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UK landlords report increased tenant demand in third quarter of 2015
Private rented sector tenant demand continued to grow across the country in the third quarter of 2015 with 41% of landlords reporting a rise in demand. The data from a survey by Paragon Mortgages also shows that rental yields, that is annual rental income as a percentage of property value, have remained at the same levels seen throughout 2015. The survey, undertaken by BDRC Continental on behalf of Paragon Mortgages, found that yields averaged 5.6% nationally in the third quarter and amongst Paragon customers this figure was higher, with a national average of 5.9%. The greatest number of landlords, 17%, reported yields between 3% to 4%, while one in 10 landlords reported yields of 10% or more. Yorkshire and the Humber reported the highest yields in the third quarter at 6.1% with outer London reporting the lowest at 4.8%, despite outer London having the second largest increase in levels of tenant demand. On tenant demand, the East of England region has performed best in the quarter with 52% of landlords reporting an increase in demand. This figure was just 31% for the North East with a national average of 41% of landlords saying demand had increased. This figure represents a strong year on year increase in tenant demand across several regions since the third quarter of 2014 with the demand in the North East having increased from 23% to 31% and in outer London from 42% to 48%. ‘This research shows that yields, and tenant demand have remained strong throughout the third quarter, in common with 2015 overall. The figures reflect a steadily improving economic outlook for the UK as a whole and show that, more and more people are actively choosing the flexibility of making a home in the private rented sector,’ said John Heron, Director of Mortgages at Paragon. ‘Yields too have remained stable throughout 2015. Quarter three data shows London and the South East slowing down somewhat, while yields in the regions are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country,’ he added. Continue reading
Less than a third of people with mortgages know what interest they pay
One in three mortgage holders in the UK have no idea what rate of interest they are paying, despite market speculation that an interest rate rise is on the horizon which could increase their repayments. The research from consumer organisation Which? Mortgage Advisers has found 32% of mortgage holders were unaware of the rate of interest on their mortgage with just 29% sure of their exact rate. Some 89%of home owners who knew their exact interest rate felt informed about the impact of a potential rate rise on their finances, yet this fell to only 58% for those who didn't know their mortgage rate. With widespread market and media speculation about a potential increase in interest rates, more and more mortgage lenders are offering fixed rate deals which enable consumers to take advantage of current low rates. Separate analysis by Which? Mortgage Advisers found a 55% increase in the number of fixed rate deals on the market over the past two years, with fixed rate deals now making up 77% of the products on the market. Seeking independent mortgage advice is crucial to finding the best deal for your individual circumstances and there could even be potential savings to be made. According to our survey, 34% of home owners are currently on a standard variable rate mortgage, the default mortgage rate once a fixed rate deal ends. The analysis shows that those people could be in line for a saving of up to £123 a month if they switched to a two year fixed rate deal. ‘With interest rates so low, we have seen a significant increase in the number of fixed rate mortgages available and a surge in households looking to take advantage of these deals ahead of any potential rise,’ said David Blake from Which? Mortgage Advisers. ‘That said, it's important to remember that fixed rate deals typically have higher rates than trackers, for the time being at least, but fixing now could potentially save you money in the long term. Now is the time to seek independent mortgage advice if you are concerned about the impact a rate rise might have on your finances,’ he added. Which? Mortgage Advisers top tips include knowing your interest rate so that you'll have a better idea of how much your repayments could change in the event of a change in the Bank of England base rate. Also, understanding your mortgage deal by making sure you know if you are on a fixed term deal, tracker, or standard variable rate as an increase in the base rate will mean different things for you depending on the type of deal you're on. People should check how long is left on their mortgage deal and if your mortgage is a fixed term deal, check when this rate will end as you will most likely default onto a standard variable rate, generally at a higher interest rate, once it does. It also recommends look at options… Continue reading
Average home buyer £4,500 better off in England and Wales since tax change
The average home buyer in England and Wales is £4,500 better off under the new progressive structure of stamp duty introduced a year ago but the Treasury is collecting a record amount of the tax. Since the change the typical home buyer has paid a total of £3,676 in stamp duty, based on the current average house price of £273,531. Under the previous flat structure, a buyer paying this price would have been subject to stamp duty payments of £8,205, a saving of £4,529. The research from the Halifax, a major UK lender, also shows that the ‘tipping point’ price is £938,000, when a buyer is worse off under the new stamp duty structure and sales above this level in the first six months of 2015 were 10% lower than in the first half of 2014. This decline was exactly in line with the market as a whole, with total sales also down by 10%. This is in contrast to both 2013 and 2014 when the prime end of the market was significantly outperforming the rest of the market. More significantly, sales above £1.5 million, which are more affected by the changes, have seen a bigger impact with a 20% decline, twice the market fall. The research also reveals that increased property prices and a higher number of residential property transactions boosted stamp duty revenues by 16% between 2013/2014 and 2014/2015 to a new record high of £7.5 billion. This comfortably exceeded the previous high of £6.68 billion at the peak of the last housing market boom in 2007/2008 and was more than 14 times as much as the £520 million raised by residential stamp duty 20 years ago in 1994/1995. London alone contributed 40% of all UK stamp duty revenues in 2014/2015 compared with 13% of all property transactions. London’s stamp duty share has risen from 28% in 2007/2008, with revenues raised in the capital increasing by 60% from £1.9 billion in 2007/2008 to £3 billion in 2014/2015. Some 80% of all home purchases in England and Wales between May 2015 and July 2015 were above the starting stamp duty threshold of £125,000 ranging from nearly all sales in London to 55-60% in northern England and Wales. This compares to 71% in 2006 when the starting threshold was initially raised to its current level. The starting threshold would now be £157,000, some £32,000 higher, if it were raised in line with house price inflation since 2006. Nationally, 32% of all purchases by first time buyers were below the £125,000 threshold at which stamp duty becomes payable during the three months from August 2015 to October 2015. ‘The changes made to stamp duty a year ago have been of significant benefit to many buyers. Only those purchasing the most expensive homes are worse off. There is some evidence that the top end of the market has been adversely affected by the changes with sales over £1.5 million falling by twice as much as the… Continue reading
