Buy to let news to Friday, June 8th, 2018

Semi-detached modern homes

An end to Right to Rent?

The legitimacy of the landlord obligation to fulfill Right to Rent rules around prospective tenants, is being challenged by MPs, landlords and immigration lawyers in the High Court.

Since the Immigration Act 2016 was introduced, landlords have had to ensure that tenants have the legal right to live in the UK. Failure to do so could result in a criminal offence, 5 years in prison and unlimited fines.

It has been suggested that in order to avert risk, landlords are simply not accepting prospective tenants who do not hold a UK passport.

Research from the Residential Landlords Association (RLA), claims that as a result of the Right to Rent policy, 42% of landlords are less likely to rent to someone without a British passport, for fear of prosecution for getting things wrong.

David Smith, policy director for the Residential Landlords Association (RLA), commented:

“Landlords will welcome the High Court decision to allow a judicial review of the Right to Rent policy which has put them in the impossible position of acting as untrained Border Police trying to ascertain who does and who does not have the right to be in the country.

“This has created difficulties for many legitimate tenants as landlords are forced to play safe and only rent to those with a UK passport.

“The announcement is an important step towards overturning a policy which the government’s own inspectorate had described as having yet to demonstrate its worth.”

This makes things particularly difficult for the 17% of UK residents without a passport.

The role of flats and terraced homes grows in PRS supply

Flats and terrace grow in PRSAn overview of the private rental sector since 1996, has revealed the growing significance of flats and terraced houses in supply to the tenant market.

The latest Nationwide review of the private rental market, looked at details contained within the English Housing Survey, which revealed a spike in the number of privately-owned flats that have been rented out.

This stands at 60%, compared to 18% of other property types.
Robert Gardner, Nationwide’s chief economist, commented:

“Flats accounted for a relatively high share of newly constructed dwellings. During the period 2005 to 2008 nearly half of new completions in England were flats. While construction has shifted back towards houses in recent years, flats still accounted for circa 20 per cent of new units last year, above their share of the stock.”

According to Gardner, rented flats comprise 9.2% of the total number of private dwellings. In 1996, this figure stood at 4.9%, underlining the growing role of flats in the private rental sector.

He added:

“There has also been a substantial increase in both the number and proportion of privately rented terraced houses, which now represent 8.9% of the stock.

“Over the same period, the number of owner occupied terraces has actually fallen, suggesting some of these properties transferred across to the rental sector. The property type which has become much less prevalent is bungalows, which now make up 8.6 per cent of the stock, down from 10.7 per cent in 1996.” 

Rental growth in England slowed down in May

Rental growth slowsThe rate of rental increase in England, decelerated to 1.18% in the year to May 2018, new data has revealed.

Landbay’s latest Rental Index reported the smallest annual increase since April 2013, suggesting that landlords may be reluctant to put further financial squeeze on tenants.

The latest news continues a trend which began after annual rental growth had reached its zenith in November 2015, at 2.63%.

However, drilling down into the data uncovers regional differences in rental growth.

Outside of London, over the past five years, the cumulative total for rental growth has been 10.32% and the average monthly rent for a property outside of London is now £769.

Since 2013, the East of England has experienced that largest growth in rent, at 14.68%, followed by the East Midlands at 12.83%.

John Goodall, chief executive and co-founder of Landbay, said:

“Landlords have been faced with a number of challenges over the past two years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy-to-let property.

“Some might have expected this pressure to push up rents, though low interest rates and the Bank of England’s Term Funding Scheme (TFS) have kept the cost of borrowing down and allowed landlords to shoulder some of the costs.”

Rates round-up

Rates round-upBelow are the top 3 buy to let mortgage deals, by lowest initial rate, for fixed, tracker and variable products.

This table updates twice daily with the latest deals from a diverse range of specialist and high street lenders. Call our team to discuss any deal or click through for the full range.

Rate Product Monthly cost LTV Lender fee APR
1.37% then 4.99% Fixed for 26 months Fixed for 26 months £114 60% £2,239 4.69% Enquire
1.55% then 4.90% Variable for 26 months Variable for 26 months £129 60% £1,300 4.57% Enquire
1.49% then 5.00% Tracker for 24 months Tracker for 24 months £124 60% £2,178 4.76% Enquire
1.69% then 5.99% Fixed for 26 months Fixed for 26 months £140 70% £2,534 5.42% Enquire
1.60% then 4.90% Variable for 26 months Variable for 26 months £133 70% £1,300 4.58% Enquire
1.69% then 4.99% Tracker for 25 months Tracker for 25 months £140 75% £2,355 4.77% Enquire
2.94% then 4.99% Fixed for 24 months Fixed for 24 months £245 80% £1,825 4.94% Enquire
2.89% then 5.19% Variable for 24 months Variable for 24 months £240 80% £794 5.02% Enquire
3.85% then 5.35% Tracker for 24 months Tracker for 24 months £320 80% £2,155 5.43% Enquire
4.19% then 4.95% Fixed for 24 months Fixed for 24 months £349 85% £1,818 5.10% Enquire
4.64% then 6.58% Variable for 24 months Variable for 24 months £386 85% £3,110 6.74% Enquire

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.