Over the past year, the government has introduced 3% Stamp Duty levy, new stress tests for portfolio landlords and started to phase out mortgage interest tax relief.
Experts predicted that landlords and property investors would be leaving the market in their droves, put off by all the extra rules and regulations that have made buy-to-let a less attractive investment option.
But they haven’t left. In fact, the opposite has happened – according to recent HMRC data, the number of buy-to-let investors in the UK rose to a record high of 2.5million in the latest tax year. That’s an increase of 5% on 2016/17 and a rise of 27% over the past five.
And the number of properties each landlord owns has increased too – on average, each landlord owns 1.8 buy-to-let properties, which according to the research, has risen for the fifth year in a row.
So, it seems that, despite the changes brought in to the sector recently, landlords continue to see residential property, especially in London, as a strong investment.
This is because they are looking at the bigger picture. A tax change is not going to cause landlords to rethink their entire investment strategy because they are more pragmatic than that. Perhaps buy-to-let is not as profitable as it once was, but it is still better than the alternatives – low interest rates and a volatile stock market, so landlords are sticking around.
However, while the changes to the sector may not have put landlords off, the PRA changes particularly have put some brokers off.
I think this is because there is no longer a place for a ‘generic mortgage adviser’. The buy-to-let sector – like the residential and commercial sectors – is becoming increasingly specialist.
The criteria for buying a buy-to-let property is very different now, and to be able to advise on the market, brokers need to understand all the latest legislation, know about portfolios, HMOs, limited companies etc.
As a result, while mainstream lenders and brokers are reporting a drop in the number of buy-to-let mortgages, Connect for Intermediaries has seen an increase. This is because the firm is able to offer much more flexibility and scope to find products that suit the specific needs of a borrower.
Connect for Intermediaries, like other specialist buy-to-let brokers, has access to specialist buy-to-let lenders who can offer tailored and flexible finance solutions.
And I think this is a positive move for the mortgage market. As lenders start to specialise more, the competition on both rates and criteria will increase which will mean better deals for borrowers and ultimately a more buoyant buy-to-let market.
Liz Syms is CEO of Connect for Intermediaries.
Mon, 16 Apr 2018 12:00:04 GMT