New analysis has revealed that there was a 7% fall in the number of buy-to-let valuations recorded during April.
The figures, presented by Connells Survey & Valuation, could highlight the start of a decline, following the reduction of landlords’ mortgage tax relief.
Connells suggest that the proportion of buy-to-let valuations is 6% under the five-year average for April. In fact, buy-to-let valuation activity is lower than in April last year, when the 3% surcharge in Stamp Duty was introduced.
That, plus the cut to mortgage interest tax relief, is likely to be the main drivers behind the fall in buy-to-let valuations. From last month, landlords can only offset 75% of mortgage interest payments against their rental income – as opposed to the full amount.
John Bagshaw, corporate services director of Connells Survey & Valuation, commented: ‘The Government’s anti-landlord policies have been hitting smaller players. Over the last year, buy-to-let valuations have made up less than 10% of market activity, representing a new low in April.’
‘This could suggest that smaller, private landlords, who typically use buy-to-let mortgages, have not been investing on the same scale as previously seen. Buy-to-let used to be seen as a viable way to gain additional income or to fund retirements, but the gradual removal of buy-to-let mortgage tax relief will make it much harder for the man on the street to invest,’ he continued.
However, Mr Bagshaw did go on to note that, ‘buy-to-let valuations only fell 1% month-on-month and so the comparison with the five year average doesn’t always tell the whole story.’
Despite the decline in buy-to-let valuations, buy-to-let remortgaging is 4% greater than the current five year average for April. Now, this is responsible for 11% of total valuations in the overall market-a larger proportion than buy-to-let purchasing.
Bagshaw went on to say: ‘With bigger tax bills, landlords will start to feel the squeeze. To offset some of the rising costs, landlords have been taking advantage of the lower remortgage rates on offer. As buy-to-let tax relief gradually disappears, remortgaging looks set to be an increasingly popular option with landlords as a way of retaining profitability.’