News & Views

Buy to Let

The UK property market has now been open again for six weeks following its enforced two-month suspension during the coronavirus pandemic lockdown and, with the easing of government restrictions on property transactions, the buy-to-let (BTL) market has also begun to recover.The last five years have been tricky for BTL investors with changes in tax rules coinciding with sluggish growth in property prices and, this year, the near-overnight suspension of the property sector.Initially, the response by lenders was understandably designed to mitigate risk as LTVs were cut, the product was removed or, in some cases, a temporary moratorium was placed on new applications.A little over a month after the sector was green-lit to resume trading, there are signs that recovery is underway, with more products entering the market and rates on higher LTVs being reduced.https://www.youtube.com/watch?v=ELNLkrFH30oThe decision by the Bank of England early in the lockdown process to reduce its base rate to an historic low has been passed on, in part at least, to borrowers and although BTL mortgage products are generally priced and structured differently to main home loans, there are some attractive deals to be had for investors keen to begin or expand their property portfolios.Having said that, investors buying a BTL property through a limited company will broadly speaking, pay more for their loan than someone applying on a named-person basis would.So there are some cost-effective buy-to-let products out there for those who are in a position to take advantage of them.The bigger question is whether the market will see further movement to make buy-to-let a more attractive proposition in the future.That’s a tough one to call because there’s still a great deal of uncertainty about the long-term effect of the pandemic on the UK economy. Personal financial security is likely still to be a big concern for individuals who have found their job situation squeezed, while lenders are likely to display greater caution around affordability.Whatever post-lockdown normality might eventually look like, it still feels like it’s a way off yet – but until we reach a point where there is greater visible confidence in the economy (such as the removal of the furlough and job retention schemes, etc.) there’s little likelihood that higher LTVs or further significant rate reductions will make an appearance in the near future.Against this backdrop is the fact that even before the pandemic hit, existing landlords were reluctant to expand their portfolios – indeed, a Paragon Banking Group survey showed that three times more landlords were planning to sell their portfolio than we planning to expand.But property remains an attractive investment proposition for those who are in a position to do so. The key is in finding the right property and then ensuring you secure the mortgage that best serves your needs.With the right strategy, a buy-to-let property can provide you with realistic capital growth and the potential to earn an income from it that will cover its associated costs. So whilst it’s essential that you consider all the advantages and disadvantages of a sector where values are prone to fluctuation, there are very clear potential upsides.One of the biggest issues for property investors in the sector has been the changes in tax rules around stamp duty, mortgage relief and capital gains, and this is a particular area where you will need very specialised advice that’s tailored to your specific circumstances.We would always recommend you engage the services of a professional mortgage adviser to give you the advice and guidance that best suits your needs – and ensuring you also have a trusted independent financial adviser (IFA) is a sensible step in assessing your overall financial situation in the context of any plans you may have to enter into the BTL market or to expand an existing portfolio.At Oportfolio, we can support you through the application process to ensure you’re in the strongest possible position to apply for a BTL mortgage and we can identify products and lenders who will be best suited to your specific circumstances.If you’re considering a buy-to-let property investment, or you want to take your existing property portfolio further, why not get in touch and talk to a member of our friendly team to see how Oportfolio can help you to fulfil your investment ambition?  Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct AuthorityYour property may be repossessed if you do not keep up repayments on your mortgage.Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295. 

