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Wednesday, May 04, 2016

Brokers hit back at BTL scaremongering

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London starter homes drop by £20k

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Tuesday, May 03, 2016

New BTL rules could reduce homes for FTBs

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Why now is not the time to invest in BTL

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House prices need to fall

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More rent cap debate in the Guardian

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Rightmove see a BTL lull

Rightmove's rental price tracker shows a lull after the pre-stamp duty rush by BTL investors.

  • BTL investors dropped 27% in March compared to March 2015. 
  • The fall follows pre-stamp duty BTL surge from December to February (up 24% year-on-year) 
  • Home-hunter demand at an all-time high with a record number of Q1 enquiries.

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'Bank of mum and dad' funds 300,000 homes

It is predicted that 25% of  UK mortgages in 2016 will be financed by the 'bank of mum and dad'.

Stats from Legal & General and CEBR predict that parental loans will equate to £5 billion over the course of the year, helping to fund the deposits on over 300,000 mortgages with a total purchase value of homes  £77 billion.

The average parental contribution is £17,500 or 7 per cent of the home value.

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ARLA blame Stamp duty for lettings dip

The Association of Residential Letting Agents (ARLA) March Private Rental Sector (PRS) report has been published.  It shows a both a fall in  supply (down 4%) and demand. 

The average letting agency branch reported having 169 rental properties on its books in March 2016, that compares to 192 in March 2015.

Prospective tenants registered per branch fell to 33 on average, down from 37 in the previous month, and 36 in March 2015.

ARLA blame Stamp duty reforms

“We don’t expect falling supply to stop here – the recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.

Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge. Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”

- ARLA's managing director David Cox

Saturday, April 30, 2016

Lender tightens mortgage criteria

I've reported before about the Bank of England intention restrict buy-to-let lending to make obtaining a mortgage more difficult and more costly for landlords.

On Friday one of the biggest lenders The Mortgage Works (TMW) increase its rental cover for it's mortgages from 125% to 145%.  The rental cover refers to the percentage of the projected rent in relation to the mortgage payments.

The lender which is part of the Nationwide BS has blamed the move on the Chancellor recent move to place limits on the amount of mortgage interest that a landlord can offset against their rental income.  The results for many higher rate taxpaying landlords is that their tax liability will increase considerably. An increasing number of landlords are incorporating their rental business in an attempt to side step the changes.

TMW has also announced that from 11th May it will reduce the maximum size of a buy-to-let loan from 80 to 75%.

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Thursday, April 28, 2016

BTL mortgage market update

The buy-to-let mortgage market continues to offer a large number of options for landlords – Property Hawk Mortgages currently has over 900 products on its sourcing and quotation system – which cater for the wide range of different requirements from clients.

For landlords who are looking to employ higher gearing in their buy-to-let property investments there are now more lenders offering products at higher loan-to-values. Although Kent Reliance is still the only lender offering rates at 85 per cent loan-to-value, there are now at least 10 lenders in the marketplace who have 80 per cent loan-to-value mortgages in their buy-to-let range, including Aldermore, Precise Mortgages, Mortgage Trust, Fleet Mortgages, Paragon Mortgages and Godiva.

For landlords with larger deposits available, some of the cheapest rates on offer are at lower loan-to-values of 60 or 65 per cent. A good selection of these rates are at below 3.00 per cent for two years and also have no completion fee or booking fee such as with Natwest, Skipton Building Society, Virgin Money, BM Solutions and TMW. So, buy-to-let clients with greater equity in their properties can get some very competitive deals at the moment.

There is currently an excellent ‘fee-free’ product which is available up to 75 per cent loan-to-value at 3.70 per cent fixed for two years with Newcastle Building Society; and Mortgage Trust has recently launched a range of products via Property Hawk Mortgages, including a 3.60 per cent two year fixed rate up to 80 per cent loan-to-value which has no completion fee and a free valuation.

There has been some growth in the number of longer term fixed rates available in the buy-to-let mortgage market over recent months, which cater for landlords who are looking for guaranteed monthly payments over a greater period of time.

In fact, there are well over 200 five year rates currently on offer from a range of lenders including BM Solutions, Virgin Money, Godiva, Fleet Mortgages, Axis Bank and Paragon Mortgages.

There is also a ten year fixed rate available with TMW at 4.99 per cent up to 75 per cent loan-to-value with a flat completion fee of £995. At Property Hawk Mortgages, we have found longer term fixed rates to be more popular with older applicants.

Following the announcement of the buy-to-let tax changes being phased in from 2017, we are starting to see some lenders adjusting their rent stress calculations in the expectation that landlords will need to generate more revenue from their properties to meet the higher tax demands.

Typically in recent times, lender rental calculations of 125 per cent have been the norm, but we may see more lenders increasing it to, say, 135 per cent in order to satisfy their concerns over landlords’ affordability.

Rent stress tests can make a big difference to the amount that clients can actually borrow and some applicants are falling short of the higher notional rate rental calculations required by some providers. Whilst there are still lenders who have lower pay rate calculations, for example Axis Bank and Foundation Homeloans, rent stress testing is definitely a factor that should be taken into consideration when sourcing a buy-to-let mortgage.

Although buy-to-let mortgage providers may become more cautious with their rental calculations over the next 12 months, the level of lending and demand for buy-to-let mortgages is unlikely to be significantly affected overall.

To discuss your buy-to-let mortgage requirements please contact the Property Hawk Mortgages team on:
Tel; 029 2069 5446



Last ever Land Registry HPI figures shows falls

The final Land Registry house price index has been published using data from sales during March ( the new national HPI out on the 14th June ).

In its last ever HPI, the LR has the average annual property price growth in England and Wales at6.7%, with the average property price at £189,901.

March saw prices fall 0.5%.

Key points -
  • London annual growth now at 13.9%
  • London and the East were the only regions to see increases in March.
  • the North East saw the only annual price fall with a movement of -0.7%
  • Yorkshire and The Humber saw the largest monthly dip, down 2.6%

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Charting the growth of PRS

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Tenants asking for energy-saving improvements

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Property inflation slows - Nationwide

It's time for another Nationwide's house price index.

Data from the bank shows an increase of  0.2 % in April, slowing their annual house price inflation  to 4.9%.

The average UK house price rose from £200,251 to £202,436.

Their Chief Economist, Robert Gardner comments:

“While UK house prices edged up 0.2% during the month of April, the annual rate of house price growth moderated to 4.9% from 5.7% in March.

This slowdown returns the annual pace of house price growth to the fairly narrow range between 3% and 5% that had been prevailing since the summer of 2015. 

It may be that the surge in house purchase activity resulting from the increase in stamp duty on second homes from 1 April provided temporary boost to prices in March.  

However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead."

Read the Nationwide's house price index for April 2016

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Stamp Duty changes cause Foxton slump

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Wednesday, April 27, 2016

Tenants name and shame landlords

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Record dip in Scottish rents

There has been a drop in average rents in Scotland according to letting agents, Your Move.

The average rent in Scotland dropped by 0.7% over the course if March to £544, the largest monthly fall on record.

The only part of Scotland to experience a rise in rent during March was the capital - Edinburgh.

Brian Moran, lettings director at Your Move Scotland reflects on the March rental data -

"What we do know, is that if landlords hit the brakes and cause a roadblock of supply in the private rented sector, tenants will be the casualties paying higher rents in the longer term,

March has seen a very unwelcome about turn in the direction of tenant finances. Up until now Scottish tenants have been making good ground over the spring months, and paying down levels of late rent but there’s still a mountain to climb for many households,

External factors and the wider economic climate obviously have a vital impact on tenants’ bottom line and the delicate balancing act between monthly income and outgoings, but landlords on the ground can help keep a lid on affordability pressures too.

