Buy-to-Let

Buy-to-Let

Making Buy-To-Let Work For You

The various components of financial planning in the modern British climate is akin to being up the creek without the veritable paddle. After all, we are in the eye of the storm. Brexit is making a shambles of everything, devaluing the British name, but, more importantly, the British pound. This means that younger Britons are scrambling for any slice of the financial pie, purely so they can have a small dose of security. Naturally, the idea of buy-to-let comes with its fair share of positives. Buying a property that you let to tenants can, on the surface of it, be a very simple way to earn money. But with this in mind, is being a landlord in the current climate a worthy investment, or is it a waste?

Buying A Property

It’s important to purchase a property that will let well. It’s so easy for us to focus on the current climate, but we’ve got to think about the property increasing in capital value over the years. There are different aspects that need addressing, most importantly, the area. Choose the wrong area, and it will drain your finances. This is why a local letting agent is invaluable. They can provide you with authentic knowledge in terms of the returns you want. Supply and demand can be a damp squib in certain areas. It’s far better for you to purchase a property in your local area, rather than getting somewhere hundreds of miles away. When problems arise, and you aren’t able to deal with it up close and personal, this becomes a financial and emotional drain.

Is Cash Flow An Issue Now?

Of all the available capital allowances services out there, we can be confident in the fact that there are ways to cover our bills. But we’ve got to ensure that the idea of cash flow is about preventing, rather than curing, an issue. You need to decide if you have enough cash flow to cover the necessary outgoings for the property. You may have to use savings or borrow money, and if these are feasible, you’ll have to sell the property. You need to decide if you have the necessary means to generate enough income to cover the costs. So many landlords make the mistake of purchasing a property that’s just out of reach financially, thinking that it will provide more than its fair share of returns in the long run. You have to find the property that you can afford at the outset, but covers enough of the outgoings as well as giving you that opportunity to put some money aside. And always remember, there are many maintenance issues that come with buy-to-let.

The Rules And Regulations

Being a landlord a few decades ago seemed like easy money. After all, there were a lot fewer regulations in place so landlords could do whatever they wanted. And while landlords originally passed on the fees of tenant referencing and inventories to the people renting the property, from the 1st of June, it’s down to the landlord. Currently, this is only in England, as Scotland banned letting fees a long time ago and Wales are looking to implement a similar bill. What does this mean for you as a landlord? The more hoops to jump through, the more it comes out of your pocket. It’s not just about the financial implications, if you don’t follow the rules to the letter, you could get fined, but it’s also possible that you would face a conviction. Working with the right letting agency that is either a member of the Association of Residential Letting Agents (ARLA), the National Approved Letting Scheme (NALS), or the Royal Institution of Chartered Surveyors (RICS) means that you stand a better chance of working with an agency that is hot on the Code of Practice.

The Personal Strain

Even if you go into a buy-to-let scheme prepared in a legal sense, there are numerous emotional investments you have to be aware of. You may very well feel that renting a property out to tenants is an easy way to get some extra money, but with this comes a lot of additional hassle. One of the main ones is if you rent it out to bad tenants. Bad tenants can cost you additional money, either through damage to the property, not paying their rent, or even causing issues with the neighbourhood, prompting the local council to jump in. It’s important to work with the letting agent in this respect, but you can also keep on top of this if you are planning on self-managing. You can undertake regular checks, ensure that you reference the tenants properly, but also be ready to pounce if there is a potential issue with a tenant. As it’s likely that you’ll find yourself lumbered with a bad tenant from time to time, it’s important before you jump into this that you are aware of the personal strain. Many landlords find it’s not worth the hassle for minimal profit, and as such, they give up after a few years. This isn’t indicative of the entire practice of being a landlord, but it can certainly take the shine off.

How Can All Of This Be Offset?

One of the best options is a landlord business plan. This way, you are able to plan ahead for any discrepancies, but it also makes the entire process more clear cut. It gives you the opportunity to see your capital in clearly defined columns, giving you a true picture of what you need, but also how you project your costs over the next few years. It gives you the opportunity to plan for intermittent works, like a new kitchen. It also gives you the opportunity to prepare should there be rises in interest rates.

It’s not an easy thing to get your head around. But buy-to-let isn’t a waste. It certainly seems that it’s not as popular as it was, but this may very well be to do with the red tape rather than anything else. Being a landlord isn’t easy money, but in this modern climate, where people are clutching at straws, they’ve got to be aware of what they’re getting themselves into. Financially speaking, it can yield you a profit and be a lifelong investment, but it comes with a few clauses.





Mortgages & Insurers Solutions Wins Buy to Let Mortgage Broker of The Year Award

London based mortgage advisers, Mortgages and Insurers Solutions have been chosen as winners of the Buy to Let Mortgage Broker of the Year at the Business Moneyfacts Awards 2019.

The Business Moneyfacts Awards is the largest and most prestigious industry awards in the UK. The award, presented by comedian Russell Kane, acknowledges the expertise and superb customer service delivered by the Mortgages and Insurers Solutions team.

Mark Edwards founder and Managing Director of Mortgages and Insurers Solutions said: “We are absolutely delighted and honoured to have been recognised with such a prestigious award. We pride ourselves on providing excellent services to our clients and we are proud to be acknowledged as the UK’s best buy to let mortgage broker. On behalf of the team here at Mortgages and Insurers Solutions, we would like to thank our loyal customers and in particular, those who took the time to provide us with so many amazing testimonials which no doubt helped us win the award.”

Mortgages and Insurers Solutions are expert buy to let mortgage brokers and are able to advise on all types of mortgages and protection. They have a walk in office in Grange Park and can support you with mortgage arrangements, life insurance, critical illness cover, home insurance and much more.

