ADDITIONAL SUPPORT NEEDED FOR TENANTS AND LANDLORDS

The UK Government has recently announced that the ban on evictions in England is to be extended until the end of March. This means that eviction notices – which could have started again on 22 February – cannot be served for another six weeks. The eviction ban had already been extended from 11 January when it was originally due to expire.

The only tenants that will be allowed to be evicted using bailiffs before 31 March will be those that cause the greatest strain on landlords or residents and neighbours. Exemptions include cases of illegal occupation, anti-social behaviour and arrears of six months’ rent or more.

LANDLORDS CONTINUE TO DISPLAY A CONSIDERED APPROACH TO PROPERTY INVESTMENT

Although the world continues to change, the fundamental principles underpinning the private rented sector remain. Despite talk of a mass exodus from urban districts, according to new research from Paragon Bank, over two-thirds of landlords will continue to look for property in such areas for their next portfolio purchase. 36% plan to buy in a suburban area and 6% are looking at rural locations. 66% of landlords said they plan to buy in the same area as their existing properties, with 10% targeting new areas. 20% said it would be a mixture of both.

THE CHANGING LANDSCAPE FOR THE SELF-EMPLOYED

Following Kensington’s successful webinar on self-employed mortgages which took place earlier this week, Frances Taylor, Head of National Accounts, reviews some of the findings.  

As we start the new year with a return to nationwide lockdown, we’re all hoping it’s the final addition to this particular trilogy.

The mortgage industry has seen immense change over the last 12 months and with the uncertainty prompted by the pandemic set to extend into 2021, we wanted to kick off the first of our webinars this year by addressing a topic that we’re seeing real demand for more information about: mortgages for the self-employed.

Market insight

TO INCORPORATE OR NOT TO INCORPORATE

The growth in the appeal of limited company lending has been evident since 2016 when the 3% investor stamp duty surcharge came into force and the proportion of tax-deductible mortgage interest on buy-to-lets held in personal names began to be phased out. In fact, since the beginning of 2016 and the end of 2020, more companies were set up to hold buy-to-let properties than in the preceding 50 years combined.

This progression was recently highlighted in research from Hamptons which showed that there were a record number of new limited companies set up to hold buy-to-let properties in 2020. Last year there were a total of 41,700 buy-to-let incorporations, an increase of 23% on 2019. The numbers have more than doubled since 2016, rising 128%. This means that at the end of 2020 there were a total of 228,743 buy-to-let companies up and running, an all-time record.

HERE'S TO A MUCH MORE POSITIVE 2021

I’m sure we’re all glad to see the back of 2020 but there’s no getting away from the tough start ahead of us in 2021.

Although, I refuse to be too downbeat. So, let me take this opportunity to wish you all a happy New Year and try to inject a little optimism.

The fact is we are all better placed, practically and hopefully mentally, to deal with some short-term hardships and we have to keep reminding ourselves that there is certainly plenty of light at the end of the tunnel.

2020: A YEAR OF TWO HALVES

2020 has, at times, been a year which seems to have lasted forever. On the other hand, there have also been moments when it feels like it has flashed by in the blink of an eye. It has certainly proved to be a year of two halves.

When focusing on the buy-to-let and housing markets, there are many reasons to be optimistic moving into the new year. Whilst we can’t, or shouldn’t, gloss over how tough the past nine months have been, we – as a company – feel we are in a stronger place than ever. The dedication, flexibility, drive and skill shown by all our people throughout this time has been truly inspirational.

TENANT DEMAND CONTINUES ON ITS UPWARDS TREND

There has been a raft of data in recent weeks around strong levels of rental yields and rental asking prices which represents great news for landlords as we face the additional challenges attached to tiered lockdowns across the UK.

In addition, tenant demand is also reported to have reached a four-year high in the third quarter of this year. This is according to research carried out on behalf of Paragon Bank which outlined that – in the three months to the end of September – 29 per cent of landlords reported rising tenant demand, the highest level since the third quarter of 2016. Out of the 700 landlords surveyed, one in 10 reported significant growth.

HEIGHTENED DEMAND FROM FIRST-TIME BUYERS

We all know how the temporary rise in the stamp duty threshold has accelerated activity throughout the housing market. Whilst many headlines have focused on the rise of first-time buyers for homeownership purposes, recent data from Legal & General Mortgage Club suggested that there is also heightened demand from first-time buyers looking to enter the buy-to-let sector. Searches made by advisers through its sourcing tool showed that the criteria search combination for first-time buyer, first-time landlord and non-owner occupier has seen an 18% increase since the beginning of September.

KEEP TRACK OF CHANGING TENANT PRIORITIES

Many factors continue to impact the current residential and BTL markets. Stamp Duty changes have accelerated activity within the purchase market and the lockdown period has challenged the way that people are living and working which is leading to a number of questions being asked of FTBs, homeowners, landlords and tenants.

Will the attitudes of the younger generation change towards the huge commitments necessary for getting onto the housing ladder? And will the homeownership dream even be achievable for the younger generation in the current economic climate? Could this combination of factors lead to even more people becoming reliant on the rental market?

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.

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