REVEALED: Why higher interest rates are making it trickier for BTL investors

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Buy-to-let mortgage searches were down 23% in April compared to the previous month, while investors have been putting down larger deposits as high-interest rates bite.

Research by Twenty7tec shows that average loan-to-value (LTV) has dropped considerably over the past year, from 66% in April 2022 to 61%.

London average BTL property prices have fallen by 4%, while loans required dropped 15% as landlords put larger deposits down. National average BTL property prices increased 0.6%, while loans required dropped 8%.

Those looking to buy had, on average, higher combined incomes of £68,907 (up 4% nationally compared to March) and £88,276 in London (up 3%).

Lee Grandin (pictured), MD of Landlord Mortgages, says the significant increase in interest rates has impacted landlords’ ability to finance.

“Assuming rental income remains static, then as interest rates rise the landlord is forced to borrow less,” he tells LandlordZONE. “This means fewer mortgages can be granted at the funding level landlords want and if property values remain static this drives down the loan to values.”

Dropped

Mortgage product volumes have dropped by about 50% in the max LTV 65% range, explains Nathan Reilly, director at Twenty7tec, who says the real driver for increased use of max LTV 60% products is that landlords are trying to rebalance their portfolios to reduce their costs.

“The drop from 65% to 60% is a breakpoint which yields real benefit to landlords looking to offset the increasing interest rate environment.”

Reilly says there has been a 10% bump in 65% product availability during the past month, but where possible, he expects landlords to continue to use the lower max LTV products until they see interest rates go down.

“Why have searches gone down? It’s hard to say for sure, but interest rate uncertainty must be one overarching factor,” he tells LandlordZONE.

View Full Article: REVEALED: Why higher interest rates are making it trickier for BTL investors

New report urges Government to stop describing private landlords as ‘bad’

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Government policy should move away from thinking that social housing and home ownership are good while private landlords are bad’ if it is to solve the rental stock and rent costs crisis.

That’s the view of a new report from Cambridge University Land Society which says this mindset translates into discrepancies when helping the PRS to retrofit properties, as it largely doesn’t have access to public funding or political support.

“Homes rented privately are no less valuable or important than owner occupied or social homes, but they are typically less well capitalised even before the need to retrofit and yet only sticks are used to incentivise action – no carrots – because this tenure is positioned as worse,” according to the authors of A Vision for the UK Housing Market.

They have tried to come up with genuine solutions to the housing crisis and suggest that policy should instead incentivise quality upgrades for existing properties.

Landlord incentives

The report suggests mortgage lenders should be encouraged to offer discounted mortgage products to property owners providing longer term tenancies, and that property owners offering longer leases could be given tax breaks to provide residents with greater security.

It also suggests releasing the freeze on Local Housing Allowance and enhancing incentives to mortgage lenders to offer long term low interest rate mortgages in return for energy performance upgrades.

The report adds that it would help if the government moved away from old fashioned terms such as landlord and tenant and used property owner and resident in its policies instead.

The authors explain: “The overriding proposal is for more joined up and coherent housing policy. This should run wider than just not changing housing ministers frequently but also engage HM Treasury and the financial regulators. Only then could we achieve the goal of defining and moving towards housing market success.”

Read the report in full.

View Full Article: New report urges Government to stop describing private landlords as ‘bad’

87 MPs are now landlords including Chancellor, reveals campaign group

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Nearly one in five Conservative MPs are currently landlords, according to research by campaign group 38 Degrees, a surprising figure given the Government’s anti-landlord stance in recent years.

The study counted 87 MP landlords – more than 13% of the Commons – of whom 53 claimed rental income from one home and 34 from two or more properties, according to a report in The Guardian.

Of the 68 Conservative MPs, chancellor Jeremy Hunt has seven flats in Southampton, while home secretary Suella Braverman, Gillian Keegan, the education secretary, and Lucy Frazer, the culture secretary, all declared one rental property in the latest House of Commons members’ register of financial interests.

Income

Alex Chalk, the justice secretary, declared a flat in Shepherd’s Bush and a share in a cottage in Gloucestershire, both producing more than £10,000 a year in income.

On the Labour frontbench, David Lammy, Emily Thornberry and Lucy Powell are all landlords. Overall, MPs could be earning as much as £2.2m a year from renting out homes, the research found.

38 Degrees chief executive Matthew McGregor (pictured) says: “Whilst we make no inherent criticism of those politicians who make money from renting property, we highlight their extra duty, to their tenants as well as their constituents, to bring forward reform without delay.

“With MPs almost four times more likely to be landlords than the rest of the population, and with eight cabinet members and nearly one in five Conservative MPs earning rental income, we highlight the need for tenants’ voices to be heard at the top of government.”

Housing Secretary Michael Gove has announced that the draft Renters Reform Bill will be published next week and would “change the way the relationship between landlords and tenants works, providing tenants with new protection, which should ensure they are better protected against arbitrary rent increases”.

View Full Article: 87 MPs are now landlords including Chancellor, reveals campaign group

The Property Cast: How can landlords spot a bad letting agent?

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In this episode of The Property Cast, founder of the HFIS group, Eddie Hooker, is joined by the Head of Redress at the Property Redress Scheme, Sean Hooker, and special guest Nathan Emerson – CEO of Propertymark – the leading membership body for property agents.

With the private rented sector on the cusp of a major overhaul, this episode explores Propertymark’s perspective on all things lettings.

Eddie, Sean and Nathan kick off by discussing what makes a bad agent. There are two types, says Nathan – but how can landlords spot one? And what are the most common agent errors? Nathan provides his top tips for landlords when it comes to choosing a letting agent.

Changes

How does Propertymark view the big changes that are coming for the rental sector? And what aspects of reform are likely to have the biggest impact on landlords and agents?

The trio discuss topical issues from antisocial behaviour and pets, to whether landlord redress is the right way to raise standards in the private rented sector. We hear a lot about landlords exiting the market, but how can landlords be encouraged to invest? What would Nathan do if he could change one thing to keep landlords in the sector?

On the way to Wembley

Finally, the Propertymark One conference is coming up on 27 June at the OVO Arena in Wembley. Open to both members and non-members, and bringing several disciplines together under one roof, it will be the biggest event Propertymark has ever staged.

What can delegates expect? Tune in to find out more and to hear Nathan’s answer to The Property Cast’s closing question – ‘You’ve got £20k to invest in improvements to your rental property – what changes would you choose to make, and why?

View Full Article: The Property Cast: How can landlords spot a bad letting agent?

Build-to-rent sector stalls as completions slump

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The number of build-to-rent (BTR) completions in the UK has slumped by 56% in a year – with the decline being blamed on the London market, research reveals.

Property developer Stripe Property Group has analysed the historic data on the annual BTR completions in London and elsewhere to better understand the emerging residential sector.

View Full Article: Build-to-rent sector stalls as completions slump