Private tenants who are prompt with their rental payments may soon see their credit score boosted, which in turn could make it easier for them to get a foot on the housing ladder.
This comes after the news Parliament is to debate the idea of taking rental payments into account when people make an application for a mortgage.
The debate will take place following a petition on the issue raised by Plymouth construction worker Jamie Pogson attracted 147,307 signatures. This was substantially more than the 100,000 required to force a debate in Parliament.
Typically, credit rating agencies do not routinely include rental payments when calculating credit scores. This means a tenant could find it difficult to access a mortgage, even if they have a long history of prompt and full rental payments.
However, a recent survey of nearly 3,000 buy-to-let landlords carried out by the RLA discovered that 61% of landlords would support rental payments being added to credit histories, just in the same way as mortgage payments.
Including rent payments in this way will make it easier for landlords to ascertain a more accurate assessment of a prospective tenants’ credit and rental payment history.
With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications.
Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time.
Thursday 21 September 2017
Number of buy to let mortgage products surges to 1,725
The number of new buy to let mortgages available to investors has hit 1,725 - its highest point since 1,942 products were recorded in December 2007, almost a decade ago.
Since January 1 this year - when the market saw a dramatic drop in the number of products available to landlords - the number of deals on offer has gone from strength to strength, culminating in a rise of seven per cent in the past four weeks.
Despite reduced BTL activity in the first quarter, competition among lenders remains high as providers fight to retain their standing in a diminished market. Rates have also fallen with the average two-year BTL fixed rate down from 2.91 per cent in August to 2.86 per cent in September - another record low.
Providers are now starting to get ready for further changes at the end of September, which will see lenders apply stricter standards to those investor-borrowers with four or more properties.
It is still uncertain how providers will choose to react to the new changes, but product numbers could climb as providers start to target their products to the two different types of borrower. However, despite this increased choice, rates might not improve.
The extra pressure on the buy to let market could be a turning point, with the competition that is currently alive and well amongst providers perhaps starting to ebb as they shift their focus to ensuring the new regulation is followed.
Since January 1 this year - when the market saw a dramatic drop in the number of products available to landlords - the number of deals on offer has gone from strength to strength, culminating in a rise of seven per cent in the past four weeks.
Despite reduced BTL activity in the first quarter, competition among lenders remains high as providers fight to retain their standing in a diminished market. Rates have also fallen with the average two-year BTL fixed rate down from 2.91 per cent in August to 2.86 per cent in September - another record low.
Providers are now starting to get ready for further changes at the end of September, which will see lenders apply stricter standards to those investor-borrowers with four or more properties.
It is still uncertain how providers will choose to react to the new changes, but product numbers could climb as providers start to target their products to the two different types of borrower. However, despite this increased choice, rates might not improve.
The extra pressure on the buy to let market could be a turning point, with the competition that is currently alive and well amongst providers perhaps starting to ebb as they shift their focus to ensuring the new regulation is followed.
Rents rising 2.4% across the UK
Rents in the UK rose by an average of 2.4 per cent during August - the highest rate of annual growth seen this year.
The average rent agreed on a new tenancy signed last month was £939 according to the HomeLet, compared to £916 in the same month of 2016.
August’s increase in average rents was partly driven by a return to inflation in the London market, where rents agreed on new tenancies last month were also 2.4 per cent higher than in August 2016. Last month’s increase took the average rent in the capital to £1,609 – the first-time rents in London have been above £1,600.
Excluding London, rental price inflation has also picked up, with 10 out of the 11 remaining regions beyond the capital seeing rents increasing last month. The average rent on a new tenancy outside London was £776, up 2.3 per cent compared to the same period in 2016.
Rents rose fastest in the South West of England (up 3.9 per cent compared to August 2016) and Northern Ireland (3.7 per cent), with only the South East recording a decline - it was down 0.2 per cent.
The average rent agreed on a new tenancy signed last month was £939 according to the HomeLet, compared to £916 in the same month of 2016.
August’s increase in average rents was partly driven by a return to inflation in the London market, where rents agreed on new tenancies last month were also 2.4 per cent higher than in August 2016. Last month’s increase took the average rent in the capital to £1,609 – the first-time rents in London have been above £1,600.
