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.
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.
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
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.
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.
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%.
Three-quarters of the way through 2019, research from Paragon shows that the state of the country’s Private Rented Sector (PRS) shows little change, as landlords remain cautious but continue to optimise their property portfolios for the challenges that lie ahead.
Whilst many of the landlord sentiment indicators in Paragon’s long-running PRS Trends report are historically low – the result of successive governments imposing fiscal and regulatory changes – there is still a story of resilience.
In its latest survey for Q3 2019, the average portfolio size amongst its experienced panel of 201 landlords has grown to 13.2 properties. With this increase, so too a rise in portfolio value, now at £1.82 million, a second successive record high.
The buy-to-let sector is never short of news or data. In recent weeks we’ve seen a raft of lender research around the increase of limited company borrowing and rental yields across the UK – as outlined in my previous blog post.
In the modern age, we now have access to an almost unlimited supply of information on a variety of subjects from a variety of sources, but when you see an in-depth report from a specialist BTL lender then you tend to sit up and take notice.
Buy to Let: The Landlord Experience produced by The Mortgage Lender evaluates how landlords feel about the market in general, especially in light of all the major changes which have taken place in the last few years.
I won’t spoil this too much but just a couple of take-outs from this include: