Still falling but for how long?

Research shows that the average two-year fixed BTL mortgage rate has fallen by 0.35% in just one year, and even though the pace of the fall has slowed in recent months – the vast majority of that decrease took place last year.

The figures also show that the market has now recovered from the significant drop in products that was seen at the start of this year, suggesting that landlords can benefit not only from low rates, but also a higher number of mortgages to choose from. The choices have also increased in the limited company sector as well.

The BTL market has seen some turbulent times, with significant tax changes, tougher affordability rules, and still more changes to come. Yet, rates have continued on a downward spiral.

New regulation brought tighter affordability rules into play, effectively reducing the amount that landlords can borrow. This had a knock-on effect on availability, and indeed the pace of rate cuts, yet it seems that the market is recovering.

Landlords taking action

One out of every three property valuations came from owner occupiers or landlords re-mortgaging in June, new research shows.

According to the latest research, growth in re-mortgage valuations is 10% above the five-year average for June.

Standard re-mortgaging accounts for 23% of market activity, while buy-to-let re-mortgaging accounts for a further 16% of loans. When combined, both types of re-mortgaging are responsible for more activity in the mortgage market than first-time buyers, buy-to-let or those who own a property and are looking to move.

As landlords’ margins are eroded and the cost of living increases for owner-occupiers, many owners are looking to re-mortgage to reduce their monthly repayments. The lower rates on offer are incentivising homeowners to refinance now, ahead of a potential base rate rise later in the year.

Rents increasing:

The number of letting agents reporting landlords increasing rents has hit a 14-month high, new figures show. According to the Association of Residential Letting Agents, the number of agents who saw landlords increase rent costs for tenants rose to 31% in June, up from 27% the previous month.

Rental properties increased marginally last month, while demand dropped very slightly which is normal for this time of year.

The report revealed that 83% of letting agents would like the Government to scrap the impending ban on letting agent fees, while 73% would also like the Government to focus on improving enforcement for rogue agents.

More than 26% want to see increased regulation for the sector, while a 62% think they should provide tax breaks for landlords. With the cost of living on the rise and inflationary pressures tightening, the last thing tenants need is for their rents to continue rising

Buy-to-let market holding steady

2016 saw the buy-to-let market surge ahead with investors seeing this as a potentially good return on their investment, after all savings returns are very poor in comparison. A recent report shows the market looks set to continue to grow although at a reduced pace. More and more landlords are converting to limited company status due to the tax changes and this seems to of had a stabilizing effect on the business in general.

Where to invest is a question always being asked, recent reports show that Manchester, Hull and the Blackpool areas are currently seeing very good growth. This is all due to reasonable house prices compared with the South of England and an increased demand for rental property.

Landlords in these areas are seeing a very healthy return on their investments compared to leaving the money in a traditional bank account. One of our regular clients commented “Demand for quality rentals is growing daily in the North and rents are increasing at a profitable rate”.