by Oliver Whitehead  -  6 July 2020

Buy to Let

It’s been a few months since I last wrote about Brexit and its likely impact on interest rates, the mortgage sector and the residential property market. That was not long after the deadline for the UK to leave the EU was extended to the end of October.So, now that we’re roughly halfway between the last deadline and this one, what’s changed?On the one hand, nothing much has changed at all. There’s no more clarity now on how we’ll leave the bloc (or even, perhaps, if we’ll leave) than there was three months ago.But politically-speaking, on the other hand, everything has changed. We have a new Prime Minister working with an even more slender majority than his predecessor and leading a party that, if anything, is more divided than it has been at any point since the EU referendum.He chairs a cabinet that is loudly pro-Leave and, publicly at least, completely aligned to taking the UK out of Europe on October 31 come what may.Outside the inner sanctum of the cabinet, former senior ministers warn of chaos ahead if Britain is allowed to crash out of Europe without a deal, while the apparatchiks of central and local government ramp up their preparations for No Deal.Labour is said to be planning a vote of no confidence in a bid to force a General Election. The Liberal Democrats have a new leader in Jo Swinson, and her fiercely pro-Remain party is attracting membership applications from former Tory MPs, disillusioned with their brief stint as part of the Change UK party.All in all, things have certainly been better within Great Britain PLC. But what does the uncertainty mean if you’ve got a mortgage or you’re thinking of buying and/or selling your home?Naturally, it depends on what you read, who you listen to and whether you’re on the Winnie the Pooh or Eeyore side of the optimism/pessimism divide. But amid the more outlandish crystal ball-gazing, there have been some interesting and well-informed hypotheses doing the rounds recently.The general consensus seems to be that a No Deal Brexit would substantially increase the chances of an economic downturn. Some commentators have stopped short of predicting a full-on recession, but others haven’t been quite as shy.According to the Guardian’s personal finance and consumer correspondents, this may not be a bad thing for homeowners where interest rates are concerned. Their joint article talks of mortgage interest rates returning to their sub-1% levels of 2016 and even of the Bank of England imposing a zero rate to ease the transition to a new trade arrangement with the rest of the world.Such a move would undoubtedly be welcomed by homeowners who suddenly find their mortgage rates significantly reduced. But the other side of that coin, of course, is the resulting misery for savers and investors.As for house prices and whether now is the time to buy or sell, the same article suggests that trying to predict whether to move before or after October 31 is more likely to be a lottery.Having said that, the fact remains that if you consider your finances to be insulated from the immediate impact of Brexit – whether with or without a deal – then when you move is less of an issue.The only question at that point is whether you can sweeten the process by winning out on the price at which you agree to buy and securing the market value of the house you sell.The Daily Mail’s financial website This Is Money reports that there’s been a growth in the appetite for long-term mortgage deals, including the recently-trending 10 year fixed product some lenders are offering.As I said in our recent article on whether you should fix your mortgage rate, we’d advise caution when it comes to locking on to a long-term deal. They tend to be more expensive and if rates do come down – which is a distinct possibility over a period of a decade – then you’re going to lose out in the long run.There are circumstances where a long-term fixed product might be right for you – but I would strongly advise getting advice from a professional mortgage expert before you commit.And then  there are the conflicting calls in the Express and Times for the Bank of England to either raise interest rates and demonstrate its commitment to – and confidence in – Brexit (Express), or cut rates ahead of Brexit to ease the impact on the economy (Times). So, even the papers are divided on the best approach to fiscal policy.The fact is, we won’t have true clarity until October 31 arrives. In the meantime, the world keeps turning and life goes on.My advice is always that you should take any long-term financial decision – such as buying a house – in the context of your long-term financial security, and ultimately that comes down to the answer to the question of whether your potential financial exposure is controllable.Any investment is a risk – but calculated risks, where you’ve looked at the worst-case scenarios and demonstrated you can survive them, are always going to be preferable to walking into a commitment blind.The best thing you can do if you’re thinking about moving in the next three months is get some advice from a professional broker and a financial adviser – and factor that advice into your decision.  Need more information about your mortgage options? Take a look at our short guide to remortgaging. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063.Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct AuthorityYour property may be repossessed if you do not keep up repayments on your mortgage.Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

by Oliver Whitehead  -  19 August 2019

Buy to Let

Despite the uncertainty in the housing market, the prospect of buying a second property – or perhaps a third, fourth or fifth – to rent out is still attractive to a lot of people.Recent research comparing the England and London property rental sector with world economies places England above 159 nations – specifically, between Ethiopia and Sri Lanka. London alone, where the sector is worth £21 billion annually, would be placed above 124 countries, sitting above North Korea but behind Latvia.And with homeownership for first-time buyers still a pinch-point for the market in spite of a number of High Street lenders recently announcing attractive mortgage products for first-time buyers, the rental market is expected to continue to grow.There are, of course, considerations that any prospective landlord would need to consider carefully. As Money Week noted recently, changes to Stamp Duty, mortgage interest relief and lettings agency fees, have put challenges in the paths of amateur landlords who may otherwise have been attracted to ‘dabble’ in property as a source of income.That said, profitability is also partly down to that old estate agency maxim of location, location, location. If you own a rental property in a highly desirable area, particularly in London, it’s likely to be easier to let at a good rent.That doesn’t guarantee a profit, of course, but a property in the right place is an obvious must if you’re to have any hope of making a decent yield on your investment.So, if you’re considering a buy-to-let investment and we assume you’ve got the basics right, what are the mistakes you need to avoid? Not minding your own business In the end, rental property is a business. It may not be a business with massive turnover or huge margin, but at the most granular level, it needs to at least break even. That means being prudent over what you invest in it – both in terms of real costs and your own time and effort, both of which have a value.If decorating, building works or ground and garden maintenance are needed, that will eat into your margin, so be pragmatic about where and what you invest. If a cheaper own-brand paint will serve just as well as the high-end stuff, that’s what you should consider using.Similarly, if the time and effort you spend dealing with the management of the property is going to materially reduce the amount you can earn from your day job, that needs to be factored in, too.There are a lot of landlords out there who failed as property entrepreneurs because they didn’t realise or remember their buy-to-let was a business – but if you keep the business side of your investment in mind, you’re less likely to become one of them. Failing to understand your responsibilities As a landlord, you’ll have a lot of statutory responsibilities and if you don’t understand what you have to do (and what you don’t have to do), life can get tricky.Your contract with your tenant and the rental agreement they have with you depends on both of you doing certain things.Among many other things, you’ll need to get certificates and undertake responsibilities for certain repairs – your tenants will be required to give you access on an agreed arrangement, pay the rent on time and keep the property in good order.If you – or they – fail to do what you’re required by legislation to do, someone could be in breach of contract. Failing to get the right cover This is a crucial thing to get right. The simple fact is that ordinary household insurance is highly unlikely to cover your property.Because your property is occupied by people who may not treat it with the same respect you would as the owner, and because there’s a chance it will be vacant at times (for example, between lets), insurers consider the buy-to-let property to be a different type of risk to that of an owner-occupied home.You’ll need to get specialist landlord insurance to cover your building (and, if you’re letting a furnished property, its contents – if it’s unfurnished, the tenant will be responsible for insuring their own possessions).We can help you to find a suitable product that offers you the best cover for your needs. Call us on the number below to speak to a member of our friendly team and find out more.Not planning to planInevitably, a buy-to-let will generate expense. It’s likely you’ll have to do repairs to the property that you may choose not to do – or to delay – if it were your main residence. The boiler might need to be replaced. The property will almost certainly need redecorating from time to time – and probably more frequently than you would do if you were living in it.Most of the expenses you currently associate with your own home will crop up in some form at your buy-to-let, so it makes sense to ensure you’re budgeting for those over the long-term so you aren’t hit with any nasty surprises.Getting your buy-to-let investment right doesn’t need to be an arduous process – and it can save you money and time in the long run if you start as you mean to go on.If you’re considering buying an investment property and want to generate an income from it, come and talk to us about how our expert mortgage and insurance advice can give you the peace of mind of knowing you’re set up for the best chance of success.Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story!   To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