Excluding London, rental price inflation has also picked up, with 10 out of the 11 remaining regions beyond the capital seeing rents increasing last month. The average rent on a new tenancy outside London was £776, up 2.3 per cent compared to the same period in 2016.
Rents rose fastest in the South West of England (up 3.9 per cent compared to August 2016) and Northern Ireland (3.7 per cent), with only the South East recording a decline - it was down 0.2 per cent.
Tuesday 14 February 2017
Rents to rise faster than house prices in next five years, says RICS
Rental prices look set to increase faster than house prices over the next five years, according to the Royal Institution of Chartered Surveyors (RICS).
When it comes to house prices, chartered surveyors said that they anticipate an increase of just less than 20% over the next five years, while rents are expected to rise at a faster rate of 25% during the same period.
This is owed mainly to an anticipated reduction in housing supply in the private rented sector (PRS), as more buy-to-let landlords either exit the market or reduce the number of properties they have in their portfolios, as a consequence of tax changes.
The introduction of the 3% stamp duty surcharge on buy-to-let homes last year and the phasing out of mortgage tax relief from this April will inevitably push some landlords out of the market, and this is likely to result in more tenants chasing fewer rental properties, according to surveyors.
Jeremy Blackburn, head of policy at RICS, said supply in the market needed a “turbo boost”, while Simon Rubinsohn, chief economist at RICS, added that the “the scale of the challenge the Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey”.
Given the inadequate supply of housing in the UK, combined with the pressures facing the buy-to-let sector, it is not that surprising that rents are expected to rise by 25% over the next five years, according to Charles Haresnape, group managing director of mortgages at Aldermore.
He said: “This [RICS latest report] further supports our view that additional assistance is required for smaller developers which could go some way to alleviate the slow progress in addressing this [housing] deficit. In light of the housing white paper released this week, the latest RICS survey highlights the scale of the challenge the government faces.”
When it comes to house prices, chartered surveyors said that they anticipate an increase of just less than 20% over the next five years, while rents are expected to rise at a faster rate of 25% during the same period.
This is owed mainly to an anticipated reduction in housing supply in the private rented sector (PRS), as more buy-to-let landlords either exit the market or reduce the number of properties they have in their portfolios, as a consequence of tax changes.
The introduction of the 3% stamp duty surcharge on buy-to-let homes last year and the phasing out of mortgage tax relief from this April will inevitably push some landlords out of the market, and this is likely to result in more tenants chasing fewer rental properties, according to surveyors.
Jeremy Blackburn, head of policy at RICS, said supply in the market needed a “turbo boost”, while Simon Rubinsohn, chief economist at RICS, added that the “the scale of the challenge the Government faces as it announces its new approach to housing is clearly demonstrated in the results from our latest survey”.
Given the inadequate supply of housing in the UK, combined with the pressures facing the buy-to-let sector, it is not that surprising that rents are expected to rise by 25% over the next five years, according to Charles Haresnape, group managing director of mortgages at Aldermore.
He said: “This [RICS latest report] further supports our view that additional assistance is required for smaller developers which could go some way to alleviate the slow progress in addressing this [housing] deficit. In light of the housing white paper released this week, the latest RICS survey highlights the scale of the challenge the government faces.”
Thursday 2 February 2017
Endsleigh claim letting agents save landlords £2k pa
Insurers Endsleigh surveyed* landlords who say that using a letting agent saves them £1910 a year more than if they marketed their own properties.
As one of the country’s leading specialist insurance providers for letting agents, landlords and young professionals, Endsleigh surveyed 500 UK landlords to uncover what it says are “widespread misconceptions” among landlords about the true value for money offered by lettings agents.
Staggeringly, says the company, more than half of the landlords surveyed (53%) currently choose to rent out at least one of their properties privately without the help of an agent, with more than two in five of those indicating that cost is a reason for this.
The claimed savings are related to services which help to let properties quicker, guarding against costly void periods. Three in four (76%) of respondents reported that their agent also helps them with legal and financial matters.
