We may be slowly but surely heading out of lockdown, but that doesn’t alter the fact that it’s been a tough year for buy-to-let landlords. Many tenants have hit hard times and had difficulties paying their rent. The government has banned evictions except in specific circumstances. It’s also been tough to find decent buy-to-let mortgages, with many lenders withdrawing products early in the pandemic. That said, things may finally be beginning to look up for landlords. In this buy-to-let news update we’ll be covering some of the recent changes that affect the sector.
Buy-to-let news (1): mortgage choice is increasing
According to the This is Money website, buy-to-let mortgage options have increased for the fifth month in a row. As a result, there are now more products available than at any time since before the coronavirus pandemic.
In many respects, this is good timing. Many landlords took out five-year fixed deals back in 2016, specifically to beat a 3% stamp duty increase. Most will not want to switch to their lender’s standard variable rate now those mortgages are ending. In addition, some landlords will be keen to invest in new property before the current stamp duty holiday finishes at the end of June.
Although there are many more buy-to-let mortgages on the market, rates are higher than a year ago. The average two-year fixed rate deal is 3.05%, which is 0.28% higher. For five year fixed rate mortgages, the average rate of 3.41% is 0.17% more.
That said, if you are buying with a larger deposit or you have already solid amounts of equity in your properties, you can get lower rates. This is Money reports that, for a 60% mortgage, the average rate has fallen from 2.52% to 2.14% over the last month alone.
The big question is whether rates will continue to fall. The signs are promising, so it may be worth waiting a little longer to get a better deal. On the other hand, if you are looking to buy and want to take advantage of the current stamp duty holiday, you probably ought to get your skates on!
(2) Evictions law update
Because the pandemic has hit so many people financially, the government introduced a ban on tenant evictions. While giving tenants extra security in tough times, it has meant that many landlords have been hit by a drop in a rental income.
The government has announced that the current ban on bailiff-enforced evictions will be extended until 31st May. That said, evictions in certain, serious circumstances are allowed. The government guidance states:
These circumstances are illegal occupation, false statement, anti-social behaviour, perpetrators of domestic abuse in the social rented sector, where a property is unoccupied following death of a tenant and serious rent arrears greater than 6 months’ rent. These measures are in force until 31 May.
In cases of a tenant having 6 months’ rent arrears, you must give them four weeks’ notice before repossession. The restrictions will begin to taper off from June. For new guidance on the possession action process, see this publication.
(3) Buy-to-let electrical safety checks
Just over a year ago, we wrote about new rules on electrical safety checks. All new tenancies have needed an Electrical Installation Condition Report (EICR) since July last year. However, you should have completed checks for pre-existing tenancies by 1st April 2021.
If you have not completed EICR checks for your properties, you can be fined up to £30,000 for each breach. So if you haven’t got EICR sorted, arrange checks as soon as possible. You can find a registered electrician here. Also, be sure to check back for future buy-to-let news updates.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.