by Oliver Whitehead  -  10 May 2019

Buy to Let

One of the key worries for many parents today is where their children will live when they fly the nest, and how they might pay for it.Although there appears to be a general consensus that the housing market is currently stagnant, years of price growth and the stricter affordability criteria that have come since 2008 mean the chances of getting a foot on the home ownership ladder have faded for children who, had they been born a generation earlier, might reasonably have expected to buy their own home at a relatively early age.According to recent figures released by the Halifax the average age of a first-time buyer in London is now 34, which is well above the national average of 27, and a whopping 11 years older than the average 23-year-old first-time buyer in 1960, according to separate research commissioned by Keepmoat Homes.The obvious answer, of course, is to rent – which is the solution for many people already in an era already being termed Generation Rent. In fact, a survey commissioned by Price Waterhouse Coopers in 2016 forecast that by 2025, 60 per cent of all Londoners would be living in rented accommodation.That’s all well and good, but significant numbers of people may well view the rental market as dead money, with no return on the monthly investment in the cost of accommodation. Added to this is the fact that in some parts of the country – notably the south – the ongoing costs of renting can often exceed those of home ownership.So, could the buy-to-let (BTL) market hold the key to the housing futures of some Millennials?Just as the Bank of Mum and Dad is an option for those that can afford to take advantage of some mortgage products that enable parents to help their children secure their first home, so BTL may also be an option for parents who want to see their children into independent living without the pressure of having to make mortgage payments.Buying a property and then renting it out at a cost which is possibly below what you might expect to pay on the open market is a smart idea- but it comes with a some mortgage and tax complexities.Here are some things to think about before you go down the route of a family buy-to-let.First, you won’t get a standard BTL mortgage. This, in part, is because the explicit intention is to rent it out at less than market value – which in the eyes of the lender makes it a riskier investment for the borrower, who may be facing the prospect of having to underwrite a shortfall between their mortgage repayments and their rental income. This is especially pertinent where the borrower only has a small deposit.That means you’re likely to be looking at what is known as a regulated buy-to-let mortgage, which may well require a higher deposit.There are variations on these two options and a professional mortgage broker like Oportfolio can advise you on the best option for your needs.In terms of tax, you’ll need to consider factors like a stamp duty surcharge of 3%, possible implications of Capital Gains and Inheritance Tax and you may not get the same benefits of deductible expenses where a family member paying lower-than-market value is your tenant.Finally, regardless of the fact the person living in your investment property is your son or daughter (or perhaps an older relative you’re supporting), you’ll still be a landlord in the eyes of the law and will need to meet the responsibilities that brings.That means having the right insurance, putting a tenancy agreement in place and ensuring the property is maintained in accordance with current legislation.All in all, there’s a lot to consider before going down the BTL route as a solution for your son or daughter. But with the right help and support, it’s a consideration worth looking at with us.To speak to a member of our friendly team and find out more about how we can help you, get in touch today To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063.Your property may be repossessed if you do not keep up repayments on your mortgage.Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.

by Oliver Whitehead  -  15 March 2019
Disclaimer

Your property may be repossessed if you do not keep up repayments on your mortgage.

Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage / further advance of £395.
Our Product Transfer fee is £295.

Request a callback
You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with the appropriate data protection requirements. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone.

By submitting this information you have given your agreement to receive verbal contact from us to discuss your mortgage requirements.
decline, do not submit
accept, submit request
Join our mailing list
You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with the appropriate data protection requirements. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone.

By submitting this information you have given your agreement to receive verbal contact from us to discuss your mortgage requirements.
decline, do not submit
accept, submit request