UK Landlords Eye Expansion

Mortgages for Business, a mortgage broker based in the United Kingdom (UK), compiled data showing that more than half of the country’s landlords seek to expand their portfolios. …

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Mortgages for Business, a mortgage broker based in the United Kingdom (UK), compiled data showing that more than half of the country’s landlords seek to expand their portfolios. Some 55% of landlords surveyed said they are planning to buy more property for rental purposes in the next six months, encouraged by the lucrative yields offered in residential investment. About two-thirds of them are expecting to have to refinance in order to make their investments, and more than three-quarters of them believe banks should be doing more to help facilitate the transactions. For more on this continue reading the following article from Property Wire.

Over half of private rented sector landlords in the UK are planning to expand their portfolio in the next six months, the latest research survey suggests.

Some 55% are planning to expand and two thirds of them will need to refinance but three quarters say mortgage lenders aren’t doing enough to support property investors, says the research from specialist mortgage broker Mortgages for Business.

Its latest survey also shows that 43% ARE looking to remortgage, up from 36% six months ago and 39% of landlords have less than £25,000 income other than rent.

The firm says that landlord appetite for more purchases stems from the attractive yields available on residential investments. High gross yields on residential property, which currently stand at 6.7%, are encouraging landlords to expand their portfolios even further. Of those investors who intend to expand their portfolios this year, some 88% plan on buying more residential property.

Investment in complex property was less popular, although some 26% of landlords plan to purchase Houses in Multiple Occupation and 16% Multi-Unit Freehold Blocks. Only 11% plan to buy semi commercial property and 7% commercial property.

The firm added that it is encouraging that just 6% of landlords say they are planning to trim their portfolios over the next six months, the same proportion as six months ago.

And even though 45% of landlords don’t envisage growing their portfolio in the first half of 2013, a quarter of them still plan to remortgage.

However, 11% of the landlords who want to expand their portfolios over the next six months won’t be able to refinance because of lack of equity and the difficulty in securing a mortgage with an LTV of more than 75%.

Over three quarters of investors, 76%, say lenders should be doing more to help them get the finance they need. The biggest issue for landlords was lending criteria and 45% said they felt criteria should be eased, with more preference given to experienced landlords and a greater willingness to lend on more complex property types.

But there is little incentive for lenders to ease their criteria while the high demand for buy to let mortgages more than meets their on-going lending targets.

The research also found, perhaps surprisingly, that 39% rely entirely on rental income, which illustrates the rise of the professional property investor who has no other income other than rent. This is despite most buy to let lenders stipulating landlords must have an additional annual income of around £20,000 to £25,000 in order to get finance.

‘Tenant demand for residential property is ballooning thanks to the lack of mortgages available to first time buyers. Every month more and more would be buyers are being forced to rent, and this is pushing up demand to astronomical levels, producing very attractive gross yields for landlords as a result,’ said David Whittaker, managing director at Mortgages for Business.

‘It is not surprising, then, that well over half of investors want to expand their portfolios to take advantage of these high yields. The first half of 2013 will see a spate of purchasing and remortgaging as landlords try to put themselves in a position to take full advantage of a buy to let sector which is in very good health,’ he added.

This article was republished with permission from Property Wire.

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