Buy-to-let mortgage lenders diversifying into residential lending

The Council of Mortgage Lenders has predicted that the buy-to-let commercial mortgage market will decrease in 2017. Many specialist buy-to-let lenders are now offering standard mortgages for home buyers.

Several factors have contributed to a downturn in the market activity in this area. In 2016 there was a rise in stamp duty on buy-to-let houses purchases, and in 2017 the tax relief that can be claimed on mortgage interest payments will fall. In January, 2017 new affordability regulations came into effect which have made it more difficult for some landlords to obtain a commercial mortgage.

To protect against a fall in profits, many commercial lenders are now offering loans for residential buildings for individual home buyers rather than landlords. No lender has recently declared that they will abandon the buy-to-let lending market, but they find it necessary to diversify to make up for any slowdown in the buy-to-let market.

Many property experts believe that there will continue to be a need for specialist commercial mortgage lenders with expertise in this particular market. Many lenders offer mortgage products for both individuals and landlords forming limited companies to purchase and manage their property portfolios.

The move by lenders to offer standard mortgages as well as buy-to-let mortgages could be good news for mortgage brokers who will have access to a wider choice of mortgage products and providers to offer their clients.