Quality rental properties in high demand

A recent survey by high street estate agents is showing an extremely high demand for good condition rental properties. One agency in the Midlands area reported a 17% increase since January of clients waiting for suitable properties to come onto the market. The demand is growing it would seem nationwide with London and the surrounding areas reporting severe shortages of suitable properties to rent.

The shortage is due to young couples being unable to raise the deposits required to buy their own homes and consequently they go for renting. Mortgage companies are doing all they can to attract the first-time buyer but the restrictions applying to applications is having a negative effect. Interest rates remain the lowest they have been for years, but this still is not helping as the deposit required is hard to accumulate.

This situation is only good news for the landlord as rents continue to increase year on year as demand for properties grow. One thing which is clear in the survey is that rental properties have to be of a good standard to demand the high rents being charged.

Buy-to-let mortgage demand is increasing rapidly

Lenders are expecting more activity in the but-to-let market in 2021 than this time last year.

A survey by the Bank of England stated 60% of lenders expected demand to grow over the coming months. All the early signs this year show they are correct as demand is up 27% on the same period last year.

It is thought that as 2021 progresses applications will slow but both lenders and borrowers alike are confident of the future.

Mortgage providers are keen to point out that there are many very good deals in the marketplace both fixed and variable rates.

Even with all the changes to buy-to-let taxation it is expected to be a strong year of growth for the buy-to-let mortgage sector. House prices in the UK continue to rise at a rapid rate thus making it exceedingly difficult for the first-time buyer to get onto the property ladder.

Proceed with caution and do get advice

Great advice from a group of accountants and brokers alike

Specialist buy-to-let brokers and accountants up and down the country are urging buy-to-let landlords to tread with caution and seek appropriate advice before jumping into incorporating their property business into a limited company.

The reduction in mortgage interest tax relief and the introduction of stamp duty are two relatively recent initiatives that have resulted in some landlords reassessing their property businesses and deciding to incorporate.

Lenders are predicting there will continue to be a growing trend towards limited company buy-to-let activity this year. But they warn this may not be the best practice for everybody.

More and more Landlords are switching

There is yet more evidence that an increasing number of buy to let investors are setting up limited companies to offset the worst impact of changes to mortgage interest tax relief.

The latest Mortgages for Business “Limited Company Buy to Let Index” reveals there was a surge in the proportion of applications for buy to let properties made by landlords using limited companies at the end of 2020.

Over the past 18 months, landlords’ behaviour has changed as the sector comes to terms with the new tax regime. The increased use of Limited Company structures includes both new purchases and transfers - that is, purchases made by landlords selling their personally owned property to their limited company.

The proportion of re-mortgage applications made via Limited Company structures also increased substantially of the last 12 months and figures show this trend is continuing into 2021. This is a sign that greater numbers of investors are choosing to transfer their properties into limited company names, effectively reducing the proportion of re-mortgaging applications made by individuals.