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Buy to let lending via limited companies up in the UK in first half of 2016
Lending to buy to let investors borrowing via limited companies in the UK grew in the first half of the year according to the latest data to be published and the number of lenders and products available to limited company borrowers also increased. According to transactional data the number of buy to let mortgage applications completed by limited companies grew to 30% of all buy to let completions, up from 21% in the second half 2015, and 18% in the first half of 2015. By volume the number grew to 30% of all buy to let loans, up from 25% in the second half of 2015 and 20% in the first half of 2015, according to the buy to let data from Mortgages for Business. It also shows that the number of lenders offering products to limited company borrowers also increased in the first half of the year to 14 from 12 in the second half of 2015. The rise was due to existing buy to let lenders introducing limited company products rather than new lenders entering the buy to let sector. Lenders offering limited company products now account for 42% of the whole buy to let lending sector, up from 30% in the first half of 2016. Product numbers increased to an average of 154, up from 147 in the last six months of 2015, although the actual proportion of them as a percentage of the whole buy to let market fell due to the increase in product numbers available to individual borrowers. Whilst average products numbers for limited companies accounted for 13% of all buy to let products in the first half of 2016 but by the end of June the percentage had risen back to 16% of all buy to let products, the same percentage recorded in the first half of 2015. ‘Both applications and completions for limited company borrowers appear to have stabilised at around one third of all buy to let business,’ said David Whittaker, managing director of Mortgages for Business. ‘However this masks a dramatic change in the investment pattern for new purchases where the proportion investing through limited companies has risen from less than 20% by number or 25% by value in the first half of 2015 to over 50% in 2016, with second quarter applications by limited companies running at over 60% of total applications related to purchases of buy to let properties. This increasing proportion will also drive an increase in the proportion of completions in the next quarter,’ he explained. He pointed out that there has only been a slight uplift in the proportion of remortgaging activity that relates to limited company borrowers, due to historical investment patterns. ‘It would, however, appear that some landlords who already own property personally are sitting on their hands somewhat and holding back from remortgaging, probably waiting to see how the economy pans out post-referendum,’ he said. ‘With the Chancellor announcing his intentions to lower corporation… Continue reading
Research suggests a third of UK tenants sublet without consent
Around a third of private rented sector tenants in the UK say they are currently subletting without the landlord’s consent and four out of 10 tenants plan to do so in the near future, new research has found. The survey from online lettings agents PropertyLetByUs, also shows that the vast majority of tenants, 96%, are subletting the property for short time to help a family member or friend out and 82% claim they are subletting to help pay the rent. Over half of tenants, 52%, say that they planning to sublet their property in the near future, with the landlord’s consent and 78% think they should be able to sublet the property without the landlord’s approval. According to Landlord Action, there is a growing number of instructions from landlords who want to start possession proceedings against tenants who have sublet, via Airbnb, without their consent. Subletting is fast becoming one of the leading grounds for a tenant eviction. According to Jane Morris, managing director of PropertyLetByUs, it is very worrying that so many tenants are subletting without telling their landlords. ‘It is imperative that landlords make regular checks on the property to check for additional occupants. Many tenants will try to hide the fact they are subletting, so the warning signs can be excessive rubbish and accelerated wear and tear,’ she said. ‘When there is multiple occupancy in a property, wear and tear and damage is dramatically accelerated. There can be increased mould and condensation with more occupants. Landlords can also face expensive repairs for damage and redecoration costs, to bring the property up to the standard it was at check-in,’ she pointed out. Morris also pointed out that illegal subletting falls under tenant fraud and renting a property makes landlords vulnerable to fraud. ‘It is vital that landlords and agents carry out thorough pre-letting checks. The purpose of referencing a tenant is threefold; to check the person is who they say they are, that they can afford the rent and that they have honoured past commitments,’ she explained. Last year, the government said it planned to make it easier for tenants to sublet a room by legislating against the use of clauses in private fixed term tenancy agreements that expressly rule out subletting, or otherwise sharing space on a short term basis. However, it has not yet set a date for a consultation on the plans. PropertyLetByUs recommends that landlords make regular checks on their property, ideally every three to six months and when doing so should look out for additional clothing and shoes, excessive rubbish for the number of registered tenants, additional bedding like sleeping bags and pillows, suitcases and rucksacks and extra toothbrushes ‘Before taking on a new tenant, make sure you carry out a thorough reference to ensure you know who your tenant is,’ added Morris. Continue reading
Property prices up modestly in UK in May but now likely to see fall due to Brexit
Residential property prices in the UK saw modest growth in May but central London experienced a fall in values, according to the latest market survey report. UK house prices are now expected to experience a short term drop for the first time since 2012, according to the monthly report from the Royal Institution of Chartered Surveyors (RICS). House prices in central London are already falling, according to the survey with 35% more property professionals reporting that prices had fallen rather than risen over the past month. While prices are continuing to climb modestly across the rest of the UK, this trend looks set to fade, with 10% more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012. London and East Anglia are expected to be worst hit with 43% and 33% of respondents saying that prices will fall over the next quarter. ‘Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market,’ said Simon Rubinsohn, RICS chief economist. ‘Instead, it appears to me that what we are looking at is a short term drop caused by the uncertainty resulting from the EU referendum coupled by a slowdown following the rush to get into the market ahead of the tax change on the purchase of investment properties,’ he explained. ‘Certainly, that’s the story we are hearing from our members. There is not at this point a sense that a fundamental shift is taking place in the market,’ he added. The market report also shows that buyer demand fell across the UK for the second consecutive month and at the fastest pace since 2008, with 33% more property professionals saying that demand decreased last month. The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rents look set to outpace them, with UK rents predicted to increase by 4.7% year on year for the next five years, compared to house price increases of 4.1%. The number of agreed sales also fell for the second consecutive month with a net balance of 22% of respondents reporting a fall rather than a rise in activity. Continue reading
