There have been a few media stories in 2017 that have predicted the death of the buy-to-let property market, but a close look at the data shows that this may be something of a distortion of the truth.
Landlords have faced extra costs from increased stamp duty and the decrease of tax relief on buy-to-let mortgages. This has caused some landlords to sell up, while others have formed limited companies to own property because limited companies are not subject to the same tax rules as individual landlords.
Lenders and brokers report that fewer new commercial mortgages for buy-to-let landlords have been processed in 2017. However, the number of cash buyers for buy-to-let property has increased. According to a BuyAssociation.co.uk article, cash buyers account for 34% of buy-to-let sales over the 12 months up to November 2017. Over £21bn was invested by cash buyers in rented residential property. Much of this cash came from landlords remortgaging existing property.
The research director of estate agents Countryside, Johnny Morris said:
“Landlords have increased their housing wealth considerably over the last 10 years. This means cash purchases are steadily becoming a bigger part of the market. But a landlord buying with cash will often have a mortgage either on their personal home or other properties in their portfolio.”
He added that rising prices mean that landlords can release equity in their properties in order to increase their profit portfolio.
Mortgage brokers can arrange a remortgage for landlords who want to raise finance.