Investment
Some landlords struggling to get buy to let finance, research suggests
Despite a choice of 900 buy to let mortgages available on the market, lack of finance is hindering almost a quarter of UK landlords, new research has found. The situation is preventing them from expanding their property portfolios, according to the study conducted by online letting agent Property Let By Us. Overall one in 10 landlords has had difficulty securing a mortgage over the last 12 months but 82% of landlords have managed to successfully secure a mortgage at a when the buy to let market has been challenging for landlords. Indeed almost 80% of landlords are reporting rent arrears, nearly a quarter of landlords have served an eviction notice and 7% have had to resort to the courts to evict tenants. The good news is that void periods are down as demand continues to outstrip demand. ‘While the booming buy to let market looks like good news for landlords, the real picture is not so rosy. Spiralling rents are great news for yields, but the down side is that it brings with it a higher risk of rent arrears,’ said Jane Morris, Managing Director of Property Let By Us. ‘Securing finance also looks like it is going to get tougher for landlords. A new high street crackdown now means landlords will need a bigger deposit and face tighter checks for a buy to let loan. High Street lenders are introducing strict criteria in a crackdown on the buy to let boom, which is feared to be pushing up house prices across the UK,’ she explained. ‘The amount landlords will be able to borrow is expected to fall by thousands and they are likely to face new tough lending criteria to secure a buy to let loan. Landlords must also prove that they are not wholly reliant on their rental income and that they will also be able to cope with void periods and any repairs to the property,’ she added. Morris also pointed out that some lenders are introducing new affordability checks, which require landlords to answer such questions as how much they spend on household bills and childcare before they can get a loan. Lenders may also refuse loans to anyone dependent solely on a rental income and some providers expect applicants to have income of at least £25,000 a year from other sources. ‘Landlords need to thoroughly research lenders and ensure they meet the lending criteria before applying for a mortgage,’ Morris concluded. Continue reading
Portugal’s golden visa scheme reduces real estate investment for certain locations
The Portuguese government has reduced the minimum required amount for its golden visa for those investing real estate from €500,000 to €350,000 for certain locations. But the new lower amount only applies to property located in districts designated for urban renewal and is designed to reinvigorate interest in the popular visa scheme and provide a boost to Lisbon's regeneration programme. The scheme is also getting a boost after it was suspended earlier this year as a result of a legal void created by a piece of new legislation which did not address certain aspects of the existing golden visa laws. It is one of several so called golden visa schemes that allows property investors from outside of the European Union to get a visa to live in the country by investing in real estate. Others are available in Spain and Greece. ‘It was already the most popular scheme of its kind in Europe, but the government wants to cast the net wider. Spain and Greece launched similar visa systems in 2013 and have taken some of the market share, so the authorities are using properties in regeneration areas across cities like Lisbon to inject more interest in the scheme,’ said Nicholas Leach at Athena Advisors. According to the latest figures from the Serviço de Estrangeiros e Fronteiras (SEF) 2014 was a record year for Portugal with 1,526 successful golden visa applicants in total. However this year there has been less, with only 398 successful applicants in the first six months of 2015. ‘After the initial surge of investment into the scheme, there was bound to be a let up in demand. The demand of immigration incentives peaks and troughs, and this is why the government has shaken up the terms, to try and keep the rhythm going,’ explained Leach. Between its launch in October 2012 and the end of June 2015 the Portuguese Golden Visa scheme attracted €1.47 billion of investment, of which €1.33 billion or 90% was through the purchase of real estate, accounting for 2,289 golden visas. By comparison, the Spanish equivalent of the scheme generated around €700 million, granting 530 foreign buyers with a visa between its launch in September 2013 and March 2015. According to Leach some golden visa investors have looked to the Algarve and Silver Coast north of Lisbon, but Lisbon's city centre has been the main target due to the value and potential uplift. ‘Prime properties in Lisbon are a third of the price of their London and Paris equivalents, and if you look towards central regeneration areas like Mouraria there is even more value,’ added Leach. Following the recession of 2008, much of Lisbon's city centre fell into disrepair as both businesses and people left the city. Developers have targeted these areas over the last few years, renovating historic properties and even entire districts, upgrading real estate to international standards, thus enticing golden visa investors. Most of the city centre's sought after districts fall within the boundaries… Continue reading
Less prominent locations in Scotland seeing home sales grow
Secondary Scottish locations have come to the forefront of the property market in the year to June with saes in Glasgow, Dunbartonshire and Argyll and Bute increasing, the latest research shows. Sales in these areas were higher than in Scotland as a whole, with buyers now looking beyond primary locations in search of more affordable and attainable property, according to a new report from Savills. These secondary locations have benefitted from the UK government’s Help to Buy mortgage guarantee scheme and the Scottish government’s new build scheme, with its £250,000 price limit applicable to greater numbers of properties than in more expensive core areas, the report suggests. Both Glasgow City and West Dunbartonshire have enjoyed a significant increase in supply, with private sector house building completions up by 44% and 75% respectively, driving up transaction levels. In contrast, traditional primary locations such as East Renfrewshire, and Aberdeen City have suffered from a lack of supply and are subsequently lagging in terms of activity, although prices have remained stable. In Argyll and Bute, for example, Helensburgh has seen a resurgence of interest following the referendum, with interest in holiday destinations regaining momentum, according to Faisal Choudhry of Savills. However, across the board, sales above £500,000 have fallen slightly in Scotland due to short term uncertainty following the introduction of Land and Building Transaction Tax (LBTT) in April. ‘We’re confident sales will pick up as the market adjusts to the new system. Below this threshold, the property market is strong and there is still a great deal of activity up to £500,000,’ explained Choudhry. ‘The Help to Buy mortgage guarantee scheme has assisted more first time buyers in Scotland and across the UK to get on the housing ladder with 78% of users purchasing their first home,’ he added. Looking ahead, the scaling back of government initiatives and continued lending constraints could prevent significant growth in Scottish sales levels, according to Savills. ‘The discontinuation of the Help to Buy new build scheme combined with the stricter lending criteria introduced by the Mortgage Market Review (MMR) will limit the number of buyers who can access sufficient lending to purchase property,’ said Choudhry. ‘Anticipated rises in mortgage rates could also dampen activity among those with lower deposits. Consequently, transaction levels are not likely to show double digit growth in the year to June 2016, but we would expect to see a small rise, he added. Continue reading
