New buy-to-let home purchase mortgages continues to drop

New buy-to-let home purchase mortgages dropped once again, with 4,800 completed in February, down 7.7% year-on-year, UK Finance Mortgage Trends Update has found.

While buy-to-let house purchases continue to contract due to tax and regulatory changes, buy-to-let remortgaging has increased as borrowers move from fixed rate mortgages and lock into new attractive rates. There were 14,400 remortgages in the buy-to-let sector, 2.1% more than in the same period last year.

David Copland, director of mortgage services at TMA, said: “Whilst activity from first-time buyers continues its upward trajectory, the buy-to-let market could do with further attention.

“As previous tax and regulatory changes continue to loom over the private rental sector, advisers will prove essential in guiding these customers towards the best solutions to fit their individual needs.

“At TMA our core focus is supporting these advisers, providing them with the quality lending solutions needed to maintain consumer confidence in the market.”

Tomer Aboody, director of property lender MT Finance, added: ‘It is no surprise that buy-to-let numbers are extremely low with just under 5,000 new purchases in the month, considering the tax and regulatory changes which have hit the sector.

“Landlords are taking advantage of cheaper rates on buy-to-let loans and remortgaging while looking at the commercial space to make further investments where regulations are softer.

“With news of further tenant protections being introduced with regard to evictions, landlords are uneasy and increasingly uncomfortable with traditional buy-to-let.

“The retreat of landlords from the market is producing more opportunities for first-time buyers, as the government intended.”

Alice Watson, head of marketing and communications at Canada Life Home Finance, said the rise in buy-to-let remortgage lending reported by UK Finance indicates that portfolio landlords are keen to unlock the value of their properties.

She said: “Since 2017, tighter affordability checks introduced by the Prudential Regulation Authority (PRA) have left some landlords struggling to access more traditional refinancing options.

“So, it’s important landlords remember there are other options available that can help them access their property wealth in retirement. Products not subject to tighter lending checks are now available for buy-to-let landlords aged over 55.

“These let them release cash tax-free, while leaving their portfolio intact and letting them continue to draw on its rental income.”

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