Buy to Let Blog
Ying Tan's Blog
Ying Tan is widely acknowledged as the guru of the Buy to Let mortgage Industry and expert on the property investment housing market.
Ying is regularly called upon by the mortgage media to provide comment on all areas of the market and is a regular speaker at various events.
In 2010, Ying was voted Best Specialist Mortgage Broker at the prestigious British Mortgage Awards by senior figures within the mortgage Industry.
Ying's blog will be updated frequently to provide an insight into his thoughts about what is happening in the Buy to Let market place.
According to the English Housing Survey published earlier this month, there are almost one million more families in the private rented sector than there were 10 years ago.
There are many reasons for this. Mortgages are harder to come by of course and wages have been stagnant since the credit crunch. Furthermore, of course, lifestyles have changed and the flexibility renting offers has become more appealing. Whatever the reason for the increase in renters, this figure shows just how important the PRS is. We need to protect it and we need to support landlords, not target them.
This week the government unveiled its plans to fix the ‘broken’ housing market when it launched its Housing White Paper.
Key to the government’s plans are, understandably, measures to increase supply. As we have said all along, the lack of properties for first-time buyers is not caused by ‘greedy landlords’ but simply by the fact we are not building enough houses. The government aims to tackle this by relaxing planning rules, helping smaller builders to get access to funding and freeing up more land. These are all sound measures and are welcomed.
For the lettings market there was calls for longer tenancies to be given to tenants in the PRS. I believe most good landlords (and the majority are good) already offer tenants this security but not everyone wants a longer tenancy. Choice, as always, is key.
As we approach the deadline of January 1st, this month has unsurprisingly seen more lenders increase their rental cover calculations in order to comply with the PRA’s stricter underwriting standards.
In the last few weeks the likes of Accord, The Mortgage Works, Hinckley & Rugby, The Principality and The Coventry have all announced increases, joining the majority of lenders now assessing at the higher levels. Rental cover is now more commonly 140% or 145% with a stress rate in the region of 5.5%.
While these new calculation rates are undoubtedly challenging, particularly in more expensive areas, we can take some comfort from the fact that there is now a greater consistency between different lenders. This can and should be viewed as the ‘new normal’. Adjusting to this and the implications it has for your portfolio moving forward should be a primary focus in the first months of 2017.