Landlord remortgage opportunity
Phil Rickards is head of BM Solutions
Since the Budget announcement much of the talk over the last week or so in the industry has concerned the Chancellor’s plans to reduce the tax relief landlords can claim on mortgage interest payments to 20% from 2017. There’s been a lot of speculation as to whether it will slow market growth? Will it crush yields and push landlords out of the market? And will landlords be able to mitigate the change by increasing rents?
On top of this we had the Financial Policy Committee signalling that it intends to look much closer at buy-to-let lending as regards their growth and any possible impact on financial stability. As such it’s no wonder that landlord’s are feeling beset on all sides at the moment and that confidence in the UK Private Rented Sector has fallen.
Just how far confidence levels have fallen is apparent in the latest BM Solutions Landlord Panel Research, which shows confidence is now 10 points below its peak in the latter half of 2013. This has translated into less buy-to-let property acquisition activity at the start of 2015, with just one in seven landlords having increased the number of properties in their portfolio in the last three months.
So what does all of this mean for brokers? Well, with our landlord research telling us that purchase activity looks slower for the first half of 2015, my thoughts turn to remortgage opportunities. The most positive action brokers can take tight now is to make certain that landlords have the best possible mortgage deal in place, and with increased lender competition in the buy-to-let sector, there looks to have never been a better time to do this.
Despite the current atmosphere, one thing is clear though and that is that landlords continue to tell us that they are in it for the long-term, with 77% telling us that their buy-to-let properties form at least part of their pension provision, up five percentage points from Q4 2014. And despite landlords reporting less acquisition appetite at the start of the year, their attitude may be changing as the intention to purchase remains high, with three in 10 landlords still saying they are still looking to grow their portfolio in the next 12 months.
At the end of the day the fundamental need for the private rental sector remains in place and it’s becoming increasingly important in providing a supply of good quality housing to help meet an ever increasing demand. As such buy-to-let continues to play an important part in supporting the overall UK housing agenda and it is therefore important it is allowed to grow in a sensible and sustainable fashion – I for one continue to watch developments with interest.