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After a long period of tenants calling the shots in London, landlords have started to regain the upper hand, says property consultants Cluttons.

The property experts have seen rental stock decrease as ‘reluctant landlords’ return to the sales market – more people are able to sell their home and do not have to resort to renting out their property while they wait. This means landlords can come back to the fore.

The high levels of stock available until recently meant that city tenants were able to dictate rental periods and negotiate down the landlord’s asking rent. However, as more rental properties come off the market, the amount of choice has now diminished, meaning landlords are becoming far more confident to demand that bit extra rent. They are not pricing themselves out the market, but they now have some leeway in how much they can ask for.

Lynn Hilton, partner for residential lettings at Cluttons says: “There is currently something of a stand-off between tenants and landlords, as both groups now believe they have the upper hand in the market. Tenants still think they can dictate terms and keep landlords waiting until they make a decision, but the oversupply seen earlier this year has now passed. Speculative offers are still being made but landlords are now frequently refusing to negotiate terms, meaning many tenants are missing opportunities.

“There are also signs that the employment market is starting to have a renewed impact on stock levels, with an increase in work-related relocations adding to demand for rental properties in some central London locations.”

If you are looking to get into property investment, or think it's time to get hold of a new buy to let mortgage, knowing that you can get that but more rental yield is crucial. The more you can save, or overpay on your loan, the better chance you have of surviving the downturn.

SOURCE: Cluttons, 11/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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New changes to the welfare system may mean that landlords who rely on their tenant's benefit might find themselves short changed at the end of the month.

The Government is proposing cutting housing benefits by £15 – not a lot on the face of it, but landlords whose tenants are on benefits will struggle even more to pay their own mortgage. This also just adds to the pain that landlords face of trying to extract their rent from tenants – the Local Housing Allowance was introduced last year for new tenancies whereby instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to tenants who are expected to pass on the rent money to their landlord.

In practice, many tenants choose not to do so and this is causing major problems, according to the National Landlords Association. In the most serious cases, the NLA says some landlords are facing repossession because rent money which they rely on for mortgage payments does not arrive.

Richard Price, NLA director of operations says: "Landlords up and down the country need to join forces and demonstrate to Government just how much this new system is not working. If something isn't done then landlords who currently operate in this market will be leaving in their droves and it will be the most vulnerable tenants who will be left out in the cold."

The best way to be sure that you can pay your buy-to-let mortgage is to have a good relationship with your tenant – keep regular conversation going with them, and be aware if they are having trouble covering their debts. Ignorance will only lead to financial pains on their part and on yours.

SOURCE: NLA, 07/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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Some parts of the UK are still really struggling through the housing downturn, but that's not the case in Scotland – it seems as though it has become the place to cash in on buy-to-let profits.

One Scottish property expert has found that buyers and search agents acting on their behalf are experiencing a shortage of property in the marketplace – as a result, there will be more people looking to rent in Scotland as they are unable to secure their own property.

Saints Property says hopeful buyers include expats wishing to return to Scotland, buyers looking for second homes, development projects and professionals requiring a family home in Edinburgh – the property expert says it has a list of ready-to-purchase cash buyers with a total spending power of £12m for properties in Edinburgh alone, and £87m in rural areas.

Matthew Sinclair, director of Saints Property says: “Currently demand outstrips open market supply, making it harder for buyers to find the property they want. This is for a number of reasons – sellers are holding back for more favourable conditions before marketing their property, properties are being marketed at prices not reflective of the current market conditions, the effect of the home report, plus buyers are not aware of ‘off-market’ opportunities.”

This sort of news is always good for buy-to-let investors. If people are scrambling for homes then they will have to rent. So if you have a rental property, it's you they will go to until they can buy, even in the short term.

During this downturn, buy-to-let investors have to do all that they can to make sure that their property is not empty. That means reading the market, having the right advice and having the right finance on your rental home. Talk to a buy-to-let professional to make sure that you are in the right position to cash in while demand outstrips supply, in whatever part of the UK you live in.

SOURCE: Saint Property, 01/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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A buy-to-let time bomb could be on its way as the gap between supply and demand for buy-to-let mortgages increases.

Moneysupermarket.com has found that its enquiries for buy-to-let mortgages has increased by nearly 50% since August 2008, whilst available products have diminished by over 70% over the same period.

Furthermore, it has found that buy-to-let mortgage rates have not fallen by as much as mainstream mortgage rates -since August last year the average rate for mainstream mortgages has reduced by 1.95%, whilst buy-to-let rates have only fallen by 1.13%.

