TRACKING THE TRENDS FOR BUY-TO-LET
Last month I looked at how the value attached to the advice process should never be underestimated. This was alongside the importance of intermediaries getting to grips with the varying challenges facing landlords and the potential raft of buy-to-let solutions on offer.
A strong component within this is maintaining a wider knowledge base and keeping track of trends along the way. Of course, this isn’t always easy, and it remains the responsibility of landlord clients to undertake their own research and due diligence before entering into any purchase or remortgage.
However, good advice and adding value – even if it’s simply pointing them in the direction of relevant articles, news stories or reports in the trade press – can often be the difference between a one-off customer and a long-term client.
So, for this month’s piece I’m compiling a brief round-up of the many research papers, data and other random statistics which have emerged from the buy-to-let sector over the past few weeks.
Hopefully some of which will be useful for building up your knowledge bank and also worth passing onto relevant existing, or potential new, landlord clients.
The proportion of homes let by accidental landlords has fallen according to the Hamptons International Monthly Lettings Index.
The number of homes let by accidental landlords fell to 7.1% in 2019 which was said to be the lowest level in five years. Every region recorded a fall in the proportion of homes being let by accidental landlords, with London seeing the biggest drop despite being the ‘accidental landlord capital’ of the country. Meanwhile Scotland (-0.4%) and Wales (-0.3%) saw the smallest changes.
Newly released data from secured property lender, Fitzrovia Finance, showed that 54% of buy-to-let landlords have been affected by recent tougher tax treatments and tighter bank lending criteria, with many selling and reducing their property holdings.
One in five of those interviewed had reduced the number of buy-to-let properties in their portfolios, and 15% said they had been deterred from buying more properties. Of those interviewed that have sold buy-to-let properties over the past two years, the average cash released from the sale was £129,746.
Despite house price growth cooling in some areas – due in no small part to Brexit-related conditions – research from property management platform Howsy has found that there are still pockets of the UK which are enjoying notable price growth.
North Devon leads the way having reported 15% growth year-on-year, followed by Merthyr Tydfil and Blaenau Gwent in Wales, both at 13%, along with Caerphilly, up 11%.
Camden was said to be the best bet in London with house prices up 10% in the last year, with West Devon, Forest Heath, Rochdale and Monmouthshire all up 9%, and Trafford seeing annual growth of 8%.
On the buy-to-let front the best yields were recorded in Glasgow with a return of 7.5%. Scotland also accounted for the next best three in Midlothian (6.8%), East Ayrshire (6.8%) and West Dunbartonshire (6.7%).
Burnley and Belfast stood at 6.5%, while Inverclyde (6.4%), Falkirk (6.3%), the Western Isles (6.2%) and Clackmannanshire (6.1%) completed the top 10.
According to property portal Zoopla, the lettings market in East Hampshire is also said to be experiencing a significant spike in activity. East Hampshire was reported to have seen the highest percentage increase (46%) in lettings instructions of all UK markets over the last 12 months.
This meets the uptake in demand with 73% more enquiries from tenants to agents in this part of the country over the same period.
The RICS Residential Market Survey has found that the number of home listings has fallen, with Brexit suggested to be putting people off selling.
The new instructions net balance fell to -37% in September, the weakest reading since June 2016. As such average stock levels on estate agents’ books remained near record lows.
In the lettings market, demand from prospective tenants has risen for an eighth month in a row. However, landlord instructions continued to drop with demand still outstripping supply. On a more positive note, rent expectations for the coming three months remained positive with a net balance of 24%.
Property maintenance tops the list of issues that keep landlords awake at night, according to a specialist report from The Mortgage Lender. The report, entitled ‘Buy to Let: The Landlord Experience’, found that three in 10 landlords listed property maintenance as their main concern.
Tenant behaviour, care of the property and finding tenants also made the top 10 worries of property owners. One in four landlords said they were not experiencing any issues, whilst one in 50 were concerned about enhanced underwriting for portfolio landlords.
This raft of data helps to demonstrate the wealth of considerations that landlords and intermediaries need to take into account.
What we must also remember is the underlying fact that the UK housing and rental markets remain, by and large, stable, resilient and robust, even in the wake of one of the most turbulent economic and political times in recent memory. A fact which should enable all those in the BTL chain.
Ying Tan - 30.11.2019 | Posted in