Complex Buy to Let Index Q4 2011
This quarterly industry index tracks mortgage transaction data for Vanilla Buy to Let, Houses in Multiple Occupation (HMO), Multi-unit Freehold Blocks (MUFB) and Semi-Commercial Property (SCP).
The index was launched with a single data set for 2010. The quarterly figures throughout 2011 show how the market can ebb and flow as conditions change. However the underlying data for the year provides a solidly reliable perspective across each subsector.
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Lenders and Products
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Q1 2011
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Q2 2011
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Q3 2011
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Q4 2011
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Average no. products
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298
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403
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455*
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442
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Average no. lenders
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19
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22
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23
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25
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*Previous data for Q3 no. of products 508 was incorrect.
Lenders and Products
As anticipated the number of lenders has increased with Abbey for Intermediaries (Santander) launching its offering in December 2011. The number of products also remains high with an average of 442. Obviously the actual number of ‘off-the-shelf’ buy to let mortgages available at any one time fluctuates as products are withdrawn and introduced by lenders. The highest number of products available on any one day reached 517 towards the end of October 2011.
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Vanilla Buy to Let
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Q1 2011
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Q2 2011
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Q3 2011
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Q4 2011
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Average loan size
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£116,238
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£126,522
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£144,006
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£126,240
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Average property value
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£175,819
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£187,708
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£224,639
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£198,529
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Average loan to value
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66%
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67%
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68%
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65%
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Average yield
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5.6%
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5.8%
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6.3%
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6.13%
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Houses in Multiple Occupation (HMO)
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Q1 2011
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Q2 2011
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Q3 2011
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Q4 2011
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Average loan size
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£317,907
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£321,836
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£292,969
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£242,913
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Average property value
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£501,290
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£573,836
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£445,948
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£359,650
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Average loan to value
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63%
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60%
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66%
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69%
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Average yield
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9.3%
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10.0%
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9.3%
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9.9%
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HMOs and MUFBs
Results for Q4 remain fairly stable across both the HMO and the MUFB subsectors compared to previous quarters although the data shows a slight but steady increase in HMO LTVs. This is likely to be due to the availability of more highly geared products allowing landlords to maximise on the amount they can get out of their properties. In 2012 we expect some improvement in product availability which could lead to a small increase in LTVs
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Multi-unit Freehold Blocks (MUFB)
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Q1 2011
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Q2 2011
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Q3 2011
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Q4 2011
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Average loan size
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£527,902
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£513,197
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£378,531
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£574,258
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Average property value
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£932,148
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£876,075
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£603,583
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£938,602
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Average loan to value
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56%
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59%
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64%
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63%
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Average yield
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7.4%
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6.6%
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6.9%
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7.1%
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Semi-Commercial Property (SCP)
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2011
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Average loan size
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£410,604
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Average property value
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£685,909
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Average loan to value
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62%
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Average yield
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7.8%
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Purchase vs. remortgage
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46% vs. 54%
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Semi-Commercial Property
It has been 12 months since we introduced the index and although the response has been extremely positive, feedback from landlords revealed that they wanted performance data on semi-commercial properties. Typical properties in this subsector are shops and offices with one or two flats above which means that the rental income is subject to more than one tenancy type, i.e. a commercial element as well as standard residential shorthold tenancy agreements (ASTs). To kick start our reporting of this subsector, the first data set is for the whole of 2011. Going forward we will report quarterly.
As might well be expected the results for SCPs sit nicely in between HMOs and MUFBs with the exception of loans to value. Typical LTVs for commercial properties are slightly lower than for buy to let mortgage transactions reflecting lender appetite and tougher rent requirements.
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Purchases versus Remortgages
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Q1 2011
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Q2 2011
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Q3 2011
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Q4 2011
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Purchase
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Remo
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Purchase
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Remo
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Purchase
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Remo
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Purchase
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Remo
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Vanilla
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50%
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50%
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55%
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45%
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48%
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52%
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47%
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53%
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HMO
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67%
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33%
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48%
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52%
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38%
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62%
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45%
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55%
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MUFB
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41%
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59%
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19%
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81%
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37%
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63%
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24%
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76%
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Purchases versus Remortgages
In the vanilla buy to let subsector the overall picture for 2011 shows a fairly even split between purchases and remortgages as landlords either continue to sit on their existing low rate or choose to remortgage to raise funds for further purchases. For Houses in Multiple Occupation (HMO) and Multi-Unit Freehold Blocks (MUFB), we continue to see remortgages outstrip purchases for two primary reasons. Firstly, the likes of RBS and the Irish banks carry on insisting that borrowers refinance elsewhere in order to balance their own books. And secondly, we have witnessed an increasing number of professional landlords refinance in order to expand their residential property portfolios.
