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Majority of UK landlords not getting enough from lenders, it is claimed
Despite the recent launch of new mortgage rates and new terms for buy to let landlords, a new study shows that over three quarters of landlords believe that banks are not doing enough to support them. Just 17% of landlords feel they are getting enough support from lenders and one in ten have faced problems securing a buy to let mortgage, says the research from online letting agent PropertyLetByUs. The research also reveals that 87% of landlords believe the mortgage fees for buy to let loans are too high, while just 13% believe the interest rates are reasonable. This comes as figures show that over 70% of landlords have taken out a mortgage in the last six months to purchase a buy to let property and 19% have taken out a mortgage to refinance a loan. ‘Our research shows that lenders have some way to go to reassure landlords that they are supporting the buy to let sector. However, since the banking crisis of 2007, there has been a gradual increase in the availability of finance for buy to let landlords and the choice of mortgage products today is better than it has been for a long time,’ said Jane Morris, managing director of PropertyLetByUs. She explained that buy to let lenders typically want rent to cover 125% of the mortgage repayments and many are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy to let mortgages also come with large arrangement fees. ‘Landlords need to be cautious with mortgage fees as they can substantially push up the cost of a mortgage, especially if landlords are only fixing, or tracking for a short deal period. The biggest fees are typically those charged as a percentage of the loan, but even flat fees can run to £2,000,’ said Morris. ‘There are currently some good buy to let mortgage products on the market. For example, the lowest rate available now is 2.2% from Principality Building Society. It comes with a £994 fee and requires a 40% deposit. The total cost on a £150,000 mortgage would be £7,594 for the deal term,’ she explained. ‘For a longer term deal, The Post Office has a five year fixed rate at 3.65% with a £995 fee for a 40%. A £150,000 mortgage would cost £28,370 over five years,’ she added. Continue reading
Rental market expected to be stronger than sales in some parts of London
This year is expected to bring fewer sales and more letting transactions, with strong rental markets across London’s Midtown, City and Docklands, a new report suggests. There will be a two tier sales market with demand for properties up to £1 million continuing to attract buyers and a slower market at prices over £1 million, according to the latest report from property advisors and development consultants Hurford Salvi Carr. However, as the market slowed in 2014, two segments of the market bucked the trend, it reveals. ‘Demand for entry level one bed apartments continued to outstrip supply so that it will be no easier to buy a pied a terre in Central London in 2015 than it was in 2014,’ the report says. The other segment to buck the trend was Docklands, where demand strengthened, as buyers looked to East London, to deliver value for money, although plentiful supply kept a lid on price increases. Over the whole year, property prices rose by an average of 4% in 2014 in City, Midtown and Docklands. Strong demand from UK buy to let investors is expected in 2015 with a concentration on sub £750,000 levels where returns are most attractive. The firm also says that buyers from the UK dominated the residential markets in 2014, accounting for almost 70% of sales, in comparison to 54% in the first half of 2013 and 61% in 2013. Other European buyers also increased their share by a small margin but the big shift was in the proportion of Asian nationals, which dropped from 17% of sales in 2013 to 7% in 2014. Almost 70% of tenants who rented homes through Hurford Salvi Carr in 2014 were overseas nationals. Overall the split was 32% British, 31% other European and 37% from elsewhere in the world with Asians being the most dominant group within that. The Docklands attracted the highest proportion of British tenants at 43%, whereas Midtown attracted more Asian tenants and the City attracted more American tenants. The most common occupation for a tenant is in the financial sector, closely followed by students. The financial sector was more prevalent in the City and Docklands, where it made up over 30%, while students were by far the most common group in Midtown, where they accounted for 62% of all lettings. The relatively high proportion of Asian tenants in Midtown reflects the demand from overseas students at top universities such as UCL, King’s College and LSE. Continue reading
Legal firm gives lowdown on new energy standards for UK landlords
Residential landlords in the UK are at risk of financial penalties and being unable to let their properties if they fail to meet minimum energy efficiency standards (MEES) that come into play in 2018, it is claimed. Law firm Maples Teesdale has warned that the new standards equate to a ticking time bomb that could have a detrimental impact on rental income and property values if left unaddressed. The non-domestic minimum energy efficiency regulations for England and Wales will mean that by 01 April 2018, all relevant properties will have to be improved to a minimum energy efficiency standard before being let to tenants, except where certain exemptions apply. Additional Tenant’s Energy Efficiency Improvement Regulations must be in force by 01 April 2016 and will empower tenants to request consent for energy efficiency measures that may not unreasonably be refused by the landlord. ‘These regulations are likely to have a big impact on the private rented sector. They are presenting a straightforward ultimatum: bring your properties up to scratch in terms of energy efficiency, or risk losing income,’ said Neil Sagoo, partner at Maples Teesdale. The consequences for landlords who do not invest in bringing their properties up to minimum standards are likely to be severe, the firm warns. There will be financial penalties, possibly geared to the rent earned while the landlord is in breach, applied to those who fail to comply and, in extreme cases, a tribunal can force landlords to make the necessary changes. ‘This means that landlords can no longer pay lip service to energy efficiency. Whereas it was once a worthy aspiration, it is becoming is fundamental as fire safety or building regulations and is to be ignored at your peril,’ added Sagoo. Following a brief consultation at the end of last year, the Government has indicated that it aims to have the regulations in place ahead of the May general election. Implementation of MEES is likely to follow in stages, coming into effect on all new lettings from April 2018 and for remaining existing lettings from April 2023. Continue reading
