Regional Analysis
North
Regional Analysis
- According to data from Fleet, rental yields in the North are the highest in England & Wales. The North East in particular sees yields as high as 7.9% despite a fall of 1.5% compared to the same period in 2019.
- Furlough support and eviction moratorium may be postponing the full effect of the pandemic on rental demands and yields.
- According to data from Fleet, we saw a 13% increase from 25% to 38% in property purchases amongst portfolio landlords since Q4 2019, whilst remortgaging is set to fall further over the next 12 months.
Key Takeaways
- What type of properties are Landlords in the North buying?
- By analysing purchase transactions in Q4 2021, we established that 84% of properties bought by Landlords in the Northern regions are houses, of which 70% are terrace houses. This is a 14% increase in terraced housing purchase activity since Q3.
- Only 13% of purchase transactions came from flats with the remaining coming from HMO and bungalow properties.
- Are Landlords buying or re-mortgaging?
Data from Fleet suggests that Landlords in the North are more likely to re-mortgage properties than to purchase. 59% Of mortgages advanced during Q4 2021 was for the purpose of re-mortgaging a buy-to-let property.
- How are Landlords buying investment properties in the North?
- In the North, 82% of purchase transactions came from limited company special purpose vehicles (SPV) properties. This follows the trend to what we have seen elsewhere in the country, however, purchasing properties in the North via Limited companies is far higher than elsewhere in England and Wales.
- What rental yields can a landlord expect when buying a property in the north?
- Data from Fleet Mortgages puts the average rental yield for properties that have completed in North East during the third quarter of 2021 at 7.9%, the North West at 6.2% and Yorkshire and Humberside at 7.0%. According to Fleet’s data the North East along with Yorkshire and Humberside see the highest and second highest levels of rental yields seen in England and Wales.
Student Lets
With a rising number of undergraduates in full-time study, student HMOs have been on the rise in 2020, as Landlords, and developers recognise the potential for consistent yields in this market.
- How does the North compare?
- The North attracts large numbers of students every year with cities such as Manchester and Leeds housing five universities each and four in Liverpool –some of the most densely populated student areas outside of London.
- North East is among the best buy-to-let investments areas with average yields at 7.9%, followed by Yorkshire and Humberside at 6.9% and finally the North West with 6.6%. All of which are above the UK average of 5.7% in Q4.
- Competition within the student HMO market
- Students are picky about where they will live, ruling out broad areas if they’re not close to campus or to key social hotspots such as the town centre and student unions. Even within an acknowledged student area, there is often a radius outside of which rents drop away quickly.
- Landlords are advised to familiarise themselves with the area, speak to local letting agents and make sure they understand the price dynamics fully before investing. There are reports where new student developments have affected valuations or achievable rents in the more traditional market.
- New student developments have been pushing up standards in the traditional student letting sector by including attractive shared areas, en suite bathrooms and kitchens with all inclusive wi-fi and bills.
Housing Market and Forecasts
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Rental Inflation Last 12 Months
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the ONS, the three northern regions (North East, North West and ‘Yorkshire and The Humber’) currently see a demand surplus in rental properties. This is because the northern regions show an above average level of growth in rental prices compared to the average in England and Wales.
For comparison, the average rental price increase for England and Wales is 1.6% whilst the North West sees average rental price increases of 2.6% and Yorkshire and The Humber sees growth of 2.2%.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.7% in the 12 months to November 2021.
During this period, rental prices for the UK excluding London increased by 2.5%, whilst private rental prices in London decreased by 0.1% over the same period.
Source: Fleet Mortgages
| Region | Ave. Rental Yield (Q4 2020) | Ave. Rental Yield (Q4 2021) |
|---|---|---|
North East |
8.0% |
7.9% |
| North West | 7.4% | 6.2% |
| Yorkshire & Humberside | 7.6% | 7.0% |
England & Wales | 6.2% | 5.6% |
Hotspots in the north are generally situated in and around town and city centres such as Liverpool, Manchester and Sheffield.
According to data from Fleet Mortgages, the 3 northern regions see some of the highest levels of rental yields in England and Wales. All norther regions see above average levels of rental yield increases. By comparison, the lowest region of rental yields can be seen in Greater London at just 4.5%. This suggests that the demand for rental properties in the North outweigh the supply.
