Buy-to-Let Mortgage Demand High at End of Last Year

Buy-to-let mortgage demand was high at the end of last year, but is expected to drop over 2017, according to lenders.

Lenders throughout the country reported that demand for secured lending for house purchase increased slightly in the last three months of 2016, partly driven by buy-to-let mortgage demand, but the market is expected to remain flat in the first quarter of this year.

Buy-to-Let Mortgage Demand High at End of Last Year

Buy-to-Let Mortgage Demand High at End of Last Year

The Bank of England’s latest Credit Conditions Survey, which assesses lender expectations, found that buy-to-let mortgage demand, for both purchase and remortgage, rose substantially at the end of last year, but little change is forecast for the next three months, with lending to landlords forecast to decrease.

Steve Olejnik, the Chief Operating Officer of broker Mortgages for Business, comments on the findings: “There was an obvious incentive for landlords to do business in the final quarter of 2016, which led to an increase in buy-to-let borrowing.

“Many investors will have wanted to beat the Prudential Regulation Authority’s tightening of buy-to-let affordability checks, which came into force this month, as well as the forthcoming changes to income tax relief on finance costs.”

He continues: “Increased landlord confidence will have also been driven by greater familiarity with the changes to Stamp Duty earlier in the year and a more stable macro-economic outlook following post-referendum turbulence.

“For investors, the fourth quarter of 2016 was therefore a sensible time to do business, and we saw increased demand in both the residential and commercial property sectors. Buy-to-let pricing remained largely unchanged, which also encouraged activity, particularly from landlords using limited companies as borrowing vehicles.”

So is investing in buy-to-let still a viable option?

Olejnik explains: “While the fiscal and regulatory changes will affect investor demand, the property market will continue to offer strong returns to those who take an intelligent and level-headed approach to their portfolios.

“Landlords need to factor the forthcoming tax changes into their financial planning and should always consult with a professional tax adviser.”

Whether you are a seasoned investor or first time landlord, you should look at all of your buy-to-let mortgage options and keep up to date with changes to the financial sector at Landlord News.

For those of you who have recently invested in the private rental sector or have remortgaged your buy-to-let property, take a look at our award-winning Landlord Insurance policy, which will offer you 33 essential covers as standard: https://www.justlandlords.co.uk/landlord-insurance

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