A BUSY SUMMER AHEAD FOR THE BTL MARKET

The buy-to-let sector has seen a raft of positive news in recent times as lenders are becoming increasingly active and landlords are taking advantage of some favourable conditions. The recent change in the stamp duty threshold has served to generate an even greater volume of enquiries and this demand is showing no sign of slowing down anytime soon.

Of course, the additional 3% stamp duty surcharge on additional properties will still apply, but investors will benefit from not having to pay the standard stamp duty on purchases of up to £500,000. According to research from Hamptons International, the stamp duty holiday will save the average investor almost £2,000 which will encourage more landlords and investors to add to their portfolios before next spring, and many are looking to take advantage of this sooner, rather than later.

STAMP DUTY AND ELECTRICAL SAFETY: KEEPING TRACK OF BTL CHANGES

The buy-to-let sector is well accustomed to change, but this doesn’t mean that landlords should become complacent when it comes to the implementation of any new policy or legislation.

In a quick recap of recent BTL-related events, April saw the introduction of minimum energy efficiency standards and the second part of the Tenant Fees Act was introduced in June. It is now time for landlords to turn their attention to the new electrical safety standards which came into force on 1st July. This means that all electrical installations must now be inspected and tested by a qualified person before a new tenancy begins.

ADVICE AND THE TECH BENEFITS FOR LANDLORDS

We’ve seen a huge amount of tech innovation throughout the buy-to-let marketplace in recent times and even more so during the pandemic. This period has really shown how lenders and advisers are utilising a variety of online platforms to support landlords, investors and developers in getting to grips with shifting market conditions.

There has been a plethora of webinars, online events, virtual roadshows, launches of Covid-19 information hubs and live feeds, plus regular updates across social media. And this demand for information around BTL was evident when a recent series of webinars hosted by specialist finance trade body FIBA saw a whopping 1,000 registrations from the intermediary community.

FOLLOW THE RISING RENTAL TRENDS

Following my recent blog post on the return of surveyors and valuers to the property market, it’s interesting to see what impact this may have had on the rental market, from a statistical sense.

According to Rightmove, demand for properties in the private rented sector is up by 22% compared to last year. The data from the property website showed that since letting agents were permitted to reopen on 13 May, the demand for rental homes has increased at a quicker rate than the sales market. Lockdown break-ups, job losses and urgent relocations are thought to have contributed to this surge in demand throughout the rental sector.

THE RETURN OF PHYSICAL VALUATIONS – GREAT NEWS FOR THE BUY TO LET SECTOR

The return of surveyors and valuers – on the back of the government’s guidance on moving home during the coronavirus crisis provided by Housing Secretary Robert Jenrick – is highly positive news for the housing and mortgage markets, not to mention the economy as a whole. For several long weeks, many lenders have not been able to process new mortgage applications because they couldn’t instruct physical valuations. Naturally, this has had major repercussions for landlords, homeowners and first-time buyers who were already in the process of, or thinking about, property purchases.

IS THERE LIGHT AT THE END OF THE LENDING TUNNEL?

It's important that we don’t get too carried away, but it’s highly encouraging to see lenders steadily returning to the market and new products emerging. Of course, we’re still far away from pre-lockdown market conditions and it will be some time until those heights are reached once again. However, business is still being written and the value of expert advice in getting these deals over the line has never been higher.

MORTGAGE PAYMENT HOLIDAYS: WHAT LANDLORDS REALLY NEED TO KNOW

All lenders, large and small, have been asked to make difficult decisions across many aspects of their business. They have faced a huge amount of pressure from the Government in terms of having mortgage payment holidays forced upon them at relatively short notice. In general, lenders have reacted quickly, effectively, and decisively but how are landlords responding to this issue?

It depends on the individual in question, and there are many factors to consider before deciding upon this option.

• Taking a mortgage payment holiday should not impact your credit history and it can help with cashflow if tenants are struggling to pay their rent

PORTFOLIO ADDITIONS, CONSOLIDATION AND DIVERSIFICATION

Landlords are constantly adapting to conditions in what remains an ever-evolving buy-to-let marketplace, but some old concepts still ring true – the importance attached to location and rental yields.

When it comes to regional variations, it currently appears that landlords based in the Midlands are most likely to increase their portfolio size. This is according to a study conducted by BVA BDRC, which outlined that 24% of landlords in the East Midlands and 22% in the West Midlands plan to purchase more properties in the next 12 months. Meanwhile, 8% of landlords in South West and 9% in Central London intend to purchase more properties within the same timeframe. Overall, the data shows that 14% of landlords intend to purchase property, with the average preparing to buy three properties.

A SHORT-TERM OPTION FOR LONGER-TERM BENEFITS?

Short-term lets were a hot topic for landlords in 2019 and this is an area which is expected to continue in prominence over the course of 2020. Nationally, ARLA Propertymark estimates that as many as 500,000 private rented homes could soon switch from the traditional private rental market to holiday or short-let accommodation, primarily due to tax and legislative changes in the PRS. And a new report from the letting agents’ regulatory body, in partnership with Capital Economics, revealed that the number of active listings on Airbnb in the UK rose by 33% to 223,000 in 2018 from 168,000 in 2017.

IT’S STILL ALL ABOUT LOCATION, LOCATION, LOCATION

Despite house price growth cooling in some areas – due in no small part to Brexit-related conditions – research from property management platform Howsy has found that there are still pockets of the UK which are enjoying notable price growth.

North Devon leads the way having reported 15% growth year-on-year, followed by Merthyr Tydfil and Blaenau Gwent in Wales, both at 13%, along with Caerphilly, up 11%. Camden was said to be the best bet in London with house prices up 10% in the last year, with West Devon, Forest Heath, Rochdale and Monmouthshire all up 9%, and Trafford seeing annual growth of 8%.

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