Buy to Let – Market Review March 2019
Welcome to the inaugural quarterly Buy to Let Mortgage Market Update.
To begin with the good news is that the buy to let mortgage market has never been more competitive with over 2000 mortgage deals available from dozens of lenders with the familiar high street banks being joined by new niche and specialist lenders. Interest rates start from under 1.50% and loan to values have been steadily increasing with a good selection of deals available with a 20% deposit and even a small selection with just 15% required. Many lenders are also offering free valuations and cashback incentives together with free legal services for re-mortgaging.
This ultra-competitive market has been driven by a response to the Prudential Regulation Authority’s increased regulation of Portfolio Landlords in 2017 which was itself a response to HMRC’s changes to the taxation of rental income. The new rules impacted any investor with 4 or more properties and meant increased stress testing and more documentation required including business plans and portfolio spreadsheets etc. However, the lenders still have an appetite for buy to let and have had to make their products more and more attractive to try and maintain lending levels.
In addition to the competitive interest rates available, lending criteria has been relaxed slightly with less onerous rental income calculations and a wider acceptance of larger portfolios compared to the early days of the new PRA rules. It is also pleasing to see many more products available for Ltd Company applications and HMO properties.
On the downside the new taxation rules will now be feeding through to landlords who will begin to feel the negative effects of bigger tax bills and we also have the ongoing uncertainty around Brexit which may or may not happen on the 29th March with as yet unknown effects on the UK property market and interest rates which could be poised to go either way. Hopefully by the time of the next quarterly update the future will be clearer.
Credit: Sean Sutton and http://mortgageoptionshull.co.uk/