Landlords are optimistic as buy-to-let stabilises
The buy-to-let business looks set to stabilise over the next 12 months and more than half of UK landlords now feel optimistic, two new studies have revealed.
Paragon ’s latest Financial Adviser Confidence Tracking (FACT) Index found that the majority - 65 per cent - of intermediaries expect to see a stable environment for those investing in the private rented sector.
This is the first time that intermediaries have forecast a stable outlook for the business since the 2015 Summer Budget when chancellor George Osbourne announced plans to phase out tax relief on buy-to-let mortgages.
Meanwhile, Your Move’s Landlord Sentiment Survey reveals that 52 per cent of landlords are currently positive about their role in the existing economic and political climate, while only 16 per cent feel negative and an additional 30 per cent say they are indifferent.
The survey, which gathered opinions from nearly 1,100 landlords in June, also reveals that the two most important considerations to landlords are ongoing maintenance and upkeep costs (83 per cent) and the potential to make long-term profit (80 per cent).
Martyn Alderton, national lettings director at Your Move and Reeds Rains, said: “Our research shows the majority of landlords are in it for the long term and that’s important for the well-being of the private rental sector, providing much needed homes for those who cannot yet afford, or do not wish to purchase due to lifestyle choices.”
In April the maximum age limit for buy-to-let mortgages was scrapped but the latest data from UK Finance shows that there was a near 10 per cent drop in new buy-to-let home purchase mortgages in May, as a series of reforms continues to hit landlords.
However, there were 14,600 new buy-to-let remortgages completed in the month, some 15 per cent more than in the same month a year earlier where August 2017 saw new buy-to-let lending rules kick in to make it harder to obtain finance.
By value this was £2.3bn of lending in the month, 21.1 per cent up on the same period last year.
Encouragingly, this quarter’s FACT results also include the first increase in the proportion of landlords raising finance with a view to adding to their portfolio since 2015.
John Heron, managing director of mortgages at Paragon, said: “It’s encouraging to see intermediaries forecast a more stable outlook for buy-to-let business after such a long period of negative sentiment.
“Purchase activity continues at much lower levels but it is interesting to see the step up in remortgage business as landlords look to maximise certainty and minimise costs as the interest rate changes start to take effect.”
As part of our Emerging Landlord report, we found that more landlords were intending to increase the size of their portfolios (67% >70%). As well as their appetite to invest in buy-to-let as part of a pension fund, which has also increased year on year, from 82% to 86%.