Tag Archives: real estate
UK landlords seeking more remortgages, buy to let index shows
Some 66% of buy to let loans in the UK in the first quarter of 2015 were for remortgaging compared with just 34% for new purchases, new research shows. This compares with 62% in the final quarter of 2014, according to the latest Mortgages for Business Complex Buy to Let Index. For houses in multiple occupation (HMOs) remortgaging is now an even higher proportion, standing at 73% of HMO mortgages in the first three months of 2015, up from 70% in the fourth quarter of 2014. Moreover, the same trend is even more pronounced for multi-unit freehold blocks (MUFBs) with remortgaging representing 89% of mortgages in the first quarter of 2015 compared to just 42% in the final quarter of 2014. Semi commercial property witnessed the same trend but with a more gradual change, from 86% to 87% of new loans agreed for remortgaging. As landlords have remortgaged in increasing numbers, their average loan to value ratios (LTVs) have crept slightly higher over the course of the last three months. For vanilla buy to let, the average LTV now stands at 66% compared to 63% in the final quarter of 2014. Landlords of HMOs have seen loan to value ratios rise to 70%, up from an average of 64% LTV in the last quarter of 2014. Likewise, MUFB properties are now mortgaged to an average of 67% of the property value, up from 64% LTV in the final quarter of 2014. Semi commercial properties saw a more gradual shift, though for these landlords the average LTV also rose from 64% in the previous quarter to 65% in the first quarter of 2015. ‘Record low mortgage rates are driving wave upon wave of landlords to reassess their finances. A great deal agreed last year may be uncompetitive by today’s standards. So this stampede is completely rational as it represents a charge by landlords to make the most of an unprecedented economic situation,’ said David Whittaker managing director of Mortgages for Business. ‘Remortgaging is often done for the purposes of raising extra capital, and this is clearly reflected in higher loan to value ratios. However, this is by no means an unwelcome trend and could in turn open the door to more new purchases and investment by landlords,’ he explained. ‘Rental yields are healthy and there is a gathering demand from an increasingly prosperous base of tenants. So the fundamentals of the rental market, and of landlords’ finances, are still extremely solid,’ he added. The report also shows that for standard vanilla buy to let property, gross yields have now risen to 6.4% in the first quarter of the year up from 6.3% in the last quarter of 2014. On a similar note, gross rental yields on HMOs have now broken through the ten per cent mark to stand at 10.4%, up from 9.0% in the fourth quarter of 2014. Semi commercial property has also seen yields grow, from 6.4% to 7.5%… Continue reading
Prime central London rental market see increased demand
Interest in the prime central London rental market has intensified in recent months as buyers become cautious prior to the election, and regulations surrounding mortgage lending take hold, a new report suggests. The proportion of those living in private rented accommodation has risen in recent years and this is partly a reflection on affordability, with rents increasing by just 1.4% when the effects of inflation are removed, according to the analysis from Kay & Co. It found that Bayswater and Marylebone offer family homes at significantly lower prices than other prime London locations and says that a family living in these areas could save over £44,000 a year on a 2,500 square foot home. Overall the prime central London lettings market experienced a relatively strong year in 2014. Annual growth in average rents returned to positive territory, recording the highest increase in rental values since 2010. However, the level of demand for rental properties was more subdued than in 2013 but there was certainly more interest in the latter half of the year. This could have been a result of households who were in the market to purchase a home awaiting the outcome of the general election and lenders becoming more cautious, the report explains. Weekly rents achieved averaged £882 per week across prime central London in 2014, an annual rise of 7% and, compared to the 2008 peak in the sales market, average weekly rents were 11.9% higher in 2014. The average weekly rent in the fourth quarter of 2014 had risen to £904 per week for prime central London. In comparison, the neighbourhoods of Bayswater and Marylebone offer more affordable rental stock within prime central London, with weekly rents in 2014 averaging £676 and £789 per week respectively. The performance of the lettings market in prime central London, including Bayswater and Marylebone, vastly outperformed Greater London as a whole in 2014. Average rental values across the capital registered 2.4% growth over the year based on the revised index of private housing rental prices by the Office of National Statistics. A breakdown of performance by property type in 2014 shows that flats performed better than houses across prime central London in 2014 in terms of rental growth. Average weekly rents for flats increased by 7.8%, compared to 5% for houses. The number of properties let in prime central London fell by 5.4% in 2014 compared to the previous year. A quarterly breakdown, however, reveals that it was the start of the year that saw considerable reductions in the volumes of properties let and this became less severe as the year progressed. By the fourth quarter of 2014, the annual change in the number of lets had increased by 6.7%. This coincided with increased uncertainty regarding the outlook for capital values in the prime central London sales market. There was also a simultaneous and continuous increase in average rents achieved each quarter in… Continue reading
Farm land in England breaks the £8,000 an acre barrier
Even the impending general election in the UK has failed to pull back the farmland market in England, with prices continuing to rise in the first quarter of the year. The farmland market in England has gained further ground this year with the average price of bare agricultural land rising by almost 2% between January and March to break the £8,000 an acre barrier for the first time. An acre is now worth £8,059, according to the Knight Frank Farmland Index. Values have risen by 10% over the past 12 months and by 192% over the past 10 years. This compares with 10 year capital growth of 138% for the prime central London residential market, 40% for the FTSE 100, despite the index hitting its own record high earlier this year, and 250% for gold. An imminent General Election, particularly one with so many possible outcomes, might have been expected to cause the market to pause for breath, but it appears the appeal of farmland is overriding the uncertainty, according to Andrew Shirley, head of rural research. But he pointed out that the market continues to separate into two clear sub-markets, each with their own distinct performance trends. Large blocks, ideally over 1,000 acres, of arable land are being eagerly sought after by investors and demand is so strong that prices upwards of £12,000 an acre are regularly being paid and even £15,000 an acre has been achieved on a number of occasions. Although East Anglia has traditionally been the main source of investment farmland, buyers are now looking across the country and exceptionally strong results have also been recorded in counties such as Hampshire. Continue reading
