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Stability returns to buy-to-let in closing months of 2016

Thursday 12 January 2017

The final three months of 2016 saw stability return to the BTL industry as lending to landlords recovered after a turbulent year, new data shows. 
 
The proportion of lending to landlords rose from 28 per cent in the third quarter to 38 per cent in the fourth - returning to the same level it reached in the second quarter.
 
The latest Mortgages for Business’ complex BTL index found that remortgaging accounted for the majority of transactions in the final quarter, as HMO lending rose to 26 per cent, from 23 per cent in the previous quarter.
 
David Whittaker, CEO of Mortgages for Business, said: “It is encouraging to see that the share of lending for purchase in the BTL mortgage market returned to normal in Q4 2016.
 
“Following a notable shift towards lending for remortgage in the third quarter, landlords showed they were once again willing to commit to new purchases."
 
He said macro-economic uncertainty sparked by the results of the EU Referendum had stifled purchase lending and many landlords had opted for 'a cautious approach.'
 
Changes to stamp duty on second properties and landlords’ tax relief meant that landlords should 'approach their investments intelligently,' he said.
 
He added: "There are still excellent returns to be had in the market – especially compared to other asset classes.”
 
The index discovered that the average loan to value ratios across all products stayed the same at 67 per cent in the final quarter of 2016.
 
Average property value and loan sizes in the multi-unit block mortgage market, was also found, with 30 per cent of applications involved properties worth more than £1m in the final quarter.
 
Mr Whittaker added: “There is clearly an appetite among investors for more valuable multi-unit blocks, with the lending share of million-pound plus blocks from growing under a fifth in Q3 to almost a third in Q4.”

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