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Thursday, April 27, 2017

Landlord expansion plans at a low

The latest index from BM Solutions reports a big decline in landlord's appetite to acquire more rental property.

The lender reports that just 13% of respondents are looking to expand their existing portfolios; the least enthusiasm shown since they started collected data back in 2006.

It comes as no surprise to me; what with the legislative and tax beatings we've been subjected to, and the stella performance of the majority of investment trusts over the course of the past year.

Why on earth take on the hassle of further quirksome tenants when you can make a few clicks on a Hargreaves Lansdown account and be done with it?

The Government needs to take heed before clobbering us more.

Other factors listed by BM Solutions were, falling tenant demand, particularly in Central London,

Phil Rickards of BM Solutions, comments: 

“Despite signs of landlord confidence stabilising this quarter, fewer landlords are feeling optimistic about the prospects for their own businesses.

This has driven down the number of those looking to expand their portfolio further to a new all-time low despite the average portfolio creeping up slightly.

The impact of the tax changes has a natural link to landlord confidence, as the market landscape continues to be reshaped by changes in regulation.”

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Housing starts indicator at a high

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£7bn of BTL lending to disappear

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Trouble brews for UK commercial property

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Wednesday, April 26, 2017

'Digital tax' return not in Finance Bill

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A London rogue landlord database

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Stamp duty receipts at all time high

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Lots of new London property unsold

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Tuesday, April 25, 2017

More landlords are selling up

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Tenants lived like 'wild pigs'

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£10k fine for bedsit in a shed

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Santander refreshes BTL range


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Your home may be repossessed if you do not keep up repayments on your mortgages. The Financial Services Authority does not regulate some forms of mortgage.

Wealthy move from houses to flats

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Nine mistakes landlords make

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JRF report - PRS regulations

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Ultra low mortgage rate bubble

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Central London property price drop

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Monday, April 24, 2017

Property asking prices hit new high

Rightmove's asking prices for newly marketed property has hit an all time high.

The average UK property asking price in April 2017 is up by 1.1% over the course of the past month.

  • The average asking price is at £313,655 (+£3,547). 
  • Annual growth slowing, now at 2.2%.
  • First-time buyer properties annual growth of 6.5%, to £194,881.
Rightmove's Miles Shipside comments: 

“High buyer demand in most parts of the country has helped to propel the price of newly marketed property to record highs. There are signs of a strong spring market with the number of sales agreed achieved at this time of year being the highest since 2007. It remains to be seen what effect the run-up to the snap election will have, though any slowdown in activity will be counter-balanced by the market’s current fast pace. Indeed, in locations where choice of suitable property is limited hesitation could mean losing out to others who still decide to act.

Increasingly stretched buyer affordability will continue to be a price moderator for sellers who are over-ambitious with their pricing, tempering the pace of price rises. Strong buyer activity this month has led to 10% higher numbers of sales agreed than in the same period in 2016. This large year-on-year disparity should be viewed cautiously as the comparable timespan in 2016 saw a drop in buy-to-let activity with the additional second home stamp duty. However, they are also up by 3.8% when compared to 2015. With the growth in household numbers and new-build supply struggling to keep pace, demand is strong and has led to the highest sales agreed numbers at this time of year since the heady pre-credit-crunch levels.”


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Property funds sit on cash

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Friday, April 21, 2017

Landlord Mortgages and BTL Finance Are Key

There are two things that make for a successful residential investor. Firstly, there is getting good tenants; bringing landlords a regular and recurring income to service their debt.

The other is access to debt at a reasonable cost - a mortgage at a low rate.

Landlord Mortgages - a potted history

There is a lot to BTL and landlord mortgage finance; it is more complex and involved than a standard mortgage. Landlords have lived through extraordinary times in terms of access to debt recently.  In the 90s we had the emergence of the whole buy-to-let industry, when lenders recognised that lending against property to bone-fide landlords using an AST was not such a bad thing.  The BTL boom meant that landlords could get their hands on ridiculous amount of cash with literally no capital,  making them and the lenders vulnerable to any down turn in capital values. 

Then, came the inevitable crash. 

The 'credit crunch' meant that debt became a dirty word overnight.  Cash was again 'King', and low rated landlord mortgages were only there for landlords with 30% + of cash to put down.

In recent years we have seen the relaxing of this tight lending criteria, and now, once again landlord mortgages are readily available with Loan To Values (LTV) as high as 85%. 

Back to the boom days?! Well almost.  Now we have the Prudential Regulation Authority (PRA) wading into the mix and scuppering the happy days of easy lending.

PRA - Landlord Mortgage Controls

The Prudential Regulatory Authority (PRA) are a new organisation set up as part of the Bank of England to maintain stability within the economy.  One of the parting shots of the last Chancellor George Osborne was to slap on a tightening of the financial screw on lending to the buy-to-let sector by giving more restrictive guidelines to banks  underwriting the landlord mortgages.  In essence what it means to me and you it means that landlords will be able to borrow less again reversing the easy credit environment of the last few years.  The way that this will effect landlords is that the PRA have added an affordability test that requires landlords to be able to afford repayments based on an assumed interest rate of 5.5% as a posed to that which they actually pay.  This has had the effect of increasing the amount of rental cover required by many lenders from what was an industry average of 125% of the rent to 145%.  Portfolio landlords (defined as 4 or more properties) will face much tighter tests on their income than previously.  This element of the changes is due to come in from 30th September.

The motto of the landlord mortgage story is that whilst lending will not be as tight as it was before the buy-to-let revolution or after the credit crunch; the days of easy access to landlord mortgages and BTL mortgage finance are probably over for now.

Mortgage Search - all your options




Thursday, April 13, 2017

DCLG's Lettings Fee Ban - consultation

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Housing supply at record low - RICS

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Tax change - what options do landlords have?

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The 'sex for rent' landlords

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Property values per sq metre - UK map

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