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UK Rental Prices Have Not Grown As Much As The Media Hype Suggests

UK Rental Prices Have Not Grown As Much As The Media Hype Suggests

UK Rental Price Growth Has Slowed Down
Everywhere Except London

The hype suggesting spiralling rental prices in the UK’s private rental sector (PRS) are out of control, has been previously used by tenants and even some agents to brow beat private sector landlords into lowering the expected monthly rental prices has been exposed as a myth by the Office for National Statistics (ONS).

Apart from the ridiculous rental situation in London, where rental prices for single dwellings are getting beyond affordable, landlords across the rest of the UK are lucky if property rental prices just about keep pace with inflation.

Private rental sector rental prices are flat in monetary terms when viewed year on year even if there has been some seasonal adjustment for the Spring & Summer lettings market.

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Surge In New Buy-To-Let Mortgage Products Confirms Rental Property Revolution

Surge In New Buy-To-Let Mortgage Products Confirms Rental Property Revolution

Surge In New Buy-To-Let Mortgage Products Confirms
Rental Property Revolution

A number of market leading lenders have introduced improved Buy-To-Let mortgage products to meet the growing demand for portfolio expansion by UK landlords.

The surge in the number of new mortgage products coming to market confirms that the UK buy-to-let industry is growing across the whole of the UK and there are even more BTL products still awaiting launch dates from lenders.

Paragon Mortgages has introduced a new Buy-To-Let mortgage product for single unit properties, Houses of Multiple Occupation (HMO’s) and multi-unit blocks; the rate is fixed at an initial 5.49% for a maximum Loan-To-Value (LTV) of 75% with a 2% product fee.

The Post Office, (and its financial services partner the Bank of Ireland) have also entered the Buy-To-Let mortgage market, launching a range of buy-to-let mortgages at 60% and 75% LTV – some of their BTL mortgage products don’t even have an arrangement fee and include free valuation.  

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UK PRS Tenant Demand Increases Again

UK PRS Tenant Demand Increases Again

There was good news for UK property investors and buy-to-let landlords who are looking to expand their rental property portfolios, as it has been reported that the number of new applicants seeking to rent PRS properties in March increased by 21% from the number of applicants seen in February.

Tenant demand continues to outstrip supply as the number of residential properties available to rent only increased by 5%.

According to Sequence, who are part of the Connells group, average rents for March 2013 were £704 (GBP), unchanged from February.

London rents averaged £1,375 (GBP), almost twice the national average.

The number of agreed new tenancies was up 13% on the previous month, and up 19% on 2012, reflecting the strong current rental preferences and tenant demand.

Spareroom.com reported that flat sharers are paying nearly 7% more than they were a year ago, with rent for a double room including bills now averaging £497 (GBP) per month compared with just £465 (GBP) a year ago.

In London, average room rents are £660 (GBP) per month, 20% higher than they were in 2011.

Matt Hutchings, Director of Spareroom said: “The fact that room rents are rising at a rate well above inflation is worrying. The bright side is that at least there is not the added cost of utility bills to factor in. All inclusive is a silver lining in an increasingly bleak rental market.”

Buy to let landlords and property investors are extremely confident about the UK rental market, with high levels of tenant demand, strong rental yields and low void periods.

A survey by specialist mortgage lender Paragon also showed that landlords are more positive about the availability of buy-to-let mortgages, with 32% saying they thought finance was reasonably available.

Paragon said that landlords with small portfolios and new property investors just starting out in buy-to-let are finding it easier to get mortgage finance than professional landlords with large rental property portfolios.

Funding For Lending Scheme Targeted

Funding For Lending Scheme Targeted

Some of the Con-Dem Government flagship schemes to get the UK housing market moving again such as Funding for Lending (FLS), NewBuy and FirstBuy have been targeted by a succession of property professionals at a buy-to-let event in Westminster, last week.

John Heron, managing director of specialist mortgage lender Paragon said: “Politicians are tinkering around at the edges and seeking headlines. They are being schizophrenic. On the one hand, they are doing everything they can to drive lenders away from high-risk lending, On the other hand, they are coming up with initiatives encouraging 95% mortgages on new-builds to first-time buyers.”

At the inaugural “Great Buy to Let Debate”, organised by the Wriglesworth consultancy, both he and other speakers called for a root and branch review of all government policies.

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Landlord Night mare as tenant causes malicious damage to property

Investing in specialist Landlord Insurance is vital for UK Landlords

Investing in a specialist landlord insurance policy is something all buy-to-let property owners should do, but it is the one vital area where people mistakenly try to curb their financial expenditure, it has been claimed.

The statement comes at a time when a recent Paragon Mortgages report revealed that during the last 3 months, UK BTL landlords have increased the size of their rental property portfolio’s by an average of 1.8 properties each.