Hannah-Mercedes Skenfield, mortgage channel manager at moneysupermarket.com says: “New and existing buy-to-let landlords face a difficult task in finding a suitable mortgage. Our figures show nearly 10% of those looking for a mortgage are looking for a buy-to-let mortgage, but the number of products has fallen by over two-thirds compared to this time last year.

"With significantly less products left on the market and high interest rates attached to those available we could potentially have a ticking buy-to-let time bomb on our hands – the need for rental housing is increasing, but there may not be enough landlords available to cater for this demand."

The website says that if you are lucky enough to meet the tighter eligibility criteria and have found a suitable buy-to-let mortgage product, you must watch out for the fees levied on arranging the deal, as these can be extortionate.

But as more people look to rent instead of buying, the demand for buy-to-let housing is likely to increase, so there is still hope for those borrowers who are looking to get into buy-to-let investment. They key to avoiding buy-to-let mortgage problems is to seek out professional advice. There are less products on the market, and they can be costly, but a buy-to-let mortgage expert can find you the best, affordable deal that is out there.

SOURCE: Moneysupermarket.com, 02/09/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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The trend for reluctant landlords appears to be coming to an end as letting agents report a drop in rental properties coming onto the market because they cannot be sold.

The reluctant landlord has been a key symptom of the housing crisis in the UK – people desperate to sell their property having to turn to the rental market to pay their mortgages. Over the last year it has become a growing phenomenon, and something that was eating into the rental profits of the buy to let landlord proper.

But research from the Association of Residential Letting Agents shows that 80% of its members' offices have seen property being rented out rather than sold. This figure has dropped from a high of 95% of offices in November 2008 when consumer confidence and house prices dipped.

Ian Potter, Operations Manager of ARLA, said: "Many sellers were left with little option other than to rent their properties out earlier in the year but this trend seems to be slowly diminishing. There are, however, still a huge number of these reluctant landlords in the market who need to understand the obligations of a landlord to their tenants and the need importance of choosing a regulated and qualified letting agent."

The rental market is still under pressure, but this is good news for anyone who has begun to see his or her buy to let profits suffer from increased competition. As house prices stay firm into the Autumn, landlords can be more confident that their market will begin to normalise.

SOURCE: ARLA, 31/08/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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Buy-to-let mortgage fraud seems to have reared its ugly head in the last few weeks as several buy-to-let lenders admit they have been the victims of massive scams.

Chelsea building society admitted it has provisioned £41m against probable buy-to-let mortgage fraud – it found, after going through its mortgage book, that many mortgage cases had been fraudulently applied for and many property prices had been fraudulently inflated. Bradford & Bingley also admitted it had provisioned a whopping £270.8m against probable buy-to-let fraud.

And experts think this is just the tip if the iceberg. They think that because of negligence on the part of mortgage lenders, along with a large increase in cowboy solicitors, surveyors and advisers, we are going to see billions of pounds provisioned against buy-to-let mortgage fraud.

Simon Bevan, head of the fraud services team at BDO Stoy Hayward, says: “From a fraud point of view we are a long way from bottom. It is extremely likely that the total fraud figures will treble during the course of the recession."

So how can you make sure that you are well clear of any dodgy practices? The best place to start is to make sure that your buy-to-let mortgage adviser is on the level. Ask to see proof of their authenticity – official authorisation, past client testimony – anything that can prove that they have done all they can to distance themselves from the cowboys that plagued the buy-to-let market for so long.


SOURCE: Chelsea, B&B, BDO Stoy Hayward, 21/08/09

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If you want to be a successful landlord – and have the security and safety that all good landlords strive for – you need to realise that being a landlord is much more than just buying a rental property.

For example, landlords have to make sure they carry out electrical and gas surveys and a regular programme of testing on their properties. This can be time-consuming and costly, but without it a landlord's insurance will almost certainly be void.

Ad there is a good reason – Landlord Property Services says there are thousands of injuries each year because of faulty electrical wiring alone. And with houses full of laptops, stereos, TVs and games consoles it makes sense for landlords to check that electrics are safe and fit for purpose.

If a landlord fails to carry out a regular programme of testing and inspection, he or she may be deemed to have not taken reasonable steps to ensure the safety of their tenants. This could leave them liable to fines, imprisonment and invalidation of their property insurance.

Kevin Firth, director of LPS says: “It is up to landlords to ensure that their properties conform to the highest standards. An electrical survey, for example, will reveal if electrical circuits are overloaded, identify any defective DIY work and carry out tests on the wiring. It will also advise on any work that needs to be done."