The survey also suggests that relationships between letting agents and landlords are not just about the financial benefits. Half of landlords (50%) were most attracted to their current agent because of their local knowledge, and more than two in five (44%) claim that excellent service is a deciding factor.
Another factor identified was “quality of life”. Two in five (41%) feel that the main benefit of working with an agent is that it provides peace of mind, and a quarter of landlords (25%) communicate with their lettings agent on a weekly basis.David Hadden, Head of Property, Endsleigh said:
“Landlords who use letting agents find them very useful – especially before a letting – and state they help to reduce stress, free up time and, critically, save them money.
“The perceived cost of using a letting agent is among the biggest deterrents for many landlords, but those that do use an agent are on average reporting significant savings.
Landlords considering letting their properties directly to tenants in light of changing legislation must seek advice to avoid potentially compromising their income, their quality of life and the provision of support and service that agents can offer.”
*This research was conducted by OnePoll on behalf of Endsleigh, and was of 500 UK landlords that rent out at least one property through an agency from 20 October 2016 to 14 November 2016.
As one of the country’s leading specialist insurance providers for letting agents, landlords and young professionals, Endsleigh surveyed 500 UK landlords to uncover what it says are “widespread misconceptions” among landlords about the true value for money offered by lettings agents.
Staggeringly, says the company, more than half of the landlords surveyed (53%) currently choose to rent out at least one of their properties privately without the help of an agent, with more than two in five of those indicating that cost is a reason for this.
The claimed savings are related to services which help to let properties quicker, guarding against costly void periods. Three in four (76%) of respondents reported that their agent also helps them with legal and financial matters.
The survey also suggests that relationships between letting agents and landlords are not just about the financial benefits. Half of landlords (50%) were most attracted to their current agent because of their local knowledge, and more than two in five (44%) claim that excellent service is a deciding factor.
Another factor identified was “quality of life”. Two in five (41%) feel that the main benefit of working with an agent is that it provides peace of mind, and a quarter of landlords (25%) communicate with their lettings agent on a weekly basis.David Hadden, Head of Property, Endsleigh said:
“Landlords who use letting agents find them very useful – especially before a letting – and state they help to reduce stress, free up time and, critically, save them money.
“The perceived cost of using a letting agent is among the biggest deterrents for many landlords, but those that do use an agent are on average reporting significant savings.
Landlords considering letting their properties directly to tenants in light of changing legislation must seek advice to avoid potentially compromising their income, their quality of life and the provision of support and service that agents can offer.”
*This research was conducted by OnePoll on behalf of Endsleigh, and was of 500 UK landlords that rent out at least one property through an agency from 20 October 2016 to 14 November 2016.
Thursday 19 January 2017
Lenders announce changes to open up products to more landlords
Bank of Ireland for Intermediaries has removed its £25,000 minimum income requirement for buy-to-let and increased its maximum loan size by £500,000 to £1.5m
.
The move is part of a raft of changes by the lender designed to make its products available to more customers, including buy-to-let landlords.
The lender is also increasing its upper age limit for residential customers to 75, while loan-to-value loans on new build homes or the first sale will increase 5% to 85% and by 5% to 80% for new build flats.
Self-employed applicants now only need to provide the last two years’ figures, as opposed to three years previously, to verify income.
“We’re thrilled to announce a host of lending criteria changes to make us more accessible and open up our products to more customers,” said Bank of Ireland for Intermediaries director of sales Alison Pallett.”
Paragon has launched a range of new fixed rate products for those seeking to make fresh buy-to-let acquisitions as well as remortgage existing properties in their portfolio.
The lender’s new five year fixed rate loans include rates of 3.75% for buy-to-let investors borrowing up to 75% loan-to-value (LTV), with interest coverage ratios from 125%.
The range also includes a two year fix at 3.25% for lending up to 65% LTV and another at 3.4% for lending up to 75% LTV.
John Heron, managing director of Paragon Mortgages, said: “The first quarter is an extremely busy time in the buy-to-let market as landlords review their portfolios and plan for the year ahead.
