Buy-to-let investors on the increase again

This is still a growth area for investors as more people see the buy-to-let market as a sound option for the future. Traditional forms of investment such as banks and building societies are still producing poor returns so investors are looking elsewhere.

The house rental market in the UK is very buoyant as people trying to get onto the property ladder find it more difficult due to rising house prices. The demand for good rental property has increased over the last 12 months and would seem to be continuing.

Experts expected the buy-to-let market to decrease and it did after all the new regulations were announced but that trend has now been reversed.

Rent increases holding firm in some regions

Rents in the UK’s regional hubs are growing significantly faster than both London and the UK average, as workers continue to relocate from London.

Rents rose by 0.03% in November 2018 which, although the lowest monthly rise since the start of the study, feeds into growth of 0.97% in the year; 0.04% higher than the same point in 2017. This is mostly down to London’s improved performance, recording growth of 0.58% this year.

These growth figures show just how resilient property continues to be as an asset class. As with all investments, it is prudent to have a diversified portfolio.

The average monthly UK rent currently sits at £1,212, a rise of £10 since the start of 2018. When London is removed, rents sit at £769, up from £761 since the beginning of 2018. Rents are rising in 27 of the 33 London boroughs, a very different picture from this time in 2017 when rents were falling in 26 of the capital’s boroughs. While every region in the UK has seen rents rising, the speed of growth has not been consistent – with all areas other than London experiencing a slowdown.

Landlords should not fall into this trap

The vast majority, some 81%, of Landlords think that their mortgage providers quietly hope they will slip onto their Standard Variable Rate (SVR) at the end of their fixed rate period.

And a significant percentage do precisely that a new poll has found, finding that 38% have been on their mortgage lender’s SVR at some point in the past.

Of these people, 17% said they have been on their lender’s SVR for up to 12 months, and 21% said they have been on their lender’s SVR for 12 months or more.

Less than half, 45%, of respondents could confirm they had never been on their lender’s SVR, while 18% had no idea whether they had or not.

Nearly half of those polled, 47%, said they do not believe their current mortgage provider would care if they moved to another lender, which reflects the dysfunctional relationship between borrowers and lenders.

Incorporation moving swiftly, could it benefit you?

According to the buy-to-let Index, the number of buy-to-let lenders lending to limited companies has risen by 47% over the past year. 22 buy-to-let lenders now lend to limited companies – up from 15 in Q4 2017 and the total number of mortgage products available to them has more than doubled since Q4 2017 – from 263 to 628. The result has been that 44% of buy-to-let transactions are now made by limited companies – up from 42% in Q2 2018.

This change in market behaviour is not surprising. We are only just over a year or so from last September’s changes issued by the Prudential Regulation Authority, the 3% stamp duty surcharge on second homes in April 2016 and a withdrawal of tax relief by 2020.

We’ve already seen that the more stringent rules on buy-to-let lending has meant the near two million ‘hobby’ landlords who own 15% of the housing market have found it increasingly difficult to raise finance from traditional lenders. Many have also embraced the business model of Houses of Multiple Occupancy in an effort to improve yields.