Although it may feel like much longer, we are now approaching two months since the start of lockdown. Sales Director, Jeni Browne, explains what’s changed in the buy to let mortgage market since March and how it’s not all doom and gloom!
When the Bank of England Base Rate (BBR) was dropped for the second time this year to just 0.1% on the 19th March, and the UK’s lockdown announced just days later on 23rd March, the mortgage market went through a period of considerable and rapid change in response.
Immediately after lockdown, we had just eight lenders accepting buy to let mortgage applications at 75% LTV and 14 able to use desktop (remote) valuation processes. It’s easy to see why there was much concern in the mortgage industry and property market as a whole at this time.
As I write this, Mortgage for Business has access to 21 lenders accepting buy to let applications at 75% LTV and the same number set up and using desktop valuation systems. It’s quite impressive how quickly the lenders have been able to change their processes and IT systems to accommodate for the “new normal”, especially while dealing with vast numbers of mortgage payment holiday requests. One in seven mortgages in the UK are now on a mortgage payment holiday.
While things aren’t where they were before the lockdown, (how could they be?), the quick response from the lender’s and their open communication with us has meant that things have been almost business as usual. We continue to place buy to let mortgages with them every day, and completions are still happening; pretty impressive given at one point, it seemed like the world was ending.
The industry continues to evolve; after Boris Johnson’s announcement on Sunday, RICS published their new guidelines for physical valuations. With these, we’re hoping it won’t be long before lenders can resume visiting properties and begin to clear the backlog that didn’t qualify for desktop valuations. This guidance includes the property being empty, valuers wearing PPE and keys being left out for inspectors to pick up contact-free. As yet, we’ve not received a formal response from valuers as to when they expect to be able to complete physical valuations under these guidelines, but needless to say, as soon as we know more we’ll be letting you know!
What about the wider buy to let property market? Well, according to the National Landlord Association (NLA), just 2% of tenants have missed a rent payment since lockdown. With systems in place, such as Mortgage Payment Holidays, we’re not expecting there to be such a catastrophic knock-on effect for landlords as some might once have expected.
Rent rates have increased by an average of 4% year on year since 2015, and we expect them to continue to do so. While house prices have reportedly reduced by 0.6% (Halifax), with the average house price now £238,511, this remains 2.7% higher than this time last year.
Furthermore, while Zoopla reported a 57% decrease in demand for rented accommodation in the last two weeks of March, they have seen that bounce back by 30% in the first two weeks of April alone.
We’ve also seen some very positive movement in the property sales market, with Coadjute citing a 182% increase in advance property viewing bookings over the last four weeks. They’ve also seen a 45% increase in estate agent registrations since the beginning of lockdown; perhaps in anticipation of slightly lower house prices post lockdown?
What these stats say to me is that there is still a solid market out there. Landlords are still receiving rent from tenants and look to benefit from continued increases in rental rates. While there may be a mild dip in house prices (good news for those looking to purchase their next investment), they haven’t plummeted in value and people are still looking ahead to their next move. The pent up demand we experienced pre-Brexit hasn’t gone away, it’s simply stalled (again).
A client recently asked me whether I’d consider buying another buy to let property now, and the answer is yes, absolutely! Borrowing rates are still low, and deals will be out there to grab on house prices which will then increase in value, giving returns on investment. The only reason I’m not purchasing now is my money now seems committed to keeping our children (and me) in a constant supply of snacks!
If you’d like to discuss your property investment plans and what your mortgage options might be, do not hesitate to contact Mortgages for Business on 0345 345 6788 or email us firstname.lastname@example.org, and one of our consultants will be more than happy to help!
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12th May 2020