Postcodes covered
BD, DH, DL, DN, HD, HG, HU, HX, LS, NE, S, SR, TS, WF, YO
Chris Barwick
BDM
North East
07464 544 446
chris.barwick@fleetmortgages.co.uk
Chris has worked in Financial Services for over 10 years, he has extensive experience of Mortgage lending having been an adviser and held an underwriting mandate.
With his background in mortgages and his desire to help intermediaries provide an excellent service to their customers, Chris enjoys nothing more than meeting with brokers and providing solutions to their customers’ BTL needs.
Sam Nasim
Telephone BDM
North East
01252 282 967
sam.nasim@fleetmortgages.co.uk
Sam has been in the specialist mortgage industry for nearly five years and has thoroughly enjoyed it. He has worked with lenders and amongst brokers to gain a real understanding of what each side of the fence is looking for, whilst keeping the end customer always at heart.
He thrives on delivering on the ‘best only’ service to all his intermediaries and keeps honesty and integrity at the forefront of everything he does. Sam is proactive and strongly believes in a yes if approach rather than a no because.
In his spare time, he enjoys spending time with his family and gardening which he finds very therapeutic.
Donna Spence
BDM
North West
07464 544 443
donna.spence@fleetmortgages.co.uk
Donna has been working in Financial Service since 2007 where she started her journey in customer service for Alliance & Leicester and then quickly progressed into a telephone adviser role.
In 2009, after the Santander take over, she switched to a similar role based within a branch where she stayed for the next 7 years. 2015 saw a change in direction when Donna landed her first BDM role in the intermediary market, working for a large mortgage brokerage Fluent Money, where she worked until 2019 when she moved on to Hodge Bank looking after brokers within the later life market in the Midlands, North of England and Scotland.
Gavin Bal
Telephone BDM
North West
01252 975238
gavin.bal@fleetmortgages.co.uk
Gavin joined Fleet Mortgages as a Telephone BDM for the North West region in February 2023.
He started his career in finance where he worked for Metro Bank. Prior to joining Fleet Mortgages, Gavin worked within the property industry and has 7 years’ experience as a sales consultant and more recently, as a Branch Manager.
Gavin has recently become a new father so he is busy changing nappies and adjusting to night-time feeds! He is a Brentford FC fan and frequently goes to watch them FC play and he also enjoys travelling.
Midlands
Regional Analysis
- East Midlands was one of just two regions which saw a rise in rental yields over the 12 months leading up to December 2020.
- 61% of purchase transaction in Midlands came from limited companies, a popular way for landlords to invest.
- East and West Midlands both show the high levels of rental price inflation at 2.2%, over 50% higher than the average of England & Wales. This suggests a surge in demand for rental properties in Midlands.
Key Takeaways
- What type of properties are Landlords in the Midlands buying?
- By analysing purchase transactions, we established that 83% of properties bought by Landlords in the Midlands are houses, of which 53% are terrace houses. Flats in this region are far less popular and only account for 13% of properties owned by landlords.
- Are Landlords buying or re-mortgaging?
- Re-mortgaging properties are currently popular in England & Wales. According to data collated by Fleet, the Midlands has a more even split between purchase and re-mortgage transactions. 58% of completed cases in Q4 were for the purpose of re-mortgaging whilst 42% were for the purpose of purchasing.
- How are Landlords buying investment properties in the Midland
- 75% of purchase transactions come from Limited Companies, a popular way of buying investment properties at present. This is a 6% increase in limited company activity compared to Q3 2021.
- What rental yields can a landlord expect when buying a property in the Midlands?
- Data from Fleet Mortgages puts the average rental yield for properties that completed in East and West Midlands at 5.4% and 6.7% respectively for Q4 2021. For comparison, the average rental yields in England & Wales 5.6% in the same period.
Student Lets
With a rising number of undergraduates in full-time study, student HMOs have been on the rise in 2020, as Landlords, and developers recognise the potential for consistent yields in this market.
- How do the Midlands compare?
- The Midlands attracts large numbers of students every year with cities such as Birmingham housing five universities alone with a further 2 each in Leicester and Nottingham – the Midlands is one of the most densely populated student areas outside of London.