Sim Sekhon, spokesman for Legal4Landlords explains: “Property investors put a lot of time and effort into finding the right properties for their Buy-To-Let property portfolio’s and need to ensure that they have the right insurance cover in place to adequately protect their property assets. If property investors choose the wrong insurance policy, it can have disastrous financial consequences as they discover that they are not covered for malicious damage. Standard buildings insurance cover will not protect landlords in the event of malicious damage to the property by tenants or any loss of rent if the tenants leave unexpectedly. Unfortunately landlords only discover that their insurance is completely inadequate after they try to claim, leaving them with damaged property and a huge bill to make it habitable again. A situation that many landlords simply cannot afford to be in. Landlords should always read the small print and make sure they are comprehensively covered by a specialist landlord insurance policy”.

Regular home insurance will not cover a residential property unless the owner actually resides at the property.

Many residential buildings insurance policies actually state in the small print that the policy will be deemed void if the property is used for rental purposes, so it is vital landlords get the correct level of insurance cover.

Landlord insurance provides a more comprehensive level of protection and it is important that all property investors who are landlords of buy-to-let properties invest wisely in it.

Laura Howard from Moneysupermarket.com explained how a good landlord’s insurance policy should include third-party liability in case of damage caused to the structure of a property by a tenant and includes covering the cost of re-housing tenants if a fire or flood makes the rental property uninhabitable.

Ms Howard also advised landlords to make sure the policy takes in to account any furniture provided by the property owner and provides liability cover in the event that a tenant or their visitor is injured at the property and claims against the landlord.

The Association of Residential Letting Agents (ARLA) advises landlords that failing to seek permission from or not informing their current mortgage provider that the property is to be rented out could also invalidate any subsequent claim.

New Data Shows A Surge In UK Buy-To-Let Property Purchases

New Data Shows 2012 Surge In UK Buy-To-Let Property Purchases

Independent research commissioned by specialist Buy-To-Let mortgage lender Paragon Mortgages has revealed a surge in house-buying activity by landlords as property investors snap up residential properties for rental.

UK landlords increased the number of rental properties in their portfolios from an average of 9 to 10.8 residential properties in the first quarter of 2012.

The new report, produced by independent researchers BDRC Continental, also shows that 20% of existing UK landlords expect to purchase more property over the next 12 months, and that the average UK rental property houses 1.3 tenants.

2 Bedroom terraced houses continued to be the most popular property choice for Buy To Let property investment (64%), followed by flats and semi-detached houses.

Property auctioneers have also independently been reporting increasing numbers of buy-to-let purchasers in property auction sale rooms across the UK.

Paragon, the UK Buy to let mortgage specialists, have released the results of their first quarterly rental yield survey of 2012
.…and the figures are still promising for UK PRS landlords.

The survey, which quizzes over 500 landlords across the UK, shows that the average rental yield is still holding steady in many regions, with the average currently standing at 6.2% – an increase of 0.3% from Q4 of 2011.

Regions in the North dominated the top spots with the North West, and particularly areas such as Liverpool, reporting average yields of 6.6%.

The North East followed closely with averages of 6.5% and the South West came in third with 6.4%.

Also this week, Mortgages for Business, a rival of Paragon, released their first quarter finding, and understandably the figures were very similar.

Mortgages for Business however also looked into the average rental yields for HMOs and found that at 10.7% the average rental yield is at an all-time high, and especially in cities with large populations of university students.

Such reports are very promising for UK PRS landlords and when coupled with the growth in buy to let mortgage products, (442 buy to let mortgage products are available at the time of writing), despite media reports to the contrary it seems the UK private rental market remains one of the top investment opportunities currently available.

Mortgage professionals have reported that Buy-To-Let (BTL) business was responsible for 21% of new introductions in the first quarter of this year.

Remortgaging was responsible for 41% of new business and next-time buyers 23%.

Specialist mortgage lender, Paragon, released the data this week as part of their quarterly FACT survey. They asked mortgage intermediaries for their views on the condition of the mortgage market, as they see it.

  • 79% expect growth in the Buy-To-Let market this year.
  • 35% said Landlord demand was strong
  • 46% said demand was stable

Intermediaries also reported an increase in first-time landlords.

The following reasons were stated for landlords obtaining a Buy-To-Let mortgage in the first quarter of 2012.

  • 39% – portfolio expansion
  • 31% – remortgages
  • 23% – first-time landlords
  • 5% – property substitution
  • 2% – other

Director of Paragon Mortgages, Mr John Heron, said: “Whilst we are not back to post-credit crunch business levels, and will not be for some time, there has been a steady improvement in buy-to-let business. It is particularly interesting to see the increase in first-time landlords entering the market. This not only demonstrates confidence in the market but also that buy-to-let remains an attractive business.”

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