Category: Real Estate

HMOs are becoming more popular among landlords as many turn to them as a ‘surer bet’ than other types of rental property in a time of economic uncertainty, it has been claimed.

As LandlordZONE has reported recently, HMOs offer much higher margins than properties for families or couples even though the higher regulatory and admin requirements – such as rent collection, licencing and fire detection and prevention equipment – make them harder and more expensive to operate.

Lender Shawbrook bank says HMOs made up 27% of all its business in both 2022 and 2023 but this has already risen to 34% in 2024.

The lender reports that while some landlords are diversifying their portfolios, there has also been a rise in HMO business from non-portfolio landlords.

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A surge in buy to let landlords exiting the private rented sector (PRS) is being fuelled by an increase in receiver appointments, one leading auctioneer says.

Landwood Group says it has seen a 150% increase in receiver appointments for BTL portfolios in the past six months.

And there’s an increase in BTL landlords heading to the auctions in a bid to avoid insolvency as tax burdens and regulatory pressures increase.

That’s despite rising rents and tenant demand.

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It’s a mixed bag for landlords at the moment, with previous uncertainties around EPC regulations and the stress of mortgage repayments. For accidental landlords, or older landlords who’ve been hit badly by the rise in interest rates, there’s a rush to cut their losses and sell. But landlords need to be careful.

A recent report by the comparison site Uswitch revealed that around a third of landlords claim they intend to sell a property within the next 12 months, and there’s good reason: in the final three months of 2023 there were 500 buy-to-let mortgage repossessions, up an astonishing56.3 per cent on the same three months of the previous year.

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When buy-to-let investors purchase a property, they are looking for two things: a good income from rent, and the potential for house price growth.

Many have a bias for one over the other. Prioritising high rental yields usually allows for good cash flow, but can come at the expense of a rising house price over time.

Other landlords focus on the fact that, if they choose the right location, rising house prices will make up the bulk of their returns. 

However, picking an up and coming area where values will climb can be easier said than done.

The average buy-to-let investor who bought in London eight years ago won’t have seen any capital growth at all, for example, according to Land Registry data – while someone who bought in Manchester will on average have seen their investment rise by 65 per cent.

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The UK is likely to continue missing its housing targets as the planning system and uncertainty hinder development, a credit rating agency has said.

In a report, Morningstar DBRS said it was “hopeful” about a recovery in the housing market due to the stabilisation of rates and building costs. However, it said builders faced a “myriad of ongoing challenges” that made meeting housing targets in the near term an “uphill battle”. 

Both the Conservative and Labour parties have set housing targets of 300,000 homes built per year, but builders have constantly failed to meet this. 

Morningstar DBRS said builders were contending with “upcoming regulatory changes, considerable red tape, a shortage of small builders, a tight labour market, and incentives required to attract new homebuyers”. The firm said all these factors affected builders’ profitability and, consequently, the number of homes built. 

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A majority of landlords (62%) plan to hold steady or even expand their rental portfolios in the coming year, despite the looming Renter (Reform) Bill, research suggests.

Leaders Romans Group (LRG) surveyed 630 landlords last month which revealed a ‘wait and see’ mentality.

More than half (55%) of landlords indicated their investment strategies wouldn’t change due to the Bill, pointing to a long-term view of the property market and a reluctance to abandon the private rented sector (PRS).

However, the biggest concern of landlords wasn’t the potential abolition of Section 21 ‘no-fault’ evictions, which worried 54% of landlords.

Instead, it is the Bill to give tenants the right to request pets which caused the most anxiety, with 56% anticipating negative impacts.

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Houses in Multiple Occupation (HMO) are becoming increasingly popular among landlords in the UK, according to data from specialist lender Shawbrook.

It says there is a shift in buy to let strategies as landlords navigate a challenging economic landscape.

While HMOs consistently made up around a quarter (27%) of Shawbrook’s BTL mortgage business in 2022 and 2023, the figure has already jumped to over a third (34%) in 2024.

Notably, there’s also been a rise in HMO investment from non-portfolio landlords, increasing from 17% to 21% during the same timeframe.

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After the Government watered down its Renters (Reform) Bill, new research from the Social Market Foundation think tank shows fears that stricter regulations will reduce the supply of rental properties are overblown.

In an international study published today, the Social Market Foundation (SMF) argues that England is an international outlier in terms of the insecurity of its tenants. Compared to similar countries, English rental contracts tend to be relatively short and most comparable countries have ditched ‘no fault’ evictions, if they ever had them.

The SMF says that measures contained in the original draft Renters (Reform) Bill, which promised to end no fault evictions, would have gone some way to improving this situation. Yet after a rebellion from Conservative backbenchers, last week it emerged that housing secretary Michael Gove intends to dilute many of the Bill’s policies which might have protected renters, and delayed plans to end no-fault evictions.

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ines for rogue landlords and agents in London have surged past the £10 million mark.  

With 19 council licensing schemes and consultations in London launched between New Year and April, the number of new measures introduced so far this year is 30% ahead of this time in 2023. 

Nearly a third of all new schemes launched this year have been targeting London boroughs. Among the boroughs stepping up their efforts this month alone are Brent, Tower Hamlets, and Redbridge, each introducing additional or selective measures to combat rogue practices within the rental market. 

Tower Hamlets, in particular, has disclosed over £1.2 million in financial penalties and rent repayment orders linked to unlicensed properties.

Redbridge Council has also revealed the results of its enforcement efforts from recent licensing measures, with 3,000 notices served and 76 prosecutions directly from their previous scheme. Meanwhile, Camden continues to lead in enforcement actions as the borough with the highest fines, recently announcing a hefty £350,000 penalty against an agency for failing to comply with a planning enforcement notice.

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Buy-to-let landlords are being hit by higher interest rates, higher costs and a less friendly tax regime.

Many have seen their costs spiral, meaning that landlords will have watched the recent falls in mortgage rates with just as much interest as homeowners and first-time buyers.

There are roughly 2 million buy-to-let properties that have a mortgage attached, according to the trade association for the banking and financial services sector, UK Finance.

An estimated 230,000 of these have fixed-rate mortgage deals that are due to end this year.

While the residential rates aimed at home buyers and homeowners have hogged the headlines, average buy-to-let rates were until recently heading downwards.

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