- According to Fleet’s data, Midlands sees an above average return for buy-to-let investments with average yields at 6.9% in East Midlands and 6.4% in the West. Both of which are above the UK average of 5.7% in Q4 of 2020.
- Competition within the student HMO market
- Students are picky about where they will live, ruling out broad areas if they’re not close to campus or to key social hotspots such as the town centre and student unions. Even within an acknowledged student area, there is often a radius outside of which rents drop away quickly.
- Landlords are advised to familiarise themselves with the area, speak to local letting agents and make sure they understand the price dynamics fully before investing. There are reports where new student developments have affected valuations or achievable rents in the more traditional market.
- New student developments have been pushing up standards in the traditional student letting sector by including attractive shared areas, en suite bathrooms and kitchens with all inclusive wi-fi and bills.
Portfolio Landlords
The typical landlord has 8.1 properties in their portfolio and generates an average rental yield of 5.7%.
- Property purchases continue to rise amongst portfolio landlords
- According to data from Fleet, we have seen a shift from portfolio landlords re-mortgaging properties to purchasing. In Q4 of 2019, we saw just 25% of landlords purchasing properties whilst in the same period in 2020, we can see that 38% of landlords are now purchasing. This trend seems to be in line with BVA BDRC Landlord Panel research which suggests that only 28% of portfolio landlords intend to re-mortgage a property over the next 12 months whilst 65% of portfolio landlords plan to use a BTL mortgage to fund their next purchase. This suggests property purchases will continue to rise in 2021.
- This increase in purchasing is likely due to the Stamp Duty Land Tax reductions which have been applied until March 2021 inclusive. This gives landlords and Homeowners alike the incentive to purchase a property at a lower cost.
- Fleet’s data also suggests a rise in property purchases via a limited company, in Q4 of 2019, we can see that exactly half of all purchases by a portfolio landlords were via a limited company. This has increased to 67% in the same period in 2020 a substantial increase. This again is likely due to tax relief provided in a limited company structure.
Housing Market and Forecasts
What can we expect from the property market post Covid-19?
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Index of Private Housing Rental Prices
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the Office of National Statistics (ONS), both the East and West Midlands shows high levels of rental inflation at 3.1% and 2.6% respectively, much higher than the average inflation in England across all regions which currently sits at 1.6%.
An above average level of rental price increase suggests that the demand for rental properties in both East and West Midland outstrips the supply.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.7% in the 12 months to November 2021.
During this period, rental prices for the UK excluding London increased by 2.5%, whilst private rental prices in London decreased by 0.1% over the same period.
Fleet Mortgages are actively financing buy-to-let properties in the Midlands
| Region | Ave. Rental Yield (Q4 2020) |
Ave. Rental Yield (Q4 2021) |
|---|---|---|
East Midlands |
7.2% |
5.4% |
| West Midlands | 6.1% | 6.7% |
England & Wales | 6.2% | 5.6% |
Though the year-on-year changes reflect negatively on East Midlands, the region still sees similar levels of rental yield growth when comparing to the average of England & Wales (5.6%). Despite a fall in rental price inflation over the past 12 months, there are similar level of supply and demand seen in East Midlands as over the rest of England and Wales.
On the contrary, West Midlands sees an increase in average rental yields and remains above the average of England and Wales. This suggests that demand for rental properties in West Midlands outweighs the supply in this region.
Katy Williams
BDM
Midlands
07464 927175
katy.williams@fleetmortgages.co.uk
This valuable experience enables her to understand the challenges brokers face when trying to place cases and ensures they are managed through to completion. Katy is a great asset to firms in the Midlands, who will benefit from her experience and understanding of their role and the market.
Outside of work, Katy plays in a local netball league and loves to travel, spending the majority of her annual leave by the pool with a mojito in hand.
Lucy Freeman
Telephone BDM
Midlands
01252 975210
lucy.freeman@fleetmortgages.co.uk
Coming from a mortgage adviser background and learning the ropes at Cheltenham & Gloucester, Lucy enjoys working closely with brokers as the Midlands Telephone BDM, Got a new case?
Got a question? Please give Lucy a call.
East Anglia
Regional Analysis
- According to data from Fleet, rental yields in East Anglia average 5.3%, down from 5.7% during the same period in 2019.
- Furlough support and eviction moratorium may be postponing the full effect of the pandemic on rental demands and yields.
