buy-to-let
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Latest property news
Landlords set to make £162,000 profit per property over next 25 years
Landlords in the near future will not be the dying breed some industry commentators would have agents believe, research by a leading lender has revealed. Chatham-based KentReliance says its data shows landlords in the UK will make an average net profit of £162,000 per property over the next 25 years – in today’s money – despite the government’s recent tax take. This equates to £6,500 per property per year and includes both rental income and capital gains. KentReliance says the figures prove buy-to-let investment still has long-term appeal for landlords, even though over the 25-year term they will pay £100,000 in tax. That includes £60,000 in capital gains tax, £29,000 in income tax and £10,000 of stamp duty, assuming the landlord is a lower rate tax payer. “The buy to let market is undergoing a sea change,” says John Eastgate of KentReliance’s parent company, OneSavings Bank (pictured, below). “Regulatory and taxation changes have altered the market dynamic, reducing its attractiveness to amateur landlords, and increasing the tax bills of higher-rate investors. “In spite of rising costs, there are still healthy returns to be found in property for committed investors, but the days of speculation are gone. “It is a long-term…
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Latest property news
Stamp Duty rise driving landlords to spend on upgrades not portfolio expansion, says Countrywide
Figures from agency giant reveal yet another unintended consequence of the government's desire to squeeze landlords financially.
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Latest property news
Landlords enjoyed £86,600 buy-to-let bonanza last year
Landlords who sold a buy-to-let property last year made a capital gain of £86,660 on average in the UK and had owned it for just under nine years, it has been revealed. But the capital gains made in London put these national figures to shame. Landlords selling up in London last year made a capital gain of £254,000 on average per property, says Countrywide. Its latest buy-to-let research reveals that, therefore, a landlord who invested in property within London eight years ago will have made three times more money from selling their property than those outside the capital. Eight of the top ten places where landlords have made the largest capital gains from their buy-to-let properties are in London and include Brent, Waltham Forest, theCity of Westminster, Haringey, Lambeth, Pendle, Islington, Kensington & Chelsea and Southwark Buy-to-let gains In these areas landlords who sold up last year enjoyed huge capital gains including, in Westminster and Kensington & Chelsea, gains of over half a million pounds on average. Also, in these areas of London 28% of landlords who sold up last year doubled their original investment. “Even in areas where price growth has lagged behind, most landlords have made a profit…
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Features
It’s grin up North
Buy-to-let’s a better bet in the North, says Joanne Christie and savvy agents are working hard to attract the investors.
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Latest property news
Portfolio landlords struggle to get mortgages as PRA rules kick in, research shows
Nearly three quarters of landlords with multiple properties are finding it harder to get either mortgages or remortgage existing debt as the Prudential Regulation Authority’s second wave of mortgage rules kick in, it has been revealed. Research completed on behalf of lender Foundation Home Loans among 2,000 landlords found that 70% of those with more than four properties had struggled to obtain further finance to buy more properties, while half of those with between one and three properties also faced problems. The second wave of PRA rules went live in September last year to allay fears that excessive borrowing by banks on generous terms to landlords might endanger the economy during a downturn. The larger the portfolio, the harder it has become for landlords to get the green light for more finance, largely because those with more than four properties are now effectively classed as enterprises and must submit business plans to get a home loan or remortgage an existing one. Rejected by lenders Two thirds of landlords with eleven or more properties within their portfolio now believe the range of mortgages available to them has dropped, while a quarter think they are now more likely to be rejected by…
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Latest property news
Smaller landlords are disappearing – is this what the Government wanted all along?
Growth in the buy-to-let sector this year has dropped dramatically as more amateur, smaller portfolio landlords have stopped buying properties or decided to leave the market, a report has claimed. The Kent Reliance annual Buy To Let Britain survey, published in association with Legal & General, quizzed 865 landlords and shows that the recent mix of tax reform and tighter regulation has reduced growth in the number of privately rented houses to 2.2% this year, down from just over 8% in 2014. These recent reductions in tax allowances and extra Stamp Duty, coupled with a second round of stricter buy-to-let lending rules introduced by the Prudential Regulation Authority (PRA) this year, means the market now favours larger portfolio and institutional investors, the report claims. Limited companies And the landlords who have stuck with buy-to-let are now increasingly turning to limited company status to reduce their tax costs. Kent Reliance says 70% of all buy-to-let loans are now from companies rather than individuals. This, Kent Reliance Chief Executive Andy Golding (pictured, left) says, is having the effect many warned it would – to push up rents as tenant demand outstrips supply in some areas of the UK, in particular the East…
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Latest property news
Buy-to-let damaged by govt’s tax and mortgage changes, says leading lender
The Prudential Regulation Authority’s changes last year to the UK’s lending rules for the buy-to-let sector have led to reduced activity in the market, leading lender Paragon has reported in its full-year accounts. Following a review of the buy-to-let market in 2015/2016, the PRA this year raised the standards it expects underwriters to apply to landlords taking out mortgages. This includes greater scrutiny of a landlord’s overall business financials, in particular for portfolio landlords with four or more properties. Paragon also says the additional Stamp Duty that is now paid by landlords buying properties, and the reduction is tax perks for the sector, also contributed to a bad year. Stamp Duty These factors, the lender says, helped drive modest profits within its business over the past year, up from £143.2 to £144.8 million – a rise of just 1.1%. Paragon appears to suggest that the additional red tape has increased its costs, because its buy-to-lending increased by 20% to £1.39 billion last year. And depsite the “disruption” to the market in recent months, the lender says overall demand in Britain’s private rented sector is expected to continue for the “foreseeable future”. “Against this backdrop the Group’s performance has been strong,…
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Guest Blogs
Plugging the landlord gap
PRS schemes could plug the gap left by landlords, says SDL’s Director of Private Rental Sector, Paul Staley, as buy-to-let loses its shine.
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Latest property news
Cash splurge surge? Landlords buying without a mortgage spend £21 billion
The government’s energetic attempts to subdue the buy-to-let market have failed, according to the latest rental market index from Countrywide. It reveals that a record number of landlords are re-mortgaging their existing properties to buy new ones for cash. The company says 65% of buy-to-let sales over the past 12 months were cash purchases, totalling £21billion, which is £200 million more than last year and a third higher than in 2007 when Countrywide began tracking the market. Northern and Scottish landlords are the most likely to buy with cash. Nearly 80% of buy-to-let property purchases in the North East are for cash, followed by Scotland at 71%, although in London landlords are much more reliant on debt to buy their next rental property – only 42% of purchases there are cash deals. “Landlords have increased their housing wealth considerably over the last 10 years,” says Johnny Morris, Head of Research at Countrywide (pictured, below). “This means cash purchases are steadily becoming a bigger part of the market.” It’s a developing trend, the Countrywide research shows. Ten years ago mortgaged-backed purchases were twice that of cash sales, but now the tables have been turned. Over the past 12 months buy-to-let purchases…
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Features
What’s behind the government’s attack on buy-to-let?
Does the Government really hate buy-to-let landlords? Andrea Kirkby investigates the changing focus on housing tenure.
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