Here is the latest edition of the Property Options’ monthly update on the UK Buy To Let (BTL) market.
This update is by economist Chris Worthington, who is one of the speakers at our upcoming February PIM.
The Economic Slowdown
Most economists are forecasting a slowdown in the British economy in 2107.
The Bank of England predicts that GDP growth will slow down to 1.4% in 2017 compared with 2% in 2016.
One of the consequences of the slowdown will be a moderation in the annual increase in house prices. Nationwide forecasts a growth in house prices of 2% in 2017, the Royal Institution of Chartered Surveyors forecast is 3%.
The bank interest rate is widely expected to remain at 0.25% during 2017.
Despite low interest rates there are signs of a slowdown in the buy to let (BTL) mortgage market.
The gross level of BTL lending in 2016 was £40bn, around 16% of total mortgage lending and down from 18% of the total in 2015. It is expected to fall to around 15% in 2017.
Most commentators attribute this to the increase in stamp duty and changes in tax relief for buy to let property.
In addition from January 1st lenders have been limited by the new affordability criteria imposed by the Prudential Regulatory Authority.
There is still plenty of choice in the mortgage market for BTL investors, but the number of available mortgage products has fallen from 1482 to 1408.
The National Rental Review published by Landbay, the BTL lender, reported that outside London rents increased by around 1.9% in the year to November 2016 – whereas in London rents fell by around 0.3%.
Countrywide estate agents also reported a decline in London rents of 0.7% in 2016.
Landbay forecast that average rents will increase by 3% in 2017 as landlords seek to accommodate changes in tax and stamp duty and tenants compete for limited stock.
Housing White Paper
The Housing White Paper published by the government in January was mostly about policies aimed at improving the supply of new housing.
However the following proposals are relevant to BTL landlords:
- An extension of mandatory licensing of houses in multiple occupation (HMOs)
- Longer tenancies on new build rental homes
- A ban on letting agents fees to tenants
- Mandatory electrical safety checks
- Mandatory deposit protection for letting agents
The proposals in the white paper are subject to further consultation and most landlords and letting agents will already be aware of the need for electrical safety checks and deposit protection.
We will provide updates on any new legislation arising from the white paper.
We will all be discussing the latest position on the property market in Bristol and across the UK at our next PIM on 23 February 2017 at Holiday Inn, Bristol City Centre, 6-9 pm.
We hope you will join us then.
For more info and to reserve your place Click Below