Extra costs cause problems for tenants

It has been claimed that many tenants are facing affordability difficulties as a result of extra and unjustified costs that are being applied by some lettings agents and companies. Read more

Tags: letting agents, tenants, transaction, agreement, renewal, tenancy agreement, Bureau

Should you pay your rent upfront to save money?

Over the past year renting has become increasingly popular, as many people have struggled to get a mortgage and buy a home, making the option of renting far more appealing. Also, difficulties that sellers have had in selling their properties in the current financial climate has resulted in an increase in the number of properties coming up for rent, which has resulted in increased choice and better value for money for many consumers. Read more

Tags: council of mortgage lenders, Real property law, rent payments, advance, Council, best deal, tenants, landlords

High tenant demand benefits buy-to-let investors

Confidence in the buy-to-let sector is sky-high, with landlords reporting an increase in average yields and plans to expand their portfolios.

A buy-to-let trends survey of landlords by Paragon shows that despite rising interest rates, landlords are more confident than ever in their property investments.

Paragon’s confidence index – which is based on the value of their property portfolios now and their expected value in twelve months’ time – is now standing at 160, up from 155 last quarter and from 150 a year ago.

John Heron, managing director of Paragon Mortgages, commented: “Landlords are confident because tenant demand is strongly underpinning the market.

“Young people are choosing to stay in rented accommodation for longer, while there are a growing number of students and immigrants who are fuelling demand for rented property.

“Just this week we have had data on record numbers of students and strong net immigration figures which indicate demand for private rented property will continue to rocket.”

High tenant demand has meant that landlords can up their rents, counteracting the squeeze from rising interest rates and higher house prices.

Slowing in the housing market has also been beneficial, with landlords taking advantage of the dip and building their portfolio, and many plan to continue to do so over the next year.

Tags: private rented property, john heron, property, landlords, confidence, confidence index, Paragon, tenant demand benefits

BTL “stabilises” prices

Although borrowing costs are rising due to the five separate interest rate rises in the past year – which some say could lead to house market turbulence – the continuing strength of the buy-to-let market is providing much-needed stability.

That is the contention of Paragon, whose Buy-to-Let index for July was released today.

According to the index, rents have risen by just over three per cent over the past three months, boosting the annualised growth rate to 12 per cent.

This comes at a time in which the general housing market is widely recognised by analysts to be slowing.

Chief executive of Paragon Group Nigel Terrington, commenting on the new index, said: “Buy-to-let provides housing for young people, who otherwise would be forced to buy and be stretched beyond their means. It would result in dramatically higher levels of repossessions in the housing market.

“As owner occupiers are increasingly struggling under the weight of higher borrowing costs, buy-to-let landlords can provide accommodation for the growing number of young people who want a flexible lifestyle or who aren’t yet ready to step on the property ladder.”

Figures covering the first half of the year from the Council of Mortgage Lenders (CML) have also recently revealed that the buy-to-let market took up 12 per cent of total mortgages in Britain – a record amount.

Tags: property ladder, Youth, cml, rate, investment, Nigel Terrington

Future demand for buy to let mortgages could fall

According to a recent report the demand for buy to let mortgages could fall in the future, as a slow down in the rise of property values hits, lumbering landlords with higher mortgage repayments but lower house value inflation and rental income.

However, reports have also indicated that at present landlords are doing very well, and in the past year enjoyed returns of around 13%. Reports indicate that landlords saw the property vales rise on average by around 7.3% and saw rental returns of around 5.5% of the property value.

The figures come from a report issued by Birmingham Midshires. The report indicated that although the 13% property value rise seen was up from the previous twelve months of 11.9% rental payments dropped from 5.7% in the previous twelve months to 5.5% last year. Birmingham Midshires warned that the interest rate rises had led to mortgage repayments being higher than rental payments, and that this could have a dampening effect on the popularity and take up of buy to let mortgages.

One economist from the building society stated: ‘While house price growth in the sector is expected to be more subdued near-term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors. There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.’

Along with homeowners buy to let landlords are likely to be hit hard by the interest rate rises that have been applied by the Bank of England over the past year, as it means higher repayments on the mortgage without higher rental income.

Tom Smith
1st August 2007

Tags: buy, rates, Mortgages, let, rent, interest

Landlords remain confident

Confidence among buy-to-let landlords remains very high.

That is according to what Bradford and Bingley is calling the largest and most authoritative landlord survey in the country.

Almost 5,000 people responded to the research, which found that the buy-to-let market is thriving and landlords are confident that it will continue to do so.

A massive 96 per cent revealed that they believe rent levels across the board will either rise or remain the same in the next six months.

In addition, 88 per cent of landlords have plans to either increase or maintain their current portfolio of properties.

All of this, coupled with very few (four per cent) being concerned about low rental yields or availability of tenants makes for a very positive outlook in the market.

“Many of our landlords have been in the market for a long time, with half investing in property for more than five years,” said Bradford and Bingley’s director of mortgages Andy Wiggans.

“Significantly, even those who have been landlords for under four years believe the sector remains strong, with many planning on expanding their portfolios.”

With house prices continuing to rise, more people are renting properties until they can afford to buy. This helps landlords to ensure that their properties are rented out.

Tags: Leasehold estate, sector, survey, long time, investing in property

Buy-to-let market set for growth

More and more people are choosing not to get a mortgage and are instead renting property.

According to Alliance & Leicester, the buy-to-let market is growing rapidly and the firm expects that it will have ballooned by 40 per cent within ten years.

The company has released its Changing UK Household Market report in which it states how the market will grow and what will be the factors affecting it.

Three main drivers for the market were identified, the first of which is a rise in the renting market, with more students and single people looking for places to live.

A change in attitude among the younger generations was also named as a key factor, with it now being more socially acceptable not to own a home.

Finally, Alliance & Leicester said that larger numbers of people are now using rented property to ensure they have flexibility.

“Demand for rented property has been growing steadily in recent years and returns on buy-to-let have increased,” said Stephen Leonard, director of mortgages at the firm.

“This growth is expected to continue – as the number of renters rises further and buy-to-let becomes even more attractive to both existing and potential landlords.”

Tags: landlords, flexibility, uk, market, home, Stephen Leonard, london, change