Last week saw mortgage advisors from across the country come together for the Mortgage Strategy Leaders Forum. This meeting in London involved a discussion about changing taxes, and how such reforms have affected the buy-to-let market.
According to senior mortgage experts, the industry is fast moving towards a more professional setting. With tax changes having an impact on buy-to-let (BTL) investors, these mortgage advisors feel that the Government’s plan to ‘professionalise’ the industry is so far working as expected.
Recent tax legislative changes have led to some accidental and part-time landlords leaving the market. With this leaving those most serious about making their investments succeed, this could be good news for improving the private rented sector for both landlords and tenants, in terms of professionalism.
The focus is shifting towards landlords who have a focus on growing and improving their portfolios, according to Rob Jupp, CEO of Brightstar Financial, the specialist lenders.
Jupp has commented: “There’s no truth to press reports that landlords are leaving in droves. But the tax changes have been the death knell for dinner party landlords.”
David Whittaker, CEO of Keystone Property Finance, has shared a similar view. He has pointed out that the majority of properties sold by landlords are then acquired by other investors. More often than not, these are professional landlords, rather than first time buyers.
He has commented: “Increased yields in some areas have mitigated the tax changes. As a long-term business plan with yields of 4.5% or 5% and mortgage rates about 3%, buy-to-let is still a good investment.”
It is argued by some experts that first time buyers are not likely to benefit from the Government’s decision to scrap tax relief for buy-to-let landlords. This is a view that was also shared by the panel at the Mortgage Strategy Leaders Forum.
However, the market for first time buyers is currently showing to be at its strongest in the UK since June 2017.
UK Finance data shows that August saw the completion of 35,500 new first time buyer mortgages, which is up 2%, compared to the same month in 2017. Lending to this group has also increased by 5.2%, to £6.1 billion.
On the other hand, it seemed to be considered by some on the panel that this jump in lending to first time buyers had more to do with assistance from schemes such as Help to Buy, rather than landlords feeling the pressure to sell up.
Adrian Moloney of One Savings Bank commented: “Help to Buy has been the stimulus for an improved first-time buyer market, not landlords selling up.”