They can be contacted via telephone on 0208 364 3444, online at mortgagesandinsurers.co.uk or at their offices, 18 The Grangeway, Grange Park, Winchmore Hill, N21 2HG and 13th Floor, Heron Tower, 110 Bishopsgate, London, EC2N 4AD

UK Mortgage Market Reports

IRN Research have published three reports on the UK mortgage market. These reports show that in 2017, existing home owners increased their gross new borrowing by almost 11%, mainly reflecting a sharp rise in remortgaging and lifetime mortgage activity, with the number of mortgages taken out growing by almost 9%. First-time buyer activity expanded at a slower rate in 2017 (but had grown much fast in 2016), with the number of First Time Buyer (FTB) mortgages taken out increasing by almost 6% and the amount borrowed riding by around 7%. The real laggards of the market were buy-to-let (BTL) mortgages. In 2017, the value of new BTL advances fell by around 12% and the market is expected to stagnate with little real growth in 2018. Also, in 2017, the number of BTL mortgages taken out fell by over 10%.

The three mortgage reports – First-Time Buyer Mortgages (37pp), Buy-to-Let Mortgages (44pp) and Existing Home Owner Mortgages (40pp) – all consider the market size and trends of their respective markets and provide forecasts up until 2022. In addition, each report looks at the structure of the market, discusses the drivers of demand, the factors changing how the market operates and key developments with the market. They also look at the main mortgage providers. The reports together provide a comprehensive overview of the UK residential mortgage sector.

The three reports (PDF) are available directly from IRN Research, priced at £250 each. UK sterling price is plus VAT so total price is £300. If two reports can be purchased for £450 (£540 inc VAT) and all three for £600 (£720).

See below for the Table of Contents for each report

IRN Research

Established in 1991, IRN Research is a market research consultancy with a particular focus on the financial services market. We offer a range of bespoke research services, on an ad-hoc and continuous basis, to finance firms and suppliers to the sector. These services include client satisfaction surveys, market studies and competitor intelligence, client industry reports, and strategic studies.

For further information on the report or our research services contact Gary Giddings on +44(0)7970829751 or ggiddings@irn-research.com. URL: www.irn-research.com

EXISTING HOME OWNERS TABLE OF CONTENTS

5 INTRODUCTION
5 Abbreviations

7 EXECUTIVE SUMMARY
7 Industry Structure and the Main Market Participants
7 Market Developments and Drivers
8 Market Size and Trends
9 The Future

10 MARKET STRUCTURE
10 Five key players
10 The Customer Journey
11 Mortgage Lenders
11 Mortgage Brokers

13 MARKET DEVELOPMENTS AND DRIVERS
13 Your target market consists mainly of affluent, mature, white couples
14 And it is getting older
15 Housing wealth is being increasingly concentrated into the hands of older consumers
15 Who can increasingly downsize without a mortgage…
15 But who also seem reluctant to release their equity
16 Possibly because it is financially comfortable to stay where you are
16 The target market is also shrinking
18 Most home owners would probably like to move…
19 Even so, it may be better to stick rather than to twist…
20 Therefore, many home owners invest to get their ideal home
21 Rising interest rates on the horizon
22 Mortgage Market Review tightens lending criteria
22 FCA calls for better access to information

24 THE KEY PLAYERS
24 Lloyds the largest mortgage provider
24 Lloyds Banking Group
25 Santander
25 Barclays Group
26 RBS Group
26 HSBC Group
26 Nationwide

27 MARKET SIZE AND TRENDS
27 Introduction
27 Almost £180 billion lent in 2017 for all purposes
28 With traditional mortgage activity dominating the market
30 With the market shifting strongly towards remortgaging activity 30 recently
32 Over £800 billion owed

35 THE FUTURE
35 An uncertain future
35Forecast assumptions
35 The Forecast
38 It will become easier to arrange a mortgage

39 ASSOCIATIONS

FIRST TIME BUYERS CONTENTS

BUY TO LET CONTENTS

INTRODUCTION
Abbreviations

6 EXECUTIVE SUMMARY
6 Industry Structure and the Main Market Participants
6 Market Developments and Drivers
6 Key Players
Market Size and Trends
7 The Future

MARKET STRUCTURE
8 Five key players
8 Not all BTL landlords are alike
9 Mortgage Lenders
10 Mortgage Brokers

11 MARKET DEVELOPMENTS AND DRIVERS
11 BTL landlords fill a gap left by the lack of housing supply
12 But are landlords pricing themselves out of the market?
13 The shine has come off the market as the Government and regulators put the boot in
16 Are BTL Landlords re-evaluating their investments?
19 With the returns on Vanilla BTL falling
23 Rising interest rates will reduce returns further
24 Most BTL landlords are not full-time professional landlords
24 Childless couples the prime target for BTL landlords

25 THE KEY PLAYERS
25 Lloyds Banking Group – the largest BTL lender
25 Lloyds Banking Group/Birmingham Midshires
26 Nationwide Building Society/The Mortgage Works
27 Royal Bank of Scotland/NatWest
28 Barclays Group
29 Coventry Building Society
29 Paragon Banking Group
29 Santander

31 MARKET SIZE AND TRENDS
31 Introduction
31 Over 2 million BLT investors
31 But a market which is now showing signs of stress
33 A market shifting towards remortgaging
34 Limited companies take around 10% of the market and it’s growing
35 FTBs now owe over £200 billion

THE FUTURE
36 An uncertain future
36 Forecast assumptions
37 The Forecast
30 Tenancies likely to grow in length
39 Technology to play a growing role in the market

42 ASSOCIATIONS

ggiddings@irn-research.com