- Rental price increases in East Anglia are at a similar level to the average in England & Wales, suggesting a reasonable balance between supply and demand in the region.
Key Takeaways
- What type of properties are Landlords in East Anglia buying?
By analysing purchase transactions, we established that 67% of properties bought by Landlords in East Anglia are houses, of which 36% are terrace houses. The next most popular property type in East Anglia are flats, accounting for 27% of properties.
- Are Landlords buying or re-mortgaging?
Data collected by Fleet Mortgages in Q4 2021 suggests that Landlords from East Anglia are more likely to re-mortgage (59% of transactions) than purchase new investment properties (41% of transactions). This trend is very similar to what we observed pre-COVID-19.
- How are Landlords buying investment properties in East Anglia?
73% of all purchase transactions came from limited company special purpose vehicles (SPV) in Q4 2021. An increasingly popular way of buying investment properties at present time.
- What rental yields can a Landlord expect when buying a property in East Anglia?
Data from Fleet Mortgages puts the average rental yield for properties that completed in East Anglia at 6.8% in Q4 2021, up from 5.4% in the same period in 2020. East Anglia is currently above the average for rental yields in England & Wales (5.6%).
Student Lets
With a rising number of undergraduates in full-time study, student HMOs have been on the rise in 2020, as Landlords, and developers recognise the potential for consistent yields in this market.
- How does East Anglia compare?
- East Anglia attracts large numbers of students every year with established universities such as Cambridge, UEA and Essex University all providing large student populations. As of 2019, each university had over 15,000 students enrolled.
- East Anglia proves to be one of the most consistent earners, despite having relatively low yields compared to other regions in England. The regions see yields over the past 5 years, averaging 5.3% during this period.
- Competition within the student HMO market?
- Students are picky about where they will live, ruling out broad areas if they’re not close to campus or to key social hotspots such as the town centre and student unions. Even within an acknowledged student area, there is often a radius outside of which rents drop away quickly.
- Landlords are advised to familiarise themselves with the area, speak to local letting agents and make sure they understand the price dynamics fully before investing. There are reports where new student developments have affected valuations or achievable rents in the more traditional market.
- New student developments have been pushing up standards in the traditional student letting sector by including attractive shared areas, en suite bathrooms and kitchens with all inclusive wi-fi and bills.
Portfolio Landlords
The typical landlord has 8.1 properties in their portfolio and generates an average rental yield of 5.7%.
- Property purchases continue to rise amongst portfolio landlords?
- According to data from Fleet, we have seen a shift from portfolio landlords re-mortgaging properties to purchasing. In Q4 of 2019, we saw just 25% of landlords purchasing properties whilst in the same period in 2020, we can see that 38% of landlords are now purchasing. This trend seems to be in line with BVA BDRC Landlord Panel research which suggests that only 28% of portfolio landlords intend to re-mortgage a property over the next 12 months whilst 65% of portfolio landlords plan to use a BTL mortgage to fund their next purchase. This suggests property purchases will continue to rise in 2021.
- This increase in purchasing is likely due to the Stamp Duty Land Tax reductions which have been applied until March 2021 inclusive. This gives landlords and Homeowners alike the incentive to purchase a property at a lower cost.
- Fleet’s data also suggests a rise in property purchases via a limited company, in Q4 of 2019, we can see that exactly half of all purchases by a portfolio landlords were via a limited company. This has increased to 67% in the same period in 2020 a substantial increase. This again is likely due to tax relief provided in a limited company structure.
Housing Market and Forecasts
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Rental Inflation Last 12 Months
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the Office of National Statistics (ONS), East Anglia – which in this case is referred to as ‘East of England’ experienced an above average increase in private housing rental prices of 3% over the past 12 months leading up to November 2021.
Regions where housing rental price inflation is above the nation’s average suggests that the demand for rental properties in the East of England outstrips its supply. This is a likely outcome from the pandemic as working from home becomes the new norm.
As a comparison, The lowest annual rental price growth was in the London where rental prices have decreased by 0.1% in the 12 months leading to November – quite unusual to see rental prices to go down, especially in London. The largest annual rental price increase was seen in East Midlands and the South West, both of which saw a 3.1% increase.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.7% in the 12 months to November 2021.
