First-time landlords are taking advantage of lower property prices and stronger yields in Northern England, according to buy-to-let lender Fleet Mortgages.
In Q4 a quarter (25%) of the lender’s mortgage applications in the North were from first-timers.
This compared to just 4% in the South West of England, where – as in most other regions – the highest percentage of landlords applying for mortgages already owned a portfolio of between six and 14 properties.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “There has been an underlying narrative played out over the last year or so, that the buy-to-let sector is functioning purely on the remortgage business of existing landlords, and there is little appetite from new or seasoned landlords to purchase more homes to rent out.
“Our latest Rental Barometer, particularly the growth in first-time landlord applications but also the much more even spread of purchase versus remortgage business, seems to indicate this is not truly the case, and instead, where the opportunity arises, landlords are very much looking to buy.
“This is clearly more the case in certain regions of the country, and it’s not surprising that where properties have lower values, but also where yield is very strong, we are seeing more purchase business from those with significant portfolios or those who are just starting on their landlord journey.”
The North East has the most affordable rental stock with an average monthly rent of £706pcm, while landlords have the lowest loan amount of £77,000 per mortgage.
The average rental yield in the North East stands at 9.3%, followed by Yorkshire & Humberside at 8.6%, and the North West at 8.3%.
In the South high property prices and rents deliver lower average annual yields – Greater London at 5.8%, East Anglia at 6.3% and the South East at 6.4%.
In the North East, East Anglia and Greater London, purchase applications are almost on a par with remortgaging.
In the Yorkshire & Humberside for example purchase applications exceeded remortgage, at 60% compared to 40%.
This is not the case in other regions, for example, in Wales 71% of all applications during the quarter were for remortgages, compared to just 29% for purchases.
Cox added: “We certainly need more supply in the PRS to house people, and to keep rents from rising exponentially.
“We believe the government and others would be much better off seeing landlords as a necessary part of the overall housing market than continuing to introduce policies which seemingly want to oust them.
“There is an appetite to invest more and to deliver more homes to the PRS – as we know landlords are a resilient bunch and are still committed to the sector and to developing their portfolios to benefit from strong yields and capital growth.”
