Lending figures are increasing rapidly

Buy-to-let lending saw its highest monthly increases in July and August since stamp duty changes were introduced.

Landlord borrowing was up 11.4% for the two months, although this figure was 2.2% down on the previous year. Over two-thirds of buy-to-let loans were re-mortgages rather than house purchases. Buy-to-let lending, driven by re-mortgage activity saw its strongest monthly lending level since the stamp duty changes on second properties was introduced.

It’s expected now buy-to-let lending levels in 2019 will be slightly higher than in 2018.

Forecasts for 2019 have definitely taken a turn upwards which in general has surprised the market. Suppliers have been very quick to recognise this trend and produced more than usual seasonal deals to match the increase in interest.

Landlords plan to add HMO’s

Over a fifth of landlords, 21%, intend to add houses in multiple occupation (HMO’s) to their portfolio over the next year, according to reports.

More than a third, 40%, of landlords plan to sell terraced houses in the year ahead, while only 8% of landlords intend to sell HMOs.

Data collected shows that HMOs saw the greatest average rental yields in Q2 at 6.3%, compared to the market average of 5.5%.

Currently rental yields are at a nine-year low, with average yields across all property types having dropped by 0.3% in Q2.

Landlords with between 11 and 19 properties saw the highest average yields at 5.9%, and landlords in the North West were the best region for yields, similarly averaging 5.9%.

Remaining in profit

The past couple of years have seen a raft of changes within the UK’s property market, particularly across the private rented sector, but most buy-to-let property investors are riding the waves.

While the goalposts within the buy-to-let sector continually move with the changing market, and political as well as economic uncertainty surrounding Brexit rages on, the formula for success within property investment tends to stay the same. There are some key steps that all property investors can take right now to maximise their potential profits over the long-term.

1. Stay ahead of the regulations

The law is always changing, and the private rented sector has seen its fair share of new legislation of late. Most recently, the Tenant Fees Act 2019 came into play this month, preventing tenants from being charged by landlords or agents for anything other than a set list of items. Tenant deposits have also been capped, and agents can no longer charge letting fees – a huge change.

Landlords

Landlords struggling to make the maths work on a new mortgage are being offered the chance to qualify for the easier rules a five-year fixed rate delivers - but without locking in for that full period.

Strict rules limiting the amount landlords could borrow on a buy-to-let mortgage came in almost two years ago, but now one lender has come up with a product that eases the amount of rent a landlord must earn without locking them in for five years.

Since 2017 landlords have had to choose between committing to a fixed term mortgage deal for at least five years or facing stringent affordability rules which limit how much they can borrow in relation to their rental income.

But a new five-year fix from lender Foundation Home Loans allows borrowers to leave after three years without facing any early repayment charges - effectively giving them the flexibility of a three-year fix without the tougher affordability rules.

The deal comes in two forms, up to 65% loan-to-value at 3.30% and up to 75% loan-to-value at 3.55% - both quite expensive compared to existing deals on the market.