During this period, rental prices for the UK excluding London increased by 2.5%, whilst private rental prices in London decreased by 0.1% over the same period.
Source: Fleet Mortgages
| Region | Ave. Rental Yield (Q4 2020) | Ave. Rental Yield (Q4 2021) |
|---|---|---|
East Anglia |
5.4% |
6.8% |
England & Wales | 6.2% | 5.6% |
Many properties financed by Fleet in East Anglia are concentrated in the larger towns such as Norwich, Peterborough and around the outskirts of Greater London.
East Anglia saw above average levels of rental yield inflation in the 12 months leading to December 2021. This suggests that supply for rental properties in East Anglia currently outstrips demand.
Stella Brookman
BDM
South East
07977 439 721
stella.brookman@fleetmortgages.co.uk
Stella has over 30 years experience in Financial Services, Mortgage Adviser for Alliance & Leicester, Underwriter, BDM and Account Manager at SPML and most recently as BDM for 7 years at Bank of Ireland where she was involved in their specialist lending before joining Fleet Mortgages as BDM for the South East in December 2021.
She has built strong relationships with her Brokers and believes in treating people the way she would like to be treated. She loves being a BDM and really getting to know her Brokers, joining them on their mortgage application journey and providing an A1 service.
Outside of work she likes to keep fit, go for long dog walks and travel.
Hannah Chatfield
Telephone BDM
South East
01252 988 589
hannah.chatfield@fleetmortgages.co.uk
After leaving University with a 2:1 in Education Studies, Hannah went on to accrue over 15 years’ experience in financial services as a Customer Services Advisor, an Underwriter and a Regional Manager for a leading car brand.
Whilst new to the mortgage industry – Hannah prides herself on being extremely friendly and organised with a very can-do attitude.
South West / South Wales
Key Takeaways
- What type of properties are Landlords in the South West buying?
- By analysing purchase transactions, we established that 74% of properties bought by Landlords in South West and Wales are houses, of which 49% are terrace housing. Flats are proving to be less popular this quarter accounting for 23%. The remainder of properties are made up of HMOs and bungalows.
- Are Landlords buying or re-mortgaging?
- Landlords in the South West and Wales see prefer to re-mortgage properties, which follows the trend of the rest of England and Wales. Only 36% of landlords prefer to purchase.
- How are Landlords buying investment properties in the South West?
- 56% of all purchase transactions came from limited company special purpose vehicles (SPV) in Q4 2021. 44% of purchase transactions came from private investors.
- What rental yields can a Landlord expect when buying a property in the South West?
- Data from Fleet Mortgages puts the average rental yield for properties that have completed in South West at 4.7% in Q4 2021, down from 5.6% in the same period in 2020. This puts the South West below the average rental yield for properties in England & Wales also at 5.6%.
Housing Market and Forecasts
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Portfolio Landlords
The typical landlord has 8.1 properties in their portfolio and generates an average rental yield of 5.7%.
- Property purchase continue to rise amongst portfolio landlords
- According to data from Fleet, we have seen a shift from portfolio landlords re-mortgaging properties to purchasing. In Q4 of 2019, we saw just 25% of landlords purchasing properties whilst in the same period in 2020, we can see that 38% of landlords are now purchasing. This trend seems to be in line with BVA BDRC Landlord Panel research which suggests that only 28% of portfolio landlords intend to re-mortgage a property over the next 12 months whilst 65% of portfolio landlords plan to use a BTL mortgage to fund their next purchase. This suggests property purchases will continue to rise in 2021.
- This increase in purchasing is likely due to the Stamp Duty Land Tax reductions which have been applied until March 2021 inclusive. This gives landlords and Homeowners alike the incentive to purchase a property at a lower cost.
- Fleet’s data also suggests a rise in property purchases via a limited company, in Q4 of 2019, we can see that exactly half of all purchases by a portfolio landlords were via a limited company. This has increased to 67% in the same period in 2020 a substantial increase. This again is likely due to tax relief provided in a limited company structure.
Rental Inflation Last 12 Months
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the Office of National Statistics (ONS), the South West along with East Midlands saw the joint highest levels of rental price increase (3.1%) in England over the 12 month period leading to November 2021.
