BTL mortgage brokers say business will ‘stabilise’
Most mortgage intermediaries are expecting levels of landlord business to stabilise over the next year, one index reveals.
Paragon's Financial Adviser Confidence Tracking Index found that 65% of brokers are predicting a stable future for the industry, the highest since the 2015 summer budget.
That's when the Chancellor of the Exchequer announced plans for the phasing out of tax relief on landlords with buy to let mortgages. The stamp duty surcharge that landlords have to pay is also compounding the financial plight of landlords.
The research also highlights that the tougher lending criteria from the Prudential Regulation Authority is also having an effect with landlords having to prove that their rental income will cover their mortgage costs and provide a business plan for their investment.
‘Brokers forecasting a stable outlook for buy to let business’
Now Paragon's managing director of mortgages, John Heron, said: “After a long period of negative sentiment, it's encouraging seeing brokers forecasting a stable outlook for BTL business.
“Purchasing activities are at lower levels and it's interesting there is an increase in remortgage business as landlords want to minimise costs and maximise certainty with the interest rate change taking effect.”
The brokers also highlight that in 49% of cases, a landlord's business is a straightforward mortgage but for 60% of landlords wanting to remortgage, they are wanting to enjoy a better rate of interest.
The latest figures from UK Finance also highlight the fact that buy to let mortgages transactions fell by 40% between May this year and 2015, from 8,900 to 5,500. The figures also highlight that landlords remortgaging has risen sharply, the figures are up 64% to 13,600 from 8,900.
Proportion of overseas landlords plunges
Meanwhile, it's been revealed that the proportion of landlords from overseas who are letting property has plummeted.
Real estate firm Hamptons International says that since 2010 - when they began keeping records - numbers have halved to 6% from 13%. And in the six months to June, the numbers fell by 2%.
Along with higher stamp duty and tax issues, there's also been a removal of capital gains tax exemptions which have made UK property less attractive.
Proportion of overseas landlords in London
The figures highlight the differences in the UK, with the proportion of overseas landlords in London growing by 1% year-on-year to 12%.
A spokeswoman explained that the low pound is effectively offering buyers a discount on UK property and a softening market is offsetting the extra financial costs of owning property in the capital.
Hamptons says that new lets have increased by 0.2% with the average rent now running at £964 per month with landlords in Wales seeing the best rent rises of 4.9%, followed by the midlands with 2.4%.