If you are unsure whether your landlord insurance is valid, up to date or fit for purpose, then talk to your mortgage adviser. They probably found you a decent buy-to-let mortgage, so let them make sure you have decent buy-to-let insurance. Being covered is essential, and putting in the leg work to make sure your cover works is equally as important – if you want to be a successful landlord, don't cut corners.

SOURCE: LPS, 25/08/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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Landlords are still going to have an important part to play in the UK over the coming months and years as experts predict massive demand for homes.

Recent statistics from the Government revealed that housing completions rose to 39,320 in the last three months – the highest level since the first three months of 2008 and above the average quarterly completions rate of 37,300. But this still isn't enough – the Royal Institute of Chartered Surveyors says this still suggests an annualised rate of completions of only 160,000 – not enough to cater to demand.

Brigid O'Leary, senior economist for RICS says: "Completions may fall back again in coming months, reflecting the recent low levels of housing starts. This is well below the 240,000 annual increase in the housing stock that experts estimates is required to keep pace with demand over the next two decades."

Also, the Government revealed that there has been a huge increase in the number of Registered Social Landlords, rising by 34% between the end of March and the end of July 2009, taking them to the highest level since 1997.

O'Leary adds: "That suggests that the increased funding for social landlords, provided by the Government, is indeed having a significant impact on building activity."

So there is a lot of opportunity for landlords, both public and private. But only with the right property and the right finance can a landlord take advantage of what's out there. Talk to a professional buy-to-let mortgage adviser about what you need to do in 2009 to take advantage of the housing and mortgage drought. There are millions of Brits who need rental properties, so don't delay – make best of the situation while you can.

SOURCE: DCLG, RICS, 21/08/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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The proportion of borrowers opting for fixed rate mortgages via intermediaries are at record levels, proving that landlords are looking to cash in on cheap rates before they disappear.

A Paragon Mortgages' survey of mortgage intermediaries who specialise in buy-to-let found that canny borrowers are deciding to go for two-year fixed rate mortgages – they want to cash in now, but understand that the market might be a very different place in two years.

The panel survey of mortgage intermediaries found that 70% of cases submitted by mortgage brokers in the three months to the end of June were for fixed rate deals. This is the highest level since the lender's survey was launched in 1996 and up from 55% in the first quarter of the year and 41% in the final quarter of 2008.

Of the fixed rate mortgages, two-year terms remained the most popular with four out of 10 borrowers opting for this period, followed by a third choosing three-year fixes and a quarter opting for five-year deals.

Conversely, the proportion of base rate tracker mortgages being introduced has fallen over the period – security and safety is key for property investors right now and evading trackers might be an example of that.

John Heron, managing director of Paragon Mortgages says: "With borrowers unsure about the next move for interest rates, they appear to have been opting for the security of fixed rate deals. It is likely that the next move for base rates will be upwards, but it is unclear when that will be."

SOURCE: Paragon, 11/08/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog

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The buy-to-let market showed the first signs of stabilising in the last three months as arrears improved significantly, according to UK mortgage lenders.

Latest figures from the Council of Mortgage Lenders fund that there were 21,600 new buy-to-let loans advanced in the second quarter, a relatively modest 4% decline from 22,400 in the preceding three months. But buy-to-let arrears showed considerable improvement in all measures.

The CML found that there were 29,400 mortgages in arrears of three months or more – 2.49% of all buy-to-let mortgages – down 17% from 35,600 in the first three months of 2009. And the number of mortgages in arrears of more than 1.5% arrears fell 20% from 28,800 at the end of April to 22,900.

Rob Thomas, senior policy adviser for the CML says: "So long as properties have paying tenants, landlords now have much greater ability to service mortgage payments and we expect arrears to continue to fall as landlords are helped by lower interest rates. But healthy rental demand is contingent on a number of factors, including tenants' continued employment."

Keshav Thukaram, managing director of Smartlandlord.co.uk, says these hopeful buy-to-let arrears figures show that the market has bottomed out and is starting to recover – albeit slowly.

And the National Landlords Association says: "This reflects how much landlords are benefiting from lower interest rates. This can only be good news for tenants – however, for buy-to-let landlords the worst may not be behind them. Rent arrears, owing to job losses and financial difficulties, remains a serious concern for many and this is set to continue."

SOURCE: CML, NLA, Smartlandlord, 14/08/09

To keep up with the latest News and comment on the UK buy to let market visit the Buy to Let Mortgage Blog