BTL Is Less Attractive For 'Amateur' Landlords

AFS Team·2 May 2019·4 min read
BTL Is Less Attractive For 'Amateur' Landlords

BTL Is Less Attractive For 'Amateur' Landlords

It appears that the days of amateur buy to let investors in the UK is coming to an end, lending figures reveal.

According to UK Finance, the banking trade association, banks advanced only a few dozen loans to amateur landlords every day in February.

In 2007, at the buy to let market's peak, banks were issuing 16,000 buy to let loans each month for buying houses, but in February that figure had fallen to 4,800 loans or 170 every day – a drop of two-thirds.

Of that figure, around a quarter were made to amateur investors and now most loans are being made to professionals who have a property portfolio and are trading through a limited company.

The figures also reveal that buy to let lending has dropped by half in just three years following a 3% stamp duty surcharge being introduced on property purchases.

Market becoming less attractive to amateur landlords

Also, the market is becoming less attractive to amateur landlords because of the scaling back of tax breaks.

Andrew Montlake, of mortgage broker Coreco, told one national newspaper: "There's been a shift in the last couple of years with professional landlords supporting the buy to let market and they have the efficiency and scale to cope with tax changes.

"Amateur landlords are people we see now who are buying-out relatives from inherited properties as well as wealthy individuals making a long-term investment for their children or for their pension and are not looking to make much profit in the meantime."

Now, the Intermediary Mortgage Lenders' Association is calling for a phase of 'policy consolidation' so that the tax changes on the property market can be assessed.

The trade group says that from 2000 to 2017, landlords invested £289 billion into rental property to help meet rising demand from tenants.

Over that period of time, investors brought 1.8 million rental homes to the market.

'Tax and regulatory changes that hit the BTL market'

The association's executive director, Kate Davis, said: "The tax and regulatory changes that hit the BTL market over the past year have had far-reaching effects that have to be realised fully yet.

"Government interventions have been aimed apparently at encouraging first-time buyers and to make buy to let investment less attractive to potential and existing landlords.

"The private rental sector plays an important role in the supply of housing and it's essential that there is a balance so that tenants are not disadvantaged by higher rents and shrinking stock."