Buy to Let trends and Landlord confidence.

At the Property Investor and Homebuyers show at the London ExCel last weekend, it was a great opportunity to talk to professional landlords, as well as those looking to take their first steps onto the Buy to Let sector ladder.

With many changes and increases in taxation on profits being recently introduced along with licence requirements for houses of multiple occupation, minimum size requirements on rooms, and minimum standards for energy efficiency, etc, the Buy to Let sector has taken quite a beating! 

One of the main specialist lenders in this area, Kent Reliance, recently issued their Buy to Let Britain Report, edition nine, which looks at Buy to Let trends and the sectors confidence.

The report suggests that Brexit uncertainty and Government intervention has subdued the growth of the Private Rental Sector.  However, rents are rising at their fastest annual rate since 2017, climbing by 1.3% to £896 pcm.

Despite landlord confidence falling to it’s second-lowest level, rents are outpacing house prices with average yields rising to a two-year high (4.5%).  Yields in London are at their highest since 2015!

The report continues stating that remortgaging activity accounts for three quarters of mortgage lending in Buy to Let as landlords look to lower costs and fix mortgage rates.  Whilst 72% of all Buy to Let mortgage applications for purchasing a property are now made in a limited company name.

Since the Prudential Regulation Authority stress test rules came into effect in 2017, lenders have to work out affordability on a Buy to Let mortgage based on the rental income achievable from the property and stress the product term over a five year period, often at 145% of a nominal rate of 5.5%.  Lenders interpret the rules differently and differentiate between a Buy to Let in a personal name compared to a property brought in a limited company name. 

So, if this is an area you are looking at moving in to, seek advice (and especially tax advice) as buying in a limited company name and over a five-year fixed rate, could allow you to achieve a mortgage loan substantially higher than against in your personal name and a based on two year mortgage deal.  Terms always apply and read the small print!

That's it for 2016 - Have a great festive break!

Amazingly, this is my last column of the year.  I cannot believe where 2016 has gone.  So much has happened and I've enjoyed writing about it, especially with regards to the mortgage world's good and bad!

2016 has been a funny old year.  Not only have we had the impact of new mortgage rules from the European Credit Directive…..we then decide to leave Europe!   As if that's not enough, the PRA rules restrictions have been hanging over our heads most of the year and will impact the Buy to Let sector from January 2017.  First Time Buyers are still yet to get the true help they need and I think that failing to adjust the Stamp Duty was a missed opportunity in the recent budget review. 

Housing shortages are never far away from the headlines, but actually a lot more people have looked at development and expansion this year.  Looking at old office blocks and converting them in to flats, or changing a large house in to two or three self contained units.  Maximising rental yields and opportunities.

The really positive news is the number of new lenders who have launched this year.  A sign of the times and that funding is a lot easier to achieve compared to recent years.  This has also bought in rate price wars and this can only be a good thing for the end consumer and keeps competition rife.

Despite many pundits saying it will be a flat market next year, I'm upbeat for 2017.  I think it will be a positive year and one we can look at that will offer so many opportunities to those looking in the right places for properties as well as funding.

Finally, a heartfelt thank you for reading my weekly columns.  I've tried to provide an unbiased insight to what happens in the mortgage world (and tried to keep it upbeat!).  But I will now enjoy a couple of weeks without a production deadline to meet!

Thank you to everyone who has instructed AToM to source and arrange their mortgage during the past twelve months. It has been a fantastic year and we have enjoyed substantial growth in volume, averaging over £30m in new applications each month. Also, a good increase in headcount in the AToM team located between our two Horsham offices (soon to be three!).  They are a truly an awesome and knowledgeable team. 

On behalf of all the staff and directors at AToM, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year!