Good management of buy to let properties and regular communication between landlords and their tenants is crucial to signpost any early concerns and avoid the likelihood of rental arrears. Tenants need properties they can afford, and landlords need tenants with a healthy grip on their household expenses, so it’s about striking a fair deal for both,"

On the surface, the new LBTT benefitting the vast majority of Scottish buyers made it more expensive to become a landlord last Spring, with average property prices sent skyward after an onslaught of high value house sales at the top end of the Scottish housing market,

This short term scramble and the impact this had on values at the time meant that many existing landlords experienced faster capital growth than they were counting on last year, and on the flip side, those who entered the fray at the peak of the rush seemingly paid a premium that they may not have obviously recouped back yet. But it’s worth remembering that they’ll have saved themselves the extra 3% stamp duty now liable on buy to let purchases,"

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Landlord blasts immoral property tax

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Top of the buy-to-let investment market

I've recently come across this investment deal being advertised by a national auctioneer house.

The block in leafy Kent is obviously a conversion property (not always the best - depending on the quality of the building work)  Often historic conversions were carried out to much lower levels of noise insulation, fire safety and non compliant electrical standards than modern standards would demand. The details on the website are:

Ten self-contained flats extending to a total of 777 sqm (8,358 sqft)

    •    All flats fully let subject to Assured Shorthold Tenancies
    •    Total Current income of £106,661 per annum
    •    Potential for further residential development subject to obtaining all necessary consents
    •    Potential to increase rent when tenancies come to an end

Value of investment

To me the asking price and investment multiple indicate that we must be close to the top of the market.  The asking price of over £1.8 million on the current rent gives a gross rental yield of less than 6%.  If the landlord then takes of the management cost and associated costs of the investment of say 2% you are left with a sub 4% net yield.  This implies the expectation of a massive increase in capital value either through development or growth in house prices.  I can't see it myself and given the lurking dangers that interest rates on any loan used to buy the property can only go upwards the upside on the investment is FULLY priced into the valuation.  At this price this and other similar investment properties are not a screaming buy and reflect the strong investment demand for buy-to-let properties rather than any long-term sensible investment criteria.

These are only my thoughts as a hard bitten investor and former surveyor.  I have been wrong before and I'm sure will continue to be proved wrong in the future.

Finance you investment - expert brokers unbiased advice

New national HPI starts in June

The Land Registry is re-jigging it's House Price Index.

It's throwing it's stats in with data from the Office of National Statistics (ONS), Registers of Scotland (ROS), Land & Property Service Northern Ireland (LPSNI) and Valuations Office Agency (VOA)

The last of the old style HPI will be published tomorrow, then the first of the new GOV HPI will be published on the 14th June.

The new format will include first time buyer and new build statistics and will be located at the GOV.UK url.
new statistics in the reports including first time buyer and new build stats - See more at:
new statistics in the reports including first time buyer and new build stats - See more at:

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Amendment to the Immigration Bill

It's good to hear that some common sense has prevailed.

MPs agreed on Monday to amend the Immigration Bill to help protect landlords wanting to evict illegal immigrants.

The changes to the Right to Rent scheme gives greater protection to landlords along as they are perceived to have taken 'reasonable steps in an appropriate time frame' to terminate the tenancy of tenants in this country illegally.

Prior to the amendment to the Immigration Bill,  criminal sanctions against a landlord would commence immediately if it was upon discovered there had been a potential failure to carry out the proper Right to Rent checks. preventing a  landlord/agent from evicting a tenant.

RLA Policy Director, David Smith comments:  

“The RLA warmly welcomes the Government’s pragmatic changes to its Right to Rent scheme that will provide protection for good landlords from the unintended consequences of the policy. It is particularly helpful that the changes were approved by MPs without a vote, a sign of cross party support for the measure.”

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Tuesday, April 26, 2016

More rent than buy property

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FTB's fill gap left by investors

First time buyers are back in the market as investors shy away.

Data for March shows 28% of property sales went to first time buyers, up 4% on February.

The data released by the National Association of Estate Agents (NAEA) also shows that many estate agents (39%) are expecting this upward trend to continue as the introduction of 3% stamp duty on second homes deters investors.

