The buy-to-let sector continues to provide excellent prospects for property investors with recent market data supporting this view. According to research by Halifax, property prices have increased, on average, by 8.8% in the last year and the latest LSL BTL Index reports that rents have also increased by 1.4%. These are the two key factors in determining the overall return on a buy-to-let property, which according to LSL is now 11.8% per annum, the highest level since June 2010 and very encouraging news for landlords.
Lenders are continuing to support the buy-to-let sector, providing a wide choice for both existing and first time landlords. However, the marketplace has become more dynamic and we have seen a number of rate changes recently, although these have not followed a single trend. Some lenders have released new ranges at higher prices, perhaps in order to stem the flow of business and likewise some have lowered their rates in order to remain competitive.
BM Solutions and TMW are still the front-runners in terms of business volumes, but there are now so many more options for specialised loan requirements such as HMOs, limited companies, Expats and refurbishment projects.
Interestingly, in mid-July Accord launched 10 new buy-to-let mortgages including cashback and free valuation incentives, but made available for 10 days only. This is an unusual sales initiative which may have limited impact in the marketplace due to the short turnaround time for submitting applications.
Lending criteria remains diverse across the market with lenders taking different approaches to risk, although there is still an overarching level of caution, especially in light of the Mortgage Market Review, even though buy-to-let lending is, in the main, unregulated. Rental income requirements are generally at 125% at 5% or above, however the recent changes by NatWest Intermediary Solutions imposing a 4.99 loan-to-income multiple may be a bit excessive.
On a more positive note, TMW’s removal of their upper age limits for their buy-to-let range earlier this year and the number of options for first time landlords means that buy-to-let property investment is now available to a very wide demographic in the UK.
Property Hawk Mortgages is continuing to see strong demand for remortgages with landlords raising capital to fund the deposit for additional buy-to-let purchases or looking to employ higher gearing in their property portfolios to maximise returns. Although Kent Reliance is still the only lender providing 85% LTV finance, there is now a good range of products available at 80% LTV from a choice of lenders. Some of these products have incentives such as a free valuation/free legal fees and no completion fee options mean that the upfront costs of remortgaging can be quite low.
Overall, the buy-to-let market remains in good shape and is likely to continue in a similar vein for the foreseeable future.
IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice. Please check our website regularly to see the most up-to-date products available.
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