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!

Piazza Italia was superb! Lenders launch in to Near Prime for those with small deposits

This column is always a difficult one to write in the middle of the Easter holidays and whilst a lot of people are away, including myself!  So, whilst writing this from our ski chalet, I do look around the surroundings and weigh up the local house prices and compare to those back home.  We are most definitely an expensive comparison.  With this in mind, I wonder how first time buyers manage to save alone, without the help from the bank of mum and dad or grandparents, in the current climates, most probably still whilst paying to rent a property?  Which incidentally, will be a significant amount more expensive on the monthly payments than a mortgage probably would be!  This is of course on the basis that the clients have no issues, which, as more and more people apply for a mortgage, more and more fall out of the ‘high street’ model.  Some give up, whilst others look for the alternative mediums out there, such as ‘whole of market’ mortgage brokers, who have access to lenders who want to help. 

Lenders recognise that they should be helping those who may have had a blip in the past.  Just last week, our good friends at Kent Reliance (part of the One Savings Bank group), launched a mortgage for those with a 10% deposit, that may have had a default or CCJ over two years ago, or a missed mortgage payment over one year ago, with rates starting from just 3.19%.   Terms and conditions obviously apply, and these deals are only available through a limited few. 

They join another lender, Kensington Mortgages, who also offer a similar offering for those with just a 10% deposit.   However, that means that only two lenders in the whole market will consider someone with a historic blip and just a 10% deposit.   These two lenders must be applauded for leading the way.  But overall, this needs to change and more lenders need to follow suit and offer assistance. 

Finally, hats off to the organisers of the Easter weekends Piazza Italia.  Despite the weather, the crowd turnout was fantastic, as was the entertainment, and it looked like everyone enjoyed themselves.  AToM was delighted to be a sponsor and well done to all involved.