Capital raising interest from portfolio landlords

Capital raising interest from portfolio landlords

Portfolio and professional landlords are increasingly looking to capital raise via remortgaging in order to purchase property with strong rental yields, according to Fleet Mortgages.

The buy-to-let lender has highlighted the findings from the most recent ARLA Propertymark report as an indication of the reasons why landlords might now be looking to capital raise via a remortgage.

The latest report revealed a fall in the number of private rental sector (PRS) properties managed per branch – down to 182 in October from 189 in September, and the lowest since October last year. It also reported that 22% of all agents saw a rise in rents across their managed properties. Meanwhile, there was only a 0.1% increase in the number of tenants achieving a reduction in their rent.

Fleet Mortgages believes a shift in the PRS environment means that the sector could be undergoing a drop in the supply of properties, which is likely to mean that rents will inch up further, and the attraction of adding to portfolios for landlords will continue to rise.

Added to this, while Fleet Mortgages’ anticipates house prices to continue to move up, it describes today’s environment as ‘relatively benign’ and believes a large number of landlords will feel now is as good a time as any to purchase, and to keep building portfolios.

Fleet Mortgages recently launched two new pay-rate five-year fixes in its Standard (Individual) and Limited Company ranges. The Standard product is offered at 3.89% with an ICR of 135% at pay rate; the limited company product is again offered at 3.89% but this time with an ICR of 125% at pay rate. Both products come with a revert rate of LIBOR plus 4.2%.

Bob Young, CEO of Fleet Mortgages, said: “There seems to be a perception in the market at the moment that remortgaging to capital raise is very hard but that’s certainly not true in the case of Fleet Mortgages, where we have few barriers to remortgage, the same simple criteria across the piece and borrowers can capital raise up to 75% LTV.

“We’ve seen a noticeable uptick in the numbers of savvy landlords/investors talking to us about their purchase plans, and I suspect that many professional and portfolio landlords will be increasingly looking to capital raise in the months ahead. Advisers are likely to be in demand for this type of work and should be aware of the portfolio landlord lending options that are available.

“A number of market fundamentals look likely to move in favour of those seeking to add to portfolios by purchasing well-priced properties with decent yields. Firstly, as the most recent ARLA research outlines, it appears the number of PRS properties on agents’ books has dropped, which means rents only have one way to go, as supply gets tighter. Secondly, it’s obvious that agents are already seeing rent rises in almost a quarter of their managed properties. Add into this, the relatively benign house price environment and it’s no wonder landlords want to add to portfolios.

“Advisers will of course need to look beyond the realms of pound-for-pound remortgages here but, from our point of view, we are intent on offering a far less complicated approach to portfolio lending and ensuring those borrowers who want to capital raise to purchase, have the ways and means to do so. This appears to be a ripe opportunity for these landlords and advisers have a clear opportunity to support their ambitions in this area by teaming up with a lender that is dedicated to servicing their needs.”