Buy To Let Lenders Crack Down On Landlords Once Again

Landlords could soon face an administrative nightmare to get a buy-to-let mortgage as new regulations are set to come into force.

The new buy-to-let rules from the Bank of England will apply from October 1 and will demand a tougher stance from lenders assessing landlords who own four or more buy-to-lets.

From this date, landlords applying for a buy-to-let mortgage will have to provide information to the lender on every single property in their portfolio – even if the mortgage application is for just one of them.

Over the past few weeks, lenders have started to confirm how they intend to cope with these ‘portfolio landlords’ – with most requiring borrowers to provide detailed information on every mortgaged property they own.

To help you prepare, we’ve rounded up the changes and explain what you need to know to navigate the maze.

What are the new rules?

The rules apply to ‘portfolio landlords’ which the Bank of England defines as buy-to-let landlords who own four or more properties with a buy-to-let mortgage on them.

The rules apply both to landlords who own properties in their own names, and to landlords whose portfolios are held in a limited company structure.

From 1 October 2017, when you apply for a mortgage on any one of your buy-to-lets, if you are a portfolio landlord you’ll need to provide financial information on every property in your portfolio to the lender.

They will then assess whether you are a good prospect for a loan based on how much equity you have in all your properties, all your rental income and the concentration of properties you might have in one location among various other factors.

It is likely to cause a huge amount of admin for landlords when they first refinance or purchase a new buy-to-let after this date.

Lenders are also likely to take longer to process buy-to-let applications until they get used to the new rules and systems.

It may also mean that some landlords are turned down for new finance because they don’t have enough equity in their whole portfolio.

Why do we need them?

The Bank of England and government have been worried about the buy-to-let sector getting out of hand for several years now.

While the previous government brought in various tax changes to make buy-to-let less attractive for landlords, the Bank of England has introduced tougher capital rules on the banks that lend buy-to-let mortgages.

Their motivations are different: the government play is designed to help free up homes for first-time buyers; the Bank of England is concerned about the systemic risk that a large buy-to-let sector poses to the wider economy.

Landlords believe that together, these changes have put enormous financial pressure on the buy-to-let sector, with some forced to sell some of their properties and raise rents to maintain profits.

What do I need to do if I am a portfolio landlord?

Nothing until you need a new buy-to-let mortgage or you want to remortgage one of your existing properties.

Every lender has decided to deal with the new rules slightly differently, meaning if you remortgage one property with TMW you’ll need one set of information and if you remortgage another two weeks later with BM Solutions, you’ll need a different set of information.

In general, you should have the following information handy in any case:

1. Lenders will value every property in the portfolio, so you’ll need to submit all of their addresses and provide proof of ownership.

2. They will want to know the value of all your outstanding mortgages, so account details for all of these as well as the lender that holds them will be needed.

3. Bank statements will be needed showing rental payments from every property, to cross check the rental income ratio and your mortgage payments.

4. Tenancy contracts provide further evidence of rental income.

5. Tax returns that provide evidence of any other income sources and / or company accounts.

6. Business plans and cash flow forecasts are also required.

Some lenders will need more than this, others less. Most buy-to-let mortgages are arranged through mortgage brokers, meaning they are likely to deal with a lot of the hassle of keying this information into lenders’ systems for you.

That said, brokers aren’t geared up to submit information on 60 properties for one application – so there is going to be a delay.

Chris Longhurst, of mortgage broker Mortgages for Business, said: ‘If there is one message to offer at this stage it is that every application form will need to be both accurate and fully completed. Early indications are that the information provided will be thoroughly analysed.’

He added: ‘The more accurate we can make the initial approach to the lender the better the likely outcome but do be prepared for delays whilst all this additional information is being processed.

‘I suspect the services of a knowledgeable broker will never be more welcome.’

Read more: http://www.dailymail.co.uk/money/buytolet/article-4833014/Buy-let-lenders-crack-landlords-AGAIN.html?utm_content=buffer0f7aa&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

NI house sales survey suggest ‘mixed picture’ in market

House sales in Northern Ireland during the three-month period from April to June were at the highest level recorded since the 2007 property crash.

However, the average price is slightly down, falling by 1.1% over the quarter.

The figures were published in the Ulster University’s latest Quarterly House Price Index report.
It suggests the “mixed picture” could be influenced by a range of factors, including political uncertainty over Brexit and the stalemate at Stormont.

‘Subdued prices’

The report was compiled by Ulster University, in partnership with the Northern Ireland Housing Executive and the Progressive Building Society.

It found that the average house price now stands at £148,500. The figure has fallen by 3.7% over the year.
But the 2,372 house sales recorded between April and June meant the quarter saw the highest rate of property transactions in a decade.

“This latest survey has mixed messages regarding the health of the Northern Ireland housing market,” said the report’s lead researcher, Professor Stanley McGreal.

“Transaction levels are high suggesting a strong market in the second quarter of 2017, however, this optimism is not reflected in average prices which are generally more subdued,” the Ulster University academic added.
Progressive’s deputy chief executive, Michael Boyd, said: “There is no doubt that wider economic and political factors are having an impact including uncertainty following the triggering of Article 50, wage growth lagging behind inflation and the potential for the rise in interest rates.”

But he added that there was still “confidence” in the housing market, as Northern Ireland remained “one of the most affordable regions of the UK”.

