loan to value ratio which safeguards the investment and that money will be paid back.

“If this is done correctly Peer-to-Peer allows lenders to get the returns associated with buy-to-let without having the hassle of managing the property themselves.”

The higher rate stamp duty land tax was introduced in 2016 for those purchasing second properties which includes buy-to lets.

Between Q2 and Q3 2018 additional dwellings transactions increased by 7% to 58,400. Compared to last year, it has fallen by 11% (7,400).

For the last four quarters additional dwellings have made up about 24% of all liable transactions and have generally increased as a proportion of residential transactions.

Source: Mortgage Introducer

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Haart Says Government Must Increase Buy To Let Support

The government needs to increase the support it extends to buy to let investors, according to Haart estate agents.

The government needs to begin supporting investors or it will see significant numbers of landlords exiting the buy to let market says Haart. This will lead to a sharp decline in rental property listings.

The call for further support comes amidst the government consultation for longer tenancies. Without greater incentives for buy to let landlords, many will not be prepared to offer longer tenancies. They will then leave the market. This will contribute towards the already-exiting supply and demand imbalance in the private rental sector that is beginning to push rental prices higher, adding more pressure on tenants.

Prospects for the sector without further incentives are looking worrying. The latest data from UK Finance found that gross mortgage lending rose by 7.6 per cent to £24.6 billion in July 2018 year on year. This was ahead of this month’s base rate rise.

However, activity in the buy to let sector did not grow. This is likely due to increasingly punitive tax measures levied by the government, such as reducing mortgage interest relief to the basic rate of income tax and adding a 3 per cent stamp duty surcharge to the purchase of additional homes.

12 per cent fewer landlords are purchasing properties in comparison to the same time last year.

CEO of Haart estate agents, Paul Smith, commented: ‘Mortgage lending jumped a huge 8 per cent on the year in July as existing homeowners sought to seal themselves into a lower rate ahead of the Bank of England’s interest rate hike. The buy to let sector is a fundamental part of the UK property market, and with fewer landlords, we are seeing rents rise. The government must stop penalising those who are willing to invest in the rental market and stop its needless crackdown on the sector.’

Source: Residential Landlord

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Record number of landlords selling their buy-to-let properties

In April letting agents saw the highest number of landlords selling their buy-to-let properties since records began in 2015, with the number of landlords exiting the market rising to five per branch from four in March.

ARLA Propertymark found in March, the figure rose for the first time in almost a year, to four landlords per branch, after sitting at three landlords consistently since April 2017.

The number of prospective tenants registered per member branch continued to rise, increasing by 9% in April. In March, agents had 66 tenants on their books on average, compared to 72 in April. This is the strongest demand seen since September, when there were 79 registered per branch.

David Cox, ARLA Propertymark, chief executive, said: “The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty has meant the BTL market is becoming increasingly unattractive to investors.

“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred.

“This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes?

“As demand for private rented homes massively continues to outstrip supply, the government can no longer divert its attention from the broken housing market.

“The recent news that the government is regulating the industry is a step in the right direction, but ultimately we just need more homes.”

The number of tenants experiencing rent hikes increased to 26% in April – the highest since September 2017 when 27% of landlords put rents up for tenants. Year-on-year, this has risen from 24% in April 2017.

The number of rental properties letting agents managed remained the same as the previous month in April, with 179 on average per branch

Year-on-year, this figure is low. In April 2017, agents managed a similar 185 per branch but in April 2016, they managed 185 and 193 were recorded in 2015.

Source: Mortgage Introducer