Buy-to-let news to Friday, January 19th, 2018

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New national housing agency “Homes England” launched

The Government has shaken up its approach to housing, with the creation of a new national housing agency covering England, called Homes England.

Replacing the Homes and Communities Agency, Homes England will amalgamate land, money, expertise and planning and compulsory purchase powers with the aim of delivering the much-needed homes England needs to help solve the housing crisis.

Sponsored by the rebranded Ministry of Housing, Communities & Local Government, Homes England is an executive non-departmental public body.

The agency will have extended powers to identify, purchase and expedite the planning process for up to 450 hectares of brownfield land.

Homes England is set to invest in excess of £4 billion on building new homes and its remit also includes the selling of land to facilitate the future building of 6,000 more homes.

Housing Secretary Sajid Javid, outlining the role of Homes England, stated:

“The new agency will play a major role in securing land in areas where people want to live, support smaller and more innovative house builders into the market and resource brownfield sites from across the country to deliver homes for families.

“This Government is determined to build the homes our country needs and help more people get on the housing ladder. The new agency will be key in replicating this approach right across the country and will help us build a Britain fit for the future.”

Javid announced that approximately 310 local authorities have now published a brownfield register, revealing over 26,000 hectares of developable land on over 16,000 sites. Homes England will use these registers to expedite the development process on brownfield sites, with projects already underway, including the construction of 10,000 properties northwest of Cambridge and 3,200 on a site in South Yorkshire.

He also reiterated that in order to resolve the housing crisis, the SME sector will require support - and that over £750 million of the £1 billion short-term fund has been committed to SMEs, custom builders and developers using modern methods of construction.

Government supports new initiative to protect tenants from rogue landlords

Rogue landlordsThe Government has given its endorsement to planned new legislation designed at protecting tenants from unsafe private rental and social housing.

Under the proposals, set out by Karen Buck, Labour MP, in a Private Member’s Bill titled: the Private Member’s Bill on Homes (Fitness for Human Habitation and Liability of Housing Standards), tenants will have the right to take legal action against landlords who fail to maintain safe properties throughout a tenancy.

Whilst acknowledging that offending landlords constitute a minority, the new bill continues the direction of recent law changes which have seen a crackdown in the activities of a few rogue landlords. This has included empowering local authorities to fine landlords up to £30,000, while from April, councils will have the powers to deliver banning orders on the very worst.

Backing the new proposals, on which the Government provided input, Secretary of State for Housing Sajid Javid commented:

“Everyone deserves a decent and safe place to live. Councils already have wide-ranging powers to crack down on the minority of landlords who rent out unsafe and substandard accommodation.

“However, public safety is paramount and I am determined to do everything possible to protect tenants. That is why government will support new legislation that requires all landlords to ensure properties are safe and give tenants the right to take legal action if landlords fail in their duties.”

The Bill covers all landlords in the social and private sector, who must ensure their property remains fit for human habitation from the start to finish of the tenancy.

In incidents where that is not the case, the tenant can take legal action against the landlord for breach of contract, on the basis that the property is unfit for human habitation.

In a statement on its website, the Government outlined further new measures, planned for April 2018, comprising a new database of rogue landlords and property agents who have been convicted of certain offences and banning orders against “the most serious and prolific offenders”.”

Buy to let lending slowed in November 2017

BTL slowed in NovemberLatest data from UK Finance shows that buy to let lending slowed in November, with the changing regulatory landscape and financial climate attributed to the decline.

In total, there were 6,600 new buy to let house purchases during November, representing a 1.5% fall from the November 2016 figure, although the value of loans was £0.9 billion, which was on a par for the corresponding period.

November saw 13,500 remortgages, which was down 3.6% in volume on November 2016. The value of remortgage activity was £2.1 billion, which represented a 4.5% drop on the same month the previous year.

Commenting on the data Paul Smee, Head of Mortgages at UK Finance reflected on industry changes in the buy to let market, suggesting these impacted on activity:

“Declines in buy-to-let lending reflect the changing regulatory and fiscal environment for landlord businesses, where some landlords might be inclined to reappraise the viability of their portfolios.”

Landlords urged to speak to brokers ahead of anticipated remortgage surge

Remortgages surges, landlords urged to speak to brokersCommercial Trust Limited has urged landlords to speak with specialist buy-to-let mortgage broker firms, as many contemplate remortgaging at the end of existing initial fixed periods over the coming weeks.

The call comes as many landlords are coming to the end of two-year deals, secured in the rush to beat the 3% stamp duty surcharge introduced in April 1st, 2016.