Via: http://www.bbc.co.uk/news/uk-northern-ireland-40870437

Northern Ireland mortgage sales plummet by almost 20 per cent in July

MORTGAGE sales in the north fell by almost 20 per cent in July on the previous according to new market figures.

Data from analytics firm Equifax Touchstone shows a 18.5 per cent in mortgage sales last month in comparison to the June figure. In the UK-wide figures the north ranks behind only Scotland, which suffered the biggest monthly slump (19.8 per cent) out of all regions.

Overall mortgage sales in the UK decreased by £1.8 billion in July, a 10.8 per cent fall on the previous month.

Buy-to-let figures were resistant to the general decline, down by just 0.2 per cent (£3.9 million) to £2.6 billion, while residential sales dropped by 12.8 per cent (£1.8 billion) to £12.2 billion. Overall, mortgage sales for the month totalled £14.8 billion, up 10.8 per cent year-on-year.

The average value of a residential mortgage in July was £199,286, up six per cent on the previous year (£188,115) and £159,721 for buy-to-let (2016: £158,415).

All regions across the UK suffered a significant fall in mortgage sales the north west of England performing best with a monthly decline of 5.7 per cent recorded. London sales fell by 8.4 per cent from June to July.

Director of Equifax Touchstone, John Driscoll said the figures showed how volatile the mortgage market can be.

“Sales have tumbled in July, with every region suffering substantial declines as buyers are put off by continuing political and economic uncertainty, coupled with the worrying gap between inflation and wage growth. These circumstances may be further compounded by the potential for an interest rate hike as early as September, driven by continued pressure on the pound.

“On a more optimistic note, mortgage sales are up over 10 per cent year-on-year and a dip in sales for July is not uncommon; however, as the summer period comes to a close, the long-term outlook for the market still remains very unclear.”

MORTGAGE sales in the north fell by almost 20 per cent in July on the previous according to new market figures.

Data from analytics firm Equifax Touchstone shows a 18.5 per cent in mortgage sales last month in comparison to the June figure. In the UK-wide figures the north ranks behind only Scotland, which suffered the biggest monthly slump (19.8 per cent) out of all regions.

Overall mortgage sales in the UK decreased by £1.8 billion in July, a 10.8 per cent fall on the previous month.

Buy-to-let figures were resistant to the general decline, down by just 0.2 per cent (£3.9 million) to £2.6 billion, while residential sales dropped by 12.8 per cent (£1.8 billion) to £12.2 billion. Overall, mortgage sales for the month totalled £14.8 billion, up 10.8 per cent year-on-year.

The average value of a residential mortgage in July was £199,286, up six per cent on the previous year (£188,115) and £159,721 for buy-to-let (2016: £158,415).

All regions across the UK suffered a significant fall in mortgage sales the north west of England performing best with a monthly decline of 5.7 per cent recorded. London sales fell by 8.4 per cent from June to July.

Director of Equifax Touchstone, John Driscoll said the figures showed how volatile the mortgage market can be.

“Sales have tumbled in July, with every region suffering substantial declines as buyers are put off by continuing political and economic uncertainty, coupled with the worrying gap between inflation and wage growth. These circumstances may be further compounded by the potential for an interest rate hike as early as September, driven by continued pressure on the pound.

“On a more optimistic note, mortgage sales are up over 10 per cent year-on-year and a dip in sales for July is not uncommon; however, as the summer period comes to a close, the long-term outlook for the market still remains very unclear.”

Via: http://www.irishnews.com/business/2017/08/23/news/northern-ireland-mortgage-sales-plummet-by-almost-20-per-cent-in-july-1117817/?param=ds441rif44T

Property Ladder – Rush to downsize

Estate agents are reporting a surge in inquiries from customers wanting to downsize to raise cash but warn that unrealistic sellers are struggling to find homes, a new survey has found.

The research by equity release referral service by Key Partnerships shows that more than two out of five (44%) estate agents have seen a rise in inquiries from older homeowners looking to downsize in the past year.

However 62% of estate agents warn would-be downsizers have unrealistic expectations about how much they will raise from moving to a cheaper home – and that’s if they can find one.

More than half (56%) of estate agents say there is a shortage of homes on the market suitable for downsizers and 68% warn there are not enough homes available for older buyers who are less mobile.

Key’s research found estate agents are increasingly suggesting lifetime mortgages as an alternative way to raise money for downsizers – around 44% of estate agents say they regularly suggest equity release plans which enable customers to take out money while staying interest-free in their homes. Meanwhile mortgage experts are warning of a slowdown in the housing market – the Council of Mortgage Lenders says the housing market has “stalled” with the number of home movers falling by 9% in the past year.

Will Hale, director of Key Partnerships, said: “When downsizing works it can be an ideal solution for older homeowners but sellers need to be realistic about how much they are going to make and it appears many are struggling to find suitable homes.

“The shortage of homes for sale is pushing up prices for downsizers who may struggle to raise the sort of money they are expecting to help with retirement planning while also having to go through the upheaval of moving home.

“Equity release should be part of all conversations with older homeowners considering downsizing, when for many it simply doesn’t add up. Estate agents who can offer equity release as a potential alternative are able to benefit from an additional revenue stream by referring potential clients to a specialist.”

Via: https://www.propertynews.com/blog/home-finder/property-ladder-rush-to-downsize/