The announcement in 2011 that Santander was to enter the buy-to-let mortgage market in 2012 was not surprising. The number of lenders seriously offering buy-to-let mortgages has increased from a handful to over 40 in just 18 months. Buy-to-let mortgages are more profitable for lenders as landlords pay higher interest rates and fees when setting up the loan than in the residential mortgage market. So Santander launching buy-to-let mortgages via the old brand Abbey was hardly surprising. However, these mortgages can only be obtained via brokers, and if you walk into a Santander branch and ask for a buy-to-let mortgage, they will tell you they don’t offer them. Yet, since.. read more →

House prices fell 0.6% in June (Nationwide survey), taking the average house price down to £165,738, according to Nationwide. This is most appealing to buy-to-let investors who are hunting down bargains. Even when mortgage finance is more widely available and people who are now renting start to look to buy, it will be the buy-to-let landlords holding the properties they wish to acquire. This of course will lead to price appreciation in the buy-to-let market, affording landlords possible capital gain opportunities. But for now, the fact that house prices are now 1.5% lower than one year ago is creating opportunity for the buy-to-let investor to get a good return on.. read more →

An increasing number of first-time landlords attracted by the promise of making money in the buy-to-let market, says lettings agency Connells The combination of a high demand for rented property and a lack of suitable properties has meant that landlords can charge more for homes. The buy-to-let market is set to continue growing for the foreseeable future as an increasing number of people have to rent for longer. A recent Consumer Rental Forecast by Rightmove highlighted that 55 per cent of tenants who took part in the survey would like to buy but cannot yet afford to. read more →

Templeton LPA director and receiver Paul Jardine says “The wider buy-to-let rental market currently includes a much higher proportion of financially comfortable tenants who would have been buyers before the initial credit crunch.” This has reduced arrears as a whole in the buy-to-let market which is good for investors. He goes on to warn, “However, this will be no comfort to the growing minority of tenants several months behind with their monthly rent cheques.” So for buy-to-let investors, the quality of the property and the type of tenant it will attract is still a key decision. With mortgage finance still difficult to secure, the contrast between better-off frustrated buyers stuck.. read more →

02 Jul 2012
July 2, 2012

Why is buy-to let booming?

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The cost of home ownership is cheaper than renting in 42 of the top 50 towns and cities in Britain, according to property website It now costs 14% more per month on average to rent a home compared to servicing a mortgage on an equivalent property. So why are landlords snapping up buy-to-let properties at such a rapid rate? The main reason is that the average rent in Britain’s buy-to-let sector now stands at £1,785 per calendar month – up 2.7% since February. In London, renting a buy-to-let is 21% more costly on average than servicing a mortgage with the average asking price for a two-bedroom flat in the.. read more →

Declining home ownership and the rapidly increasing number of buy-to-let properties will cost the government an extra £8bn in housing benefits for the elderly by 2060, a think tank claims. The Strategic Society Centre claims that projections of declining owner-occupier rates and rising buy-to-let investment properties could cost the government billions more in benefit payments. Author James Lloyd, director of the SSC, believes the buy-to-let sector and individuals buying second homes will cost the public purse in the long run and warrants action. The report states: “Although the current rules around ownership and property-taxation enable some individuals to own multiple properties, such behaviour will impose significant costs on the Exchequer.. read more →

28 Jun 2012
June 28, 2012

Virgin backing buy-to-let

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Virgin Money, or the old Northern Rock as we fondly remember, has just raised £500m in loans to lend as mortgages. The new bank has a keen focus on the strong buy-to-let market and is intending to challenge more established lenders. Virgin had hoped to be “out of the blocks” more quickly, but to ensure service levels in mortgage transactions are high, they have been recruiting into and re-organising their mortgage transaction teams, including a new buy-to-let team. read more →

A group of previous capital speculators have become the new breed of buy-to-let landlords. After the collapse of Lehman Brothers and the ensuing credit crunch, there were people who became accidental landlords. They were sitting on properties which they bought for capital growth and then couldn’t sell. Then as the rental market strengthened, these landlords became ever enthusiastic expanding their portfolio of buy-to-let properties. Lenders have rushed into the buy-to-let mortgage space and are now providing good products for those with a 25% deposit. The Association of Residential Lettings Agents estimates there could be 6.6m houses in the hands of private buy-to-let landlords by 2021, equivalent to 22 per cent.. read more →

Buy-to-let landlords have increase their market share of UK property by 42% since January 2007. 19% of the housing stock is now in the hands of buy-to let landlords. The consequence of tighter lending in the residential market has led to a buy-to-let boom. Cash rich landlords are benefiting from the lack of bank lending to other potential home owners and the lowest new build programme for homes since the 1920’s. This has led to a surge in rents and buy-to-let investors see this as a good place to get returns often around 10%. “The expansion of the buy-to-let private rented sector is the single most important issue in the.. read more →

Interest only mortgages for domestic residences will pretty much become a thing of the past. However, in the buy-to-let sector, this kind of loan is still viewed as a reasonable method of funding an acquisition, as the asset is held in security against the mortgage. Buy-to-let mortgages have predominantly been interest only for two reasons. Firstly when a buy-to-let property has no occupants, it is easier for the landlord to keep up the payments to the lender than if they were also repaying capital. Secondly buy- to-let properties are an investment and the interest can be deducted from the tax accruing from the rent. This allows landlords tax planning opportunities.. read more →