Agents reported a fall in demand, as registered buyers fell from 463 to 417 from Feb to March.

Supplycontinued to rise, with the branch average up from 35 in February to 54 in March.

Mark Hayward, NAEA managing director comments -

‘The last few months first time buyers have had to compete with landlords for the same properties and those landlords have really pushed hard to complete ahead of the rise in stamp duty.

Now, in theory things should get easier for first time buyers as we have seen with a slight increase in sales this month and as those seeking to buy to let will tail off.

However in reality, it’s unlikely in the long term that first time buyers will notice a huge difference, as prices remain high and housing is in short supply. The Government needs to significantly increase the number of homes that are being built in this country to really make a difference to those that are struggling to get on the housing ladder.’

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Letting agent rips off 17 landlords

A letting agent has been sentenced to ten months in prison and banned from being a director of a company for 7 years by Kingston Crown Court.

Chandra Patel had ran Giraffe Residential in New Malden when he suddenly closed the agency owing a total of £27,000 to seventeen landlords.

Mr Patel had used money paid as security deposits and rent to pay off other business debts as the agency fell into financial difficulties between February 2014 and October 2014.

Judge Timothy Lamb summed up:

“He traded well until 2014, when things took a turn for the worst. The defendant decided to help himself to the monies which he held in trust. I take into account the defendant’s family circumstances, I take into account that he is of previous good character. However, the defendant became part of a system of retail letting which was created in order to instill trust and confidence. He was plainly not fit to play a part in the system. He abused his position.”

Following the closure of the agency, landlords were forced to pay back their tenants deposits using their own money.

Mr Patel is looking to appeal the sentence.

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Savills national property auction 9th May

 Here's 243 lots from all over the country to have a stab at  Savills next national property auction on the 9th May.

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DPS dispute worshop in Bristol

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Soaring housing costs

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Monday, April 25, 2016

More concern over Universal Credit

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Luton 'fake landlord' jailed

A 'rent to rent' case in Luton has lead to a 16 month prison sentence for the 'fake landlord'.

Moses Ogoe posed as a landlord/owner of seven rental properties that he'd himself rented from unsuspecting landlords under false documentation, before converting them into Houses in Multiple Occupancy (HMOs).

An investigation by Luton Council Trading Standards and Private Sector Housing services discovered that Mr Ogoe had rented the properties using falsified documentation, claiming he worked in a number of different professions, including as a doctor, a security manager and a catering manager, when in fact he worked as a security guard on temporary contract.

Mr Ogoe then went on to rent the properties out on a room by room basis to unsuspecting tenants who presumed he was the landlord.

The Honour Judge Kay QC outlined: 

"You saw an opportunity to rent relatively sizable properties and sublet them to desperate individuals who needed somewhere to live. You were not providing a public service because you did this for greed. You defrauded them as you did not provide a genuine tenancy and the protection that would give".

Alongside the 16 months prison sentence, Ogoe was ordered to pay £7,500 in costs. 

The case underlines the importance of carrying out tenant referencing checks.

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Friday, April 22, 2016

LSL puts annual rental growth at 3%

The LSL rent index for March has the average monthly rent across England and Wales at £791 - putting the annual rental growth rate at 3%. 

In an uneventful month, March saw Midland rents hit a new high, whilst Wales and the North East saw falls, most other areas remained pretty much the same.

LSL director, Adrian Gill, shared his concern for the rental market following April's stamp duty changes

‘Ultimately this will only punish tenants and aspiring first time buyers, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them,’

‘In particular, this month’s new stamp duty surplus has driven an extra wedge between those aspiring landlords planning to invest in additional homes to let, and those existing landlords who have already built up their portfolios. That difference will not last for long. But by making it more expensive to invest in property, it will hamper the healthy growth of the private rented sector,’

‘For private renting to remain an affordable option and a high-quality home for millions, the answer is more supply and more choice. That means lifting the barriers to investment in property, rather than adding fresh penalties for landlords aspiring for their own financial security,’

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BTL surge boosts prices in UK cities

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