“The tax changes being introduced in April make it more important than ever for landlords to think ahead and minimise costs where possible.
“These products offer landlords the opportunity to put in place longer term mortgage finance, whilst taking advantage of the beneficial impact of today’s record low market rates.”
Landbay has launched a range of new buy-to-let products aimed at professional landlords, including expats and those with HMOs.
The products, available up to 80% loan-to-value (LTV), include a standard term tracker at 3.88%, a HMO tracker at 3.98%, and an expat term tracker at 4.38%.
The new tracker products will be available exclusively via the peer-to-peer lender’s approved broker partners: Atom, Brightstar, Complete fs, Connect Mortgages, Mortgage for Business, The Business Mortgage Company, The Buy to Let Business.
Landbay recently changed its criteria to require a minimum income of £25,000 for those employed, or the equivalent of £40,000 from expats.
Its minimum property values were also revised and are now £80,000 for standard properties and £150,000 for HMOs.
Paul Clampin, chief lending officer at Landbay, said: “The buy-to-let market is set to become more complex in 2017, as landlords face an increasingly intricate lending landscape and tighter regulation. It’s in such a context that borrowers and brokers need solutions that meet their changing needs, so these new products have been designed to do just that for the growing number of professional landlords.”
All new products use pay rate to make initial ICR calculations, however Landbay runs an underlying affordability calculator to ensure that, as a whole, the application meets a minimum ICR of 125% at 5.5%.
“As landlords move to navigate this complex environment, so too must lenders ensure that affordability calculations are robust, and in line with the rest of the industry. This is why we have chosen to refine our ICR calculations,” he added.
Virgin Money launced a new two-year fixed rate buy-to-let mortgage at a borrowing rate of just 1.59% a year.
The mortgage has a loan-to-value rate of 60%, £1,995 product fee and £500 cashback.
In addition to the new buy-to-let product, Virgin Money also launched a two-year fixed rate 2.84% residential mortgage available at 90% LTV, with no product fee and £1,000 cashback.
Virgin also announced a five-year fixed rate up to 65% LTV at 1.89% per annum. This mortgage comes with a £995 fee, £300 cashback for purchases, free valuation and legal fees for remortgage.
Peter Rogerson, Virgin Money’s commercial director for mortgages, said: “To kick off the year we have launched a new range of red hot mortgage products that offer competitive rates to help homebuyers get onto the property ladder, support those looking to move home and a great deal for landlords.”
.
The move is part of a raft of changes by the lender designed to make its products available to more customers, including buy-to-let landlords.
The lender is also increasing its upper age limit for residential customers to 75, while loan-to-value loans on new build homes or the first sale will increase 5% to 85% and by 5% to 80% for new build flats.
Self-employed applicants now only need to provide the last two years’ figures, as opposed to three years previously, to verify income.
“We’re thrilled to announce a host of lending criteria changes to make us more accessible and open up our products to more customers,” said Bank of Ireland for Intermediaries director of sales Alison Pallett.”
Paragon has launched a range of new fixed rate products for those seeking to make fresh buy-to-let acquisitions as well as remortgage existing properties in their portfolio.
The lender’s new five year fixed rate loans include rates of 3.75% for buy-to-let investors borrowing up to 75% loan-to-value (LTV), with interest coverage ratios from 125%.
The range also includes a two year fix at 3.25% for lending up to 65% LTV and another at 3.4% for lending up to 75% LTV.
John Heron, managing director of Paragon Mortgages, said: “The first quarter is an extremely busy time in the buy-to-let market as landlords review their portfolios and plan for the year ahead.
“The tax changes being introduced in April make it more important than ever for landlords to think ahead and minimise costs where possible.
“These products offer landlords the opportunity to put in place longer term mortgage finance, whilst taking advantage of the beneficial impact of today’s record low market rates.”
Landbay has launched a range of new buy-to-let products aimed at professional landlords, including expats and those with HMOs.
The products, available up to 80% loan-to-value (LTV), include a standard term tracker at 3.88%, a HMO tracker at 3.98%, and an expat term tracker at 4.38%.
