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UK to get new buy to let index
A new property index is being launched in the UK that will include more micro level data aimed at providing advanced insight into buy to let investment. The Landbay Rental Index, powered by MIAC for the peer to peer buy to let mortgage lender, will be available for the first time later this month and will monitor rental prices and market trends across the country. The index is intended to serve as a more practical guide to current and potential landlords looking to invest in buy to let properties, as well as others interested in trends in the private rented sector. Rental trends will be reported by granular geographical levels including region, county and London boroughs. Rents will also be analysed by the number of bedrooms and include detailed analysis and explanation of emerging trends. Each monthly report will contain national and local breakdowns, alongside practical detail for rental asking prices by number of bedrooms with input data sourced from Zoopla. ‘The ability to offer new and highly developed data insights into the buy to let and wider property market is very exciting for us. Our P2P mortgage lending platform was developed using the latest innovations in financial technology, so data and insight are already in our DNA,’ said John Goodall, Landbay chief executive officer. ‘We’re confident our partnership with MIAC will give answers to what is driving prices and trends in the private rented sector. Being able to see how rental trends differ by number of bedrooms will be useful in a very practical way, particularly for those looking to invest in buy to let. We hope this tool will prove a useful guide to buy to let investors, and stimulate a discussion amongst industry commentators,’ he explained. ‘The UK property market is fluid and complicated. To really pinpoint what is happening we need local and bedroom number data. With this index we’ll truly find out who and where is pulling the levers in the rental market,’ he added. According to Joe Macklin, director of risk and analytics of MIAC, the new index will benefit from the richest available underlying data and the most fit for purpose statistical techniques to deliver a rental index that is both granular and accurate. Continue reading
Survey reveals confusion over UK new mortgage rules one year on
Some 45% of people who planned to buy a property since the introduction of the UK Government’s new affordability rules last year have failed to do so, new research has found. And many feel less in control of securing a mortgage as the new Mortgage Market Review (MMR) introduced a year ago has created confusion, according to the research from Experian. A quarter claim that the MMR has impacted their ability to buy a property, while 37% report that the changes have made them feel less in control of securing a mortgage. The research also suggests that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. For example, 46% have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money. ‘Preparation is the key to successfully navigating the mortgage market post-MMR. Understanding the affordability rules and how a lender makes their decision is the key to success,’ said James Jones, head of consumer affairs at Experian. ‘But it can take time to build a positive credit history and a solid track record of positive money management, so it’s important you start preparing as soon as you make the decision to buy,’ he added. The research also found that 62% were not aware that lenders may require bigger deposits, 23% believed they could apply for mortgages with smaller deposits than before while 37% didn’t recognise that lenders would now be more careful on whether they could afford repayments and 15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR. Some 13% do not know how much money they have left over at the end of the month, 18% don’t even know what monthly repayments they can afford, 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Experian said it was concerned that 11% of those who were unsuccessful did not know why or haven’t asked their lender, leaving them at a significant disadvantage when it comes to improving their chances of being accepted in the future. Guy Shone, from Explain the Market, said that it seems many people remain stuck in a bit of a muddle.’ More needs to be done in 2016 to encourage personal financial planning and properly support aspiring home buyers, so that all buyers fully understand the rules of the game and stand the best chance of securing a property they can afford,’ he explained. Continue reading
Two thirds of UK landlords now planning to buy new properties
Landlords in the UK are looking to expand their property portfolios at an accelerated pace over the rest of 2015, according to a new property investor survey. Some 65% of UK landlords plan to buy at least one further property in the next six months up from 55% looking to buy six months ago, says the research from specialist buy to let mortgage broker Mortgages for Business. . Just 8% of landlords currently plan to sell any property, while 27% do not intend to either grow or reduce the size of their property portfolio over the next six months. ‘Landlords are better capitalised and now more confident about reinvesting. A strong rental market is being driven by tenants moving to make the most of job opportunities, and now gradually starting to earn more too,’ said David Whittaker, managing director at Mortgages for Business. ‘That new surge of demand is putting more upwards pressure on rents, and landlords are only just beginning to supply more homes to let in response. On top of this, after the surprise stability of a majority government, landlords will almost certainly see a short term boost of house price growth while the threat of damaging regulation has been lifted for at least the next five years,’ he added. When choosing how to finance borrowing, landlords are also changing their approach. Some 26% would currently prefer a variable rate deal for a new buy to let mortgage, up from 23% in November 2014. However, choosing to fix repayments for just a short time period is actually slightly less popular than six months ago. Currently 22% prefer a two year fixed rate mortgage, down marginally from 23% in November, while 12% would go for a three year fix, down from 15% in November. Some 30% would still choose the safety of fixing their mortgage repayments for five years, though this is also slightly down on 31% in November. By contrast, very long term fixes appear to be gaining popularity and 10% would now choose a 10 year fix, more than the 8% recorded in November. Landlords’ average loan to value ratios have fallen in the space of the last six months. Overall, the average overall LTV ratio for UK landlords now stands at 54%, down from 57% in November. The proportion of landlords with overall borrowing above 75% LTV has fallen to just 12%, down from 16% in November. The vast majority have some borrowing, though below 75% LTV. This now represents 81% of landlords, up from 79% in the previous survey. Currently only 6% of UK landlords have no borrowing whatsoever. ‘Over the medium term, interest rate expectations have never been friendlier to landlords. This is clearly reflected in the proportion willing to eschew guaranteed stability in favour of some immediate savings. Over a two year period this may be rational, and landlords as a whole don’t tend to take extraordinary risks with their financial position,’ said Whittaker. Continue reading
