Following Bank of England base rate increases, landlords are managing to escape a rise in mortgage interest thanks to the buy-to-let market slowdown.
Here, we take a look back at the buy-to-let market over the past three years, including the difficulties presented by tax and regulatory changes – and why, despite this, there's a silver lining for landlords.
In the first half of 2018, buy-to-let property purchases were down 13 per cent compared to the first half of last year, according to research by Hamptons International.
More staggeringly, the research shows there’s been a 31 per cent drop in landlords buying homes in the past three years.
The drop has been seen across all regions of Britain, with the most significant decrease in the South East (45 per cent), and Scotland not far behind at 44 per cent. While the drop in purchases was only 16 per cent in the North East of England, this still accounts for thousands of properties, according to Hamptons.
With figures reported in the Daily Mail revealing that landlords are selling their buy-to-let properties at