The new tracker products will be available exclusively via the peer-to-peer lender’s approved broker partners: Atom, Brightstar, Complete fs, Connect Mortgages, Mortgage for Business, The Business Mortgage Company, The Buy to Let Business.
Landbay recently changed its criteria to require a minimum income of £25,000 for those employed, or the equivalent of £40,000 from expats.
Its minimum property values were also revised and are now £80,000 for standard properties and £150,000 for HMOs.
Paul Clampin, chief lending officer at Landbay, said: “The buy-to-let market is set to become more complex in 2017, as landlords face an increasingly intricate lending landscape and tighter regulation. It’s in such a context that borrowers and brokers need solutions that meet their changing needs, so these new products have been designed to do just that for the growing number of professional landlords.”
All new products use pay rate to make initial ICR calculations, however Landbay runs an underlying affordability calculator to ensure that, as a whole, the application meets a minimum ICR of 125% at 5.5%.
“As landlords move to navigate this complex environment, so too must lenders ensure that affordability calculations are robust, and in line with the rest of the industry. This is why we have chosen to refine our ICR calculations,” he added.
Virgin Money launced a new two-year fixed rate buy-to-let mortgage at a borrowing rate of just 1.59% a year.
The mortgage has a loan-to-value rate of 60%, £1,995 product fee and £500 cashback.
In addition to the new buy-to-let product, Virgin Money also launched a two-year fixed rate 2.84% residential mortgage available at 90% LTV, with no product fee and £1,000 cashback.
Virgin also announced a five-year fixed rate up to 65% LTV at 1.89% per annum. This mortgage comes with a £995 fee, £300 cashback for purchases, free valuation and legal fees for remortgage.
Peter Rogerson, Virgin Money’s commercial director for mortgages, said: “To kick off the year we have launched a new range of red hot mortgage products that offer competitive rates to help homebuyers get onto the property ladder, support those looking to move home and a great deal for landlords.”
Monday 16 January 2017
Landlords should be ‘supported’, rather than ‘burdened with unfair tax measures’
The government needs to do more to support buy-to-let landlords, and start by reversing recent tax increases and unnecessary regulation in the buy-to-let sector, it has been suggested.
There has been a significant drop in the number of buy-to-let transactions following the government’s outright assault on buy-to-let landlords. Recent reports indicatet the volume of buy-to-let transactions across England and Wales had more than halved over the past 12 months, following the introduction of a raft of measures that have deterred many people from investing in the private rented sector.
Chancellor Philip Hammond needs to listen to landlords’ concerns. Landlords should be supported and recognised for their contributions in providing affordable housing, rather than burdened with unfair tax measures that will see them having to take considerable cuts to their income and being forced to pass some of this to their tenants.
2017 is going to be an interesting year and I think we are yet to really see how potential changes are going to impact the rental market.
Brexit and the US elections aside, it is likely to see changes to landlord taxes and mortgages that will really influence the market place.
Investing in residential property is becoming increasingly expensive and I wouldn’t be surprised if we see landlords sell of parts of their portfolio. This could be good news for the buyer-occupier market, but will likely mean less supply for the rental market, which could in turn lead to higher rents.
There has been a significant drop in the number of buy-to-let transactions following the government’s outright assault on buy-to-let landlords. Recent reports indicatet the volume of buy-to-let transactions across England and Wales had more than halved over the past 12 months, following the introduction of a raft of measures that have deterred many people from investing in the private rented sector.
Chancellor Philip Hammond needs to listen to landlords’ concerns. Landlords should be supported and recognised for their contributions in providing affordable housing, rather than burdened with unfair tax measures that will see them having to take considerable cuts to their income and being forced to pass some of this to their tenants.
2017 is going to be an interesting year and I think we are yet to really see how potential changes are going to impact the rental market.
Brexit and the US elections aside, it is likely to see changes to landlord taxes and mortgages that will really influence the market place.
Investing in residential property is becoming increasingly expensive and I wouldn’t be surprised if we see landlords sell of parts of their portfolio. This could be good news for the buyer-occupier market, but will likely mean less supply for the rental market, which could in turn lead to higher rents.
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