The Last Word Comment
Landlords will purchase next property via a limited firm
Research reveals the changing nature of lending in the sector
Jeff Knight Director of marketing, Foundation Home Loans
Our latest landlord research has revealed that of those landlords who intend to add to their portfolios over the next year, over half are likely to do so within a limited company vehicle. The research shows portfolio landlords
(those with four or more buy-to-let mortgaged properties) are even more likely to purchase via a limited company, with almost seven in 10 of landlords with more than 11 properties in a portfolio, intending to do so in this way. Just over a quarter of landlords intend to
remortgage in the next year, although this rises to one in three for portfolio landlords. Also, 29% of all landlords took out a new remortgage in the last year. The use of mortgage advisers by landlords
to secure their property finance also remains strong, with the research revealing that seven in 10 landlords used an adviser to arrange their most recent mortgage, however 23% did deal direct with a lender. When asked how they had first come across
their mortgage adviser, 44% of landlords said it had been through a recommendation, 13% through an internet search, and 9% via membership of a landlord body. The research also reveals a number of
key financial measures with regard to the ‘average’ UK landlord – the typical one has 10 properties in their portfolio, over half of which are owned via a buy-to-let mortgage, with the average LTV of those mortgaged properties down below 50%. The average market value of a portfolio is
£1.4m with average gross rental income of £66,000. The amount of borrowing for each landlord is £427,000 across their portfolio, although there is a marked difference between those who own only one to three
50 What we are clearly seeing is far more
portfolio landlords active in the sector, and while there has not been the great exodus that many were predicting, it is less likely that those with only one or two properties are going to add to them. Overall, portfolio landlords are showing
serious ambitions for the future, while holding relatively low levels of mortgage debt and therefore risk for lenders. The market value of their portfolios is solid as is their annual rental incomes and, looking at these numbers, it is obvious to see why they stress they are in this market for the long-term. When it comes to anticipated purchase and
Portfolio landlords are showing serious ambitions for the future, while holding relatively low levels of mortgage debt and therefore risk for lenders
properties (£334,000) and those with more than four properties (£1.073m). Finally, 19% of landlords said they had
seen an increase in tenant demand over the last three months, down 5% from the last iteration of the research; 37% had seen no change, 21% had seen demand fall and 22% were unsure. Those landlords in the Midlands are currently reporting the strongest tenant demand in the UK. Overall the report seems pretty positive,
albeit with obvious concerns about falls in tenant demand and how existing and future regulatory and economic change is going to affect their portfolios.
www.CCRMagazine.com
remortgage activity, many landlords intend to do either or both within the next 12 months, which is clearly good news for advisers, and for purchasing, especially as this is now far more likely to be in a limited firm structure, plus we have more landlords remortgaging properties out of their individual name into a company. Advisers do, however, have an opportunity to pick up more business, given that over two in 10 went direct to a lender for their last buy-to-let mortgage. The growth in portfolio activity certainly
chimes with our own business results for April with 62% of all our mortgage applications coming from portfolio landlords and 53% for limited company business. Our focus therefore remains on ensuring that we support advisers with these clients with an easy-to-understand limited company or portfolio landlord proposition that takes away much of the administration demands and presents products with flexible criteria and highly-competitive rates which are not higher just because the client is utilising a limited company. CCR
June 2019
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52