For comparison, the region which saw the worst level of rental price change was London at -0.1%. London was the only region in to have seen a fall in rental price over the past year.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.3% in the 12 months to August 2021. Growth in private rental prices paid by tenants in the UK has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period, a reduction of 1.7% over the past 12 months.
Fleet Mortgages are actively financing buy-to-let properties in the South West
Source: Fleet Mortgages
| Region | Ave. Rental Yield (Q4 2020) | Ave. Rental Yield (Q4 2021) |
|---|---|---|
South West |
5.6% |
4.7% |
Wales |
7.2% |
7.1% |
England & Wales |
6.2% |
5.6% |
The majority of properties financed by Fleet in the South West and Wales are concentrated in the larger cities such as Bristol and Cardiff. However, Fleet does offer mortgages across the region.
According to data from Fleet Mortgages the average rental yield of properties financed in the South West was 4.7%, down from 5.6% in Q4 2020.
Wales currently see an above average level of rental inflation compared to the average rental yield in England & Wales which suggests that demand for rental properties currently outstrips the supply
Postcodes covered
BA, BH, BS, CF, DT, EX, GL, NP, PL, SA, SN, SP, TA, TQ, TR
Josh Parker
BDM
South West
07471 992978
josh.parker@fleetmortgages.co.uk
Supported by experienced telephone BDM, Sarah, Josh has strong business acumen and is a natural relationship-builder, committed to delivering excellent levels of service with the promise of ‘I will respond to contact on the same day, guaranteed!’
Josh is passionate about learning and development, and has successfully passed his CeMAP, CeRER and DipFA qualifications. He is also a keen golfer, so after a busy week of meeting with his broker partners and attending networking events, you can often find him on a golf course.
Sarah Bowen
BDM
South West
01252 975220
sarah.bowen@fleetmortgages.co.uk
Sarah Bowen has a background in Financial Services having worked previously as both a BDM and an employed and self-employed broker. She enjoys bringing this wealth of experience to bear when assisting brokers with their complex Buy to Let requirements.
Sarah is professional, friendly and enjoys whatever challenges life throws at her and what she can learn from these. She is focused on upholding and demonstrating the high standards that Brokers expect from Fleet Mortgages.
South East
Regional Analysis
- According to Fleet, the average rental yield across the South East during Q4 of 2020 was 5.0%, down marginally from 5.3% in the same period in 2019.
- The South East sees the largest number of properties being financed through a re-mortgage in England & Wales.
- Furlough support and eviction moratorium may be postponing the full effect of the pandemic on rental demand and yields.
Key Takeaways
- What type of properties are Landlords in the South East buying?
- By analysing purchase transactions, we established that 69% of properties bought by Landlords in the South East are houses of which 36% was terraced housing. The large remainder of purchase transactions came from Flats 26%.
- Are Landlords buying or re-mortgaging?
- The South East favours re-mortgaging (62%) properties rather than purchase transactions (38%). This follows the trend in other regions in England and Wales.
- How are Landlords buying investment properties in the South East?
- 67% of purchase transactions in the South East were completed via a Limited Liability Company SPV set up for the sole purpose of acquiring BTL Properties. This is a 6% increase in transactions via Limited Company SPV’s compared to Q3.
- What rental yields can a Landlord expect when buying a property in the South East?
- The average rental yield in the South East is 5.5% in Q4 2021, rental yields have stayed the same during the 12 months leading up to December. Rental yields in the South East are currently below the average in England & Wales suggesting supply currently outstrips the demand for rental properties.
Housing Market and Forecasts
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Rental Inflation Last 12 Months
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the Office of National Statistics (ONS), the average inflation of rental prices in the South East currently sits at 2.1%.
Regions which see a rental price increase above the average of England suggests that the demand for rental properties outstrips the supply in the South East.
For comparison, East Midlands sees the highest levels of housing rental price increase in November 2021 at 3.1% and Greater London sees the lowest with a 0.1% decrease.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.7% in the 12 months to November 2021.
During this period, rental prices for the UK excluding London increased by 2.5%, whilst private rental prices in London decreased by 0.1% over the same period.
Source: Fleet Mortgages
| Region | Ave. Rental Yield (Q4 2020) | Ave. Rental Yield (Q4 2021) |
|---|---|---|
South East |
5.4% |
5.5% |
England & Wales |
6.2% |
5.6% |
- Many properties financed by Fleet in the South East are concentrated in the larger towns situated close to the M25 such as Reading and near the coastal towns such as Brighton and Portsmouth.
- Despite seeing an increase in rental yields compared to 12 months ago, the South East sees below average levels of rental yields compared to England and Wales. Regardless, the South East has remained a consistent earner throughout the year.
South
Postcodes covered
BN, CR, GU, KT, RH, PO, RG, SE, SM, SO, TW
Giovanna Streatfield
BDM
South
07981 802 332
giovanna.streatfield@fleetmortgages.co.uk
Giovanna joined Fleet back in 2019 to focus solely on meeting with brokers and providing solutions to their customers complex BTL needs.
In her spare time, Giovanna loves spending time with family and enjoys long walks in the country, relaxing beach holidays as well as being a dab hand in the kitchen.
Jason Blignaut
Telephone Business Development Manager
South
01252 931 365
jason.blignaut@fleetmortgages.co.uk
Having started out as a chef, Jason began his career in property finance in 2018 where he gained experience within Buy to Let, Bridging and Commercial Finance.
A keen problem solver, Jason enjoys finding solutions to brokers’ quirky enquiries and is focused on always delivering the best service possible.
South East
Postcodes covered
BR, CB, CM, CO, CT, DA, IG, IP, ME, NR, RM, SS, TN
Stella Brookman
BDM
South East
07977 439 721
stella.brookman@fleetmortgages.co.uk
Stella has over 30 years experience in Financial Services, Mortgage Adviser for Alliance & Leicester, Underwriter, BDM and Account Manager at SPML and most recently as BDM for 7 years at Bank of Ireland where she was involved in their specialist lending before joining Fleet Mortgages as BDM for the South East in December 2021.
She has built strong relationships with her Brokers and believes in treating people the way she would like to be treated. She loves being a BDM and really getting to know her Brokers, joining them on their mortgage application journey and providing an A1 service.
Outside of work she likes to keep fit, go for long dog walks and travel.
Hannah Chatfield
Telephone BDM
South East
01252 988589
hannah.chatfield@fleetmortgages.co.uk
After leaving University with a 2:1 in Education Studies, Hannah went on to accrue over 15 years’ experience in financial services as a Customer Services Advisor, an Underwriter and a Regional Manager for a leading car brand.
Whilst new to the mortgage industry – Hannah prides herself on being extremely friendly and organised with a very can-do attitude.
Greater London
Key Takeaways
- What type of properties are Landlords in Greater London buying?
- By analysing purchase transactions in Q4, we established that 54% of properties bought by Landlords in London are houses, of which 34% are terrace houses. 44% of properties purchased were flats, an 8% fall compared to data in Q3.
- Are Landlords buying or re-mortgaging?
- Re-mortgaging properties are currently popular in England & Wales. According to Fleet data, Greater London is no different with 68% of properties being re-mortgaged and only 32% being purchased.
- How are Landlords buying investment properties in Greater London?
- 69% of purchase transactions come from Special Purpose Vehicles (SPV) Limited Companies, a preferred way of buying investment properties at present.
- What rental yields can a Landlord expect when buying a property in greater London?
- According to Fleet data, Greater London saw an average rental yield of 4.5% in Q4 2021.
- Greater London had seen stagnant rental yield inflation since 2014, ranging between 4.5% and 5.1% rental yields.
- A year on year comparison shows that London has fallen by 0.5% in terms of rental yields from Q4 2020.
Housing Market and Forecasts
In our previous quarterly presentation, we forecasted that demand for housing would continue to remain strong going into Q4 despite the end of the Stamp Duty tax relief. Fleet expects this trend to continue going into 2022.
According to the Halifax house price index in December, house price growth over the 2021 calendar year was the strongest for at least 15 years.
A combination of low mortgage rates, high household saving and the reassessment of housing needs given government work from home initiatives have resulted in an increased appetite to purchase properties.
Due to a recent increase in Bank of England base rate, we can expect to see a steady increase in mortgage rates as lenders attempt to preserve their margins. The increase in rates may not be evident yet as lenders have offset this increase with narrower profit margins in order to maintain sales volumes. However, as this is not sustainable, we can expect modest increase in mortgage rates over the coming months.
This increase in base rate is likely to yield less demand as it reduces the incentive to invest. Despite this backdrop, Capital Economics still forecasts a 5% y/y rise in house prices by Q4 2022, 2.5% higher than the excepted growth when we had a look last quarter.
According to data from Capital Economics, housing demand continues to outstrip supply. Surveyors have reported that sales instructions have continued to fall in Q4, perhaps reflecting a shift back towards first-time buyers in the market after a surge in home moving activity during the stamp duty holiday.
As a result of elevated household saving, continuing historical low mortgage rates and many households reassessing their homes in light of the pandemic, Fleet suspects demand will continue to rise going into 2022.
Rental Inflation Last 12 Months
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
According to data from the Office of National Statistics (ONS), London has now seen its average rental prices drop for a third consecutive quarter. Falling a further 0.1% since August 2021.
Having a housing rental price inflation below the nation’s average suggests that the supply for rental properties in London currently outstrips by the demand.
As a comparison, The highest annual rental price growth can be seen in the South West and East Midlands where rental prices increased by 3.1% in the 12 months leading to November 2021.
Source: Index of Private Housing Rental Prices, UK - Office for National Statistics (ons.gov.uk)
Private rental prices paid by tenants in the UK increased by 1.3% in the 12 months to August 2021. Growth in private rental prices paid by tenants in the UK has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period, a reduction of 1.7% over the past 12 months.
Source: Fleet Mortgages
| Region | Ave. Rental Yield (Q4 2020) |
Ave. Rental Yield (Q4 2021) |
|---|---|---|
Greater London |
5.0% |
4.5% |
England & Wales | 6.2% | 5.6% |
According to Fleet’s data, rental yields in Greater London have been relatively stagnant over the past few years and is likely to continue in this manner.
This is likely due to the saturated market already in London. This competition within London has allowed for rent prices to remain relatively stable. It also proves to be a consistent earner despite offering lower yields than other regions.
Central London
Postcodes covered
E, EC, SW, W, WC
Dave Horsman
Senior BDM
Central London
07377 246 387
dave.horsman@fleetmortgages.co.uk
Dave has been in the mortgage intermediary world for over 20 years having worked at some of the UK’s key lenders where he gained an extensive knowledge of the UK specialist mortgage market.
He has an extensive understanding of the intermediary world and loves to get involved and nurture relationships. Outside of work plays golf and watches football.
Naz Buckler
Telephone BDM
Central London
01252 975 246
naz.buckler@fleetmortgages.co.uk
Naz has 10 years banking experience based in London, Dubai and New York. During this period, she was fortunate enough to perform a variety of roles including working as a Registered Mortgage Advisor. She is CeMap qualified and is also a qualified Yoga teacher.
AL, EN, HA, HP, LU, MK, N, NW, SG, SL, UB, WD
Stuart Kay
Senior BDM
North London
07929 264 379
stuart.kay@fleetmortgages.co.uk
With 25 years experience dealing with brokers and their clients, Stuart aims to provide ideas to create business and solutions to convert business.
Find out how he can help your business by calling him on 07929 264379.
James Belcher
Team Leader / Senior Telephone BDM
North London
01252 975 204
james.belcher@fleetmortgages.co.uk
With 4 years in Estate Agency prior to joining Fleet Mortgages, James brings an existing passion for the Buy to Let market into his role as Internal BDM.
James takes pride in working with intermediaries, discussing how to deliver the best outcomes for their clients, and bringing what Fleet Mortgages has to offer to life.
Andrea Gizzy
BDM
Central London
07377 246387
andrea.gizzy@fleetmortgages.co.uk
Andrea has numerous years of experience within the Mortgages Industry, and is CeMAP qualified.
Andrea’s criteria and product knowledge is second to none, and she prides herself on providing outstanding customer service.
Michael Maynard
Telephone BDM
Central London
01252 931355
michael.maynard@fleetmortgages.co.uk
Coming from a background of Estate Agency and New Homes, Michael has continued to learn about the property sector within Fleet Mortgages.
Having been with Fleet for nearly two years and earning his CeMAP qualification in that time, Michael is accomplished at dealing with tricky enquires from intermediaries and guiding them on our criteria to assist in getting BTL cases through to completion.
