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Data confirms buy to let surge in UK ahead of stamp duty change
The UK’s buy to let sector has seen a surge of activity as property investors have rushed to complete their transactions before the new Stamp Duty surcharge comes into force next month. In February the number of buy to let valuations carried out increased by 34% compared to the same month last year. Meanwhile, remortgaging activity, which includes buy to let remortgaging activity, was up 41% over the same period. In addition, buy to let activity saw a month on month increase of 25%, while remortgaging volumes climbed 6% in February compared to the previous month, largely driven by buy to let remortgaging, according to the data from Connells Survey & Valuation. It confirms a lot of anecdotal evidence that the extra 3% Stamp Duty surcharge on second homes or buy to let properties due to take effect on sales completed after 01 April 2016 has resulted in increased demand from buy to let investors. ‘Buy to let investors and those remortgaging with the aim of buying a second home are racing against the clock. Activity from both these groups is picking up pace on a monthly basis as the April Stamp Duty deadline looms and people hurry to complete their transactions before being hit by the 3% surcharge on their buy to let property or second home,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. ‘Expect this activity to reach a crescendo in March before calming in the second quarter of the year. Buy to let investors will be calculating the impact the Stamp Duty hike is having on their rental yields, while those thinking of remortgaging to fund a second home will weigh up whether it’s still financially viable for them to do so,’ he explained. ‘But behind these somewhat frantic figures there is an underlying story of steady, long term growth. Despite taking some political heat recently, the buy to let market continues to attract investment off the back of its potential returns, while the remortgaging sector remains popular with those looking to get a better mortgage or release capital on their home for investment purposes,’ he added. In addition, the home mover and first time buyer sectors have experienced strong monthly rises in valuation activity. The number of valuations carried out for first time buyers surged by 36% between January and February 2016, while those carried out for home movers grew by 35% over the same period. Activity for both these sectors was steadier on an annual basis. Those taking their first step onto the property ladder in February reported a 9% increase compared to January and home movers experienced an 8% uptick on the same month on month basis. ‘Home movers are confident the strong but steady property price rises which typified 2015 are set to continue, and so feel confident that their home’s value will hold them in good stead as they endeavor to move up the ladder,’ said Bagshaw. ‘Meanwhile, first time buyers, whose personal… Continue reading
Majority of UK private rented sector tenants don’t want long leases, research shows
Almost 80% of tenants in the UK want a lease that is between six months and two years, with just one in five tenants wanting longer leases of two to five years, new research has found. Over half of tenants are hoping to move up the rental ladder and rent a nicer property when they can afford to, according to the study by online letting agent PropertyLetByUs. It also found that over 60% of tenants would like to redecorate their property and over half of tenants want to change the carpets and floorcoverings a further 23% want to install decking, 18% want to add a hot water tub and 13% want to create a patio. ‘Clearly tenants don’t want long leases. For many, longer than two years does not give them the freedom and flexibility they need. They may find a job, then move on to another one, start out living with friend and then want to move in with a partner,’ said Jane Morris, the agent’s managing director. ‘However, landlords like longer leases as they get charged fees each time their agent needs to find new tenants. Our research also shows that many tenants do aspire to owning their own home and a large proportion of them want to redecorate their rental accommodation,’ she explained. But she pointed out that this can cause a major headache for landlords, with many facing redecorated properties at the end of the lease, with no prior approval secured by the tenant. The latest Tenant Deposit Scheme report shows that redecoration is a major cause of dispute, taking 32% of the share. ‘We have seen properties with walls painted in bright colours, despite landlords specifying that the décor must be a neutral and standard lettings property colours, from off-whites and beige to magnolia. One tenant decided to decorate the whole house black and white. Another tenant chose a dark burgundy for all the walls, throughout the property,’ said Morris. ‘Even when a tenant repaints in the correct or authorised colour scheme, there are still problems. We have seen instances of bad paint application, patchy walls, paint spills on carpets, curtains, fixtures and fittings, all of which the tenants will be responsible for at the end of the tenancy,’ she added. The firm says that it is vital that landlords carry our mid-term property inspections and ensure the inventory and check-in stipulates the colour and quality of the decoration. If tenants do want to decorate, they should be given colour swatches to choose from and clear instructions on what can be painted and how. Continue reading
High property prices and deposits preventing people from buying a home
High property prices, affording a deposit and associated costs are the biggest barriers to buying or moving home in the UK, new research has found. Some 51% of are considering buying a home or trading-up the property ladder but, 61% can’t see that they’ll be in a position to do so in the next 12 months and 21% worry they may never afford to buy or move home. The research, commissioned by Gocompare.com Mortgages, also found that those considering buying or moving home have been thinking of doing so for an average of 3.2 years. For 22% it is high property prices in the area they want to buy that prevents them from doing so, for 18% it is getting enough money together for a deposit and for 11% it is the associated costs of buying a property and moving. Other barriers to moving home include a lack of availability of the type of property in the area they wish to live, affecting 11%, while 19% cited job or income insecurity and the ongoing costs of running a home including mortgage repayments, utility bills and council tax. The survey found that while high property prices are a key obstacle for all would be home movers, other difficulties varied considerably with age. For example, 45 to 54 year olds cite a poor credit history or credit score and job/income insecurity among their top three barriers to buying or moving home. For those in the 55 to 64 and 65 plus age brackets, the main obstacle they face is a lack of availability of the type of housing they wish to move to in the area they want to live in. ‘Affordability is a big concern for both first time buyers and those wishing to move-up the property ladder,’ said Matt Sanders, spokesman for Gocompare.com Mortgages. He pointed out that according to the Office for National Statistics house prices are continuing to increase due to rising demand and a lack of supply. Indeed, the average house price in the UK now stands at £288,000 and with house price inflation exceeding wage growth it’s even harder to save enough money for a deposit, potentially putting home ownership out of reach for many people. But he also pointed out that there has recently been a resurgence in the number of lenders offering low-deposit mortgages. Most lenders now have a mortgage product aimed at home buyers with a deposit of 10% of the purchase price of their property and, subject to stricter eligibility criteria, some lenders offer 5% deposit mortgages. ‘The obvious advantage of a low-deposit mortgage is that you’ll be able to buy a home or move sooner, but, interest rates and fees for these products tend to be higher than for mainstream mortgages. So, if you are concerned about the ongoing costs of home ownership, then it might be better off saving… Continue reading
