Tag Archives: london
More UK landlords opting for low cost short term buy to let mortgages
The proportion of landlords in the UK favouring shorter two year fixed rates for mortgages has doubled in a year, new research suggests. It means fewer are looking at longer term fixed rate mortgages as the shorter terms loans are offering much lower deals at a time when the prospect of an interest rate rise recedes. The research from specialist broker Mortgages for Business also found that despite cheaper borrowing costs, some 73% of landlords want buy to let lenders to relax their lending criteria, up from 47%. A breakdown of the data shows that as of the final quarter of 2014, the proportion of property investors favouring two year fixed rates has increased to 23% from just 12% in the first quarter of the year. By contrast there was a decline in the proportion of landlords who would choose longer term fixed rates. In a marked reversal, fewer would now fix their mortgage repayments for three years than would prefer a two year deal. Just 15% prefer three year fixed rate products, down from 21%. The proportion of property investors who would fix for five years has fallen less dramatically, from 34% in the first quarter of 2014 to 31% in the final quarter. Moreover, in the latest figures only 8% would opt for a 10 year fixed rate if available, down from one in 10. ‘Tempted by cheap rates, landlords are deciding to take their chances with a shorter term deal. It’s true that these ultra-competitive mortgage rates will probably continue for some time as the financial world increasingly predicts virtually zero inflation in the UK and Eurozone, plus a cooling rate of economic growth,’ said David Whittaker, managing director at Mortgages for Business. ‘That doesn’t mean there’s no room for caution. Even in such an exceptional situation, rates are still expected to rise in due time. However, landlords now seem willing to take the chance that won’t happen for at least a couple of years,’ he explained. ‘However, we maintain our recommendation to fix for longer, particularly where the pricing difference between three and five year fixed rates is narrow,’ he added. Overall, the proportion of landlords who say lenders should be doing more to support property investors has risen since the start of last year. This is now 64%, up from 58% in the first quarter of 2014. As borrowing costs have fallen, substantially fewer property investors feel mortgage rates should be lower, 10%, down from 19% at the start of 2014. Similarly, fewer respondents said they would like lenders to reduce fees at 12%, down from 20%, and only 5% felt that lenders should be lending more, down from 14%. The survey revealed that landlords with larger portfolios continue to feel marginalised by the majority of lenders. They would like to see lenders remove age restrictions and non-property related income requirements, increase lending to limited companies and take a more common sense approach to underwriting. ‘Unfortunately for the more seasoned… Continue reading
Prime central London rental values flat for second month in a row
Rental values in prime central London were flat for the second consecutive month in December as a seasonal year end slowdown and the impact of global economic uncertainty dampened demand. Though monthly growth slowed to zero by the end of the year, the annual increase in rental values was 3.3%, which was the highest rate in three years, the rental index from Knight Frank shows. It points out that annual growth has been climbing steadily since July as the UK economy improved and some buyers switched to the rental market while political uncertainty surrounds the outcome of the general election in May and the prospect of further property taxes remains. ‘However, while the UK’s economic indicators have improved, caution surrounded the world economy in the last quarter of the year, including falling oil prices and the economic outlook in China and the euro zone,’ said Tom Bill, head of London residential research at Knight Frank. ‘The result is that companies or individuals are more likely to postpone decision making while they wait for clarity,’ he added. The report points out that other factors affecting the market include the falling price of oil, events in Syria and Hong Kong, the Ebola outbreak and concerns the Federal Reserve in the United States was going to raise interest rates sooner than expected. ‘Despite this uncertain global economic and political backdrop, prime central London residential property remained a sound investment in 2014,’ said Bill. ‘Total returns, which include rental income and capital value growth, outperformed a series of other asset classes in the year to November, proving its resilience as an investment. For example, while commodity prices have fallen markedly, partly due to concerns over the Chinese economy, demand among Chinese tenants and buyers for prime central London property has increased, buoyed by its safe haven appeal,’ he explained. ‘This is underlined by the fact the number of Chinese tenants increased by almost fourfold in 2014 compared to 2013,’ he added. Continue reading
London Mayor announces new £10 million loan for affordable housing in London
The Mayor of London is forming a partnership with Big Issue Invest to renovate empty properties into much needed new affordable homes in the UK’s capital city. Boris Johnson has awarded a £10 million loan from his Housing Covenant to Big Issue Invest who help small community organisation's to renovate empty homes or buildings to convert them into good quality affordable housing for Londoners to rent or part buy. The funding will revolve over a 10 year period and result in up to 400 empty homes being transformed into good quality low cost housing. In addition it will provide long term unemployed people, veterans and out of work young people from across London the opportunity of employment and training in construction. The Mayor's Housing Covenant supports organisations proposing innovative ways of delivering affordable housing through a Revolving Fund and is one of a number of housing schemes the Mayor is delivering to boost affordable housing, stimulate building and fast track the delivery of thousands of much needed new homes. The proportion of empty homes in the capital has fallen dramatically under the Mayor, and at 0.7% is now at the lowest level since the 1970s. Over 5,000 empty homes have been brought back into use through GLA housing programmes since 2008. ‘With the huge demand for housing it's essential we get empty properties back into use, which is why I'm helping innovative projects renovate them back into much needed affordable homes,’ said Johnson. ‘Big Issue Invest are masters of boosting community social enterprise and delivering key employment and training skills to the homeless and unemployed people who need our extra support. This funding sits alongside my affordable home programme which is on track to deliver 100,000 new low cost homes across the city,’ he added. The Big Issue Group's chairman, Nigel Kershaw, described it as an exciting opportunity. Big Issue Invest is a specialist provider of finance to social enterprises. It provides investment from £50,000 to £1.7million and develops innovative financial solutions which help organisations tackle poverty and create opportunity. Since 2005 Big Issue Invest has invested over £27 million across the UK in more than 330 social enterprises, directly benefitting over 1.8 million people. The new loan will allows Big Issue Invest to finance and support more innovative housing projects undertaken by social enterprises and charities. These projects will serve to increase the volume of affordable housing available in London. The Mayor's commitment to getting empty homes back into use and boosting affordable housing is part of a package of wider measures he is promoting to stimulate house building. Continue reading