According to UK Finance figures, landlords borrowed £7.1 billion in March 2016, an 87% month-on-month increase and a 163% year-on-year rise.

In May 2016, the then director general of the Council of Mortgage Lenders, Paul Smee, acknowledged that March activity was ‘distorted’ due to the rush to beat the 3% stamp levy, alongside the seasonal increase in activity before Easter.

Andrew Turner, chief executive at Commercial Trust Limited, commented:

“At Commercial Trust we saw significant growth in applications. Now, more than ever, it is vital for landlord investors to use the insights of a specialist broker to set themselves up for success.

“The lending environment has changed radically since April 2016. The introduction of new Prudential Regulation Authority rules in 2017 has resulted in much stricter underwriting from a large proportion of mortgage lenders, both for individual investors and especially portfolio landlords.

“Specialist broker firms work closely with lenders from across the marketplace, and are cognisant of the types of challenges, and solutions that can be put in place, to steer landlord investors through the mire of lending complexity.

“In the past, savvy investors may have felt adequately informed to approach their buy to let lending options themselves, but now even some of the smaller, generalist, mortgage practitioners are turning to the bigger specialist firms for help with buy to let.

“You can imagine that, with only one or two, or even a handful of staff, keeping track of the fifty plus lenders and their differing interpretations of the PRA changes is a logistical nightmare, alongside the day to day work of residential mortgage or other financial advice.

“As a top 5 UK specialist in buy to let, Commercial Trust is fortunate to have the resources to keep our landlord clients abreast of a breadth of solutions that can keep their investments on track."

Turner added: “Because of the time it can take to complete a deal, I would recommend starting the process as soon as possible by getting in touch with a professional you know you can trust and it is no accident that we are so-named.”

Modest UK rental growth up to December 2017

Rental growth modest in DecemberLatest data shows there was a modest 1.2% growth in UK rent prices, in the year up to December 2017.

According to the Office for National Statistics (ONS), this is the lowest annual rate of growth since they began compiling data in January 2012 and represented a 0.2% fall from the previous month.

Wales saw the highest average increase in private rent at 1.7%, followed by England at 1.3%. However, Scotland’s rental growth was much slower at 0.4% in the 12 months to Dec ember 2017.

The ONS statistics for Wales continued a general pattern of increased annual growth rate since July 2016 and the latest data reflects the highest annual growth rate in the Principality, since this series began in 2010.

The data for England represented a slight fall of 0.1% from November 2017, but was also the lowest annual growth rate since January 2011, when it was also 1.3%.

Within the figure for England, London recorded growth of just 0.4% for the same period, its lowest annual rate of growth since October 2010.

This reflected the challenges that have been well chronicled in the Capital’s private rental sector in recent months. London recorded a figure of 0.6% growth in November.

The impact of stamp duty and rocking boat of Brexit has seen London hit particularly hard and as a result, landlords are investing in properties outside of the Capital, where house prices are typically lower and buy to let yields higher.

Furthermore, London’s tenants have perhaps more keenly felt the effects of inflationary rises and with earnings failing to keep pace with the cost of living, rising rents are simply no longer a viable option for many, who have opted to move to cheaper commutable locations.

Conversely, the East Midlands recorded the highest annual growth of 2.6% (although this fell 0.1% from November), followed by the East of England, which rose by an average of 2.2%.

Scottish rental growth may have been less than its regional counterparts, but the 0.4% increase in the 12 months to December 2017 was still an improvement of 0.2% on November data.

The ONS report suggested that the weaker growth north of the border might be a reflection on stronger supply and weaker demand for rental property.

Looking at the bigger picture, the ONS data indicates that momentum for increases in private rent across the UK has slowed since the end of 2015.

Rate roundup

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 27 months Fixed for 27 months £114 60% £2,239 4.67% Enquire
1.55% then 4.90% Variable for 27 months Variable for 27 months £129 60% £1,300 4.55% Enquire
1.49% then 5.00% Tracker for 24 months Tracker for 24 months £124 60% £2,178 4.76% Enquire
1.71% then 4.99% Fixed for 27 months Fixed for 27 months £142 70% £2,239 4.73% Enquire
1.60% then 4.90% Variable for 27 months Variable for 27 months £133 70% £1,300 4.56% Enquire
1.69% then 4.99% Tracker for 26 months Tracker for 26 months £140 75% £2,355 4.75% 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% £5,485 5.71% Enquire
4.59% then 6.58% Fixed for 24 months Fixed for 24 months £382 85% £3,110 6.73% 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.