Last thing Mark Carney wants is business blood on his hands

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Brian Johnson, insolvency partner at accountants HW Fisher comments on the UK’s 2017 insolvency statistics just out.

Company Insolvencies:

“Even stripping out the distorting effects of the two spikes triggered by law changes, the overall trend is up

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Top Buy-to-Let Hotspots

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Buy-to-Let Investing:

The latest Private Finance buy-to-let (BTL) hotspots report shows Liverpool and Nottingham at the top of the list of provincial centres, as London suffers in the BTL yield stakes.

When it comes to deciding where to invest in BTL in 2018, it pays to study where the best yields can be had, and increasingly the move to profit is outside of the capital.

When it comes to the best place to invest in property, these centres should feature in the prudent investor’s sights as the list of top performing property investment locations shows where the top initial yields are.

Liverpool and Nottingham came out joint top with average rental yields of 6.2 per cent, once mortgage costs are taken into account.

General shortages in rental supply and increased landlord costs, due to recent tax changes, are driving up rents, so while these conditions are still profitable for landlords, it’s not so good for tenants who are having to pay more of the income in rent.

The Private Finance figures show that across the top 10 hotspots rental yields have risen by an average of 0.9 percentage points since May 2017. Southampton shows the biggest increase 2.2 percentage points, with rents rising faster than house prices, representing a 20 per cent increase as opposed to only a 6 per cent rise in average house prices since May 2017.

Mortgage rates increased marginally in the autumn of 2017 with the first increase in the interest rate for 10 years (to 0.5%). But the Bank of England’s own data shows that the average two-year (75% loan-to-value) BTL fixed rate mortgage is at its lowest point (2.47%) since the BoE tracking began in January 2012, falling from 2.62 per cent in May 2017.

The overall result is that on average landlord’s mortgage costs have fallen slightly as rents have increased, improving yields when house prices have been stable or falling slightly, but in those areas where house prices have risen, there is downward pressure on yields, emphasising the need for careful assessment of locations and the numbers when investing in BTL

Private Finance – *Average house price based on December 2017 data. Average mortgage costs based on a two-year fixed, 75% LTV, BTL interest-only loan at an average rate of 2.47%

Director of Private Finance, Shaun Church, has said:

“Finding the right buy-to-let location is a careful balancing act. Too large an initial investment makes it difficult to achieve a healthy yield, but landlords must also be confident that property values will appreciate at a higher rate than mortgage borrowing to achieve a long-term profit.

“Strong rental demand is also key to prevent lengthy void periods that can damage affordability. While there has been some movement in the top 10 buy-to-let hotspots, larger cities and university towns tend to offer the greatest opportunity for investors as they offer the highest rental demand.

“Though the buy-to-let sector is facing many challenges, one area where landlords have benefited is falling mortgage rates. However, seeking independent advice is becoming increasingly important for landlords to find and be accepted for the best deals. With house prices on the rise, too large a loan can negate any savings made from low rates, so landlords need to consider all aspects of their mortgage.

“There are particular challenges for portfolio landlords, classed by the Prudential Regulation Authority (PRA) as those with four or more buy-to-let properties. These landlords now face much more stringent affordability tests and must demonstrate the profitability of their entire portfolio to be accepted for a loan. ”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Top Buy-to-Let Hotspots | LandlordZONE.

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Standard and Poor’s predicts landlords to make net loss after S24

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A Standard and Poor’s (S&P) Global report into the effects of Section 24 mortgage interest relief restrictions is predicting over 60% of landlords who purchase property between 2014 and 2016 will make a net loss on those properties by the time the restrictions are fully applied in 2021.

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Are Mortgage Express offering Discounted Redemption Figures?

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I have a mortgage which was originally taken out with Mortgage Express. It was moved from an interest only mortgage to a repayment one before they hit hard times.

Now they will not allow me to switch it back.

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Staffordhire landlord gets criminal record for gas safety breach

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Gas Safety:

Mr David John Corry of Springfield Drive, Stafford, has been sentenced to serve a total of 36 weeks imprisonment, suspended for twelve months, and ordered to complete 140 hours unpaid work. Corry was also ordered to pay costs of £6,428.46, after failing to provide evidence that a gas safety check had been carried out at one of his tenanted properties.

Newcastle-under-Lyme Magistrates’ Court heard how David Corry failed to present a Landlords Gas Safety Record to the Health and Safety Executive (HSE) after numerous attempts from HSE representatives to obtain this certificate.

Corry was served with an Improvement Notice on 11 August 2016 requiring him to arrange for a registered gas fitter to carry out an inspection of the gas appliances in one of his tenanted premises in Stafford, and to produce a Landlord’s Gas Safety Record. Mr Corry failed to comply with this Improvement Notice.

In court Corry pleaded guilty to breaching Regulation 36(3) of the Gas Safety (Installation and Use) Regulations 1998, and Section 21 of the Health and Safety at Work etc Act 1974.

Speaking after the hearing, HSE inspector Wayne Owen said:

“David Corry potentially put the health of his tenants at risk and also chose to ignore the repeated requests by the HSE to produce the gas safety record.

“Every year around 7 people die from carbon monoxide poisoning caused by gas appliances and flues that have not been properly installed, maintained or that are poorly ventilated. It is important that landlords fulfil their legal gas safety obligations to their tenants.”

More information on what landlords are legally responsible for in relation to gas safety can be found here: http://www.hse.gov.uk/gas/landlords/

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Staffordhire landlord gets criminal record for gas safety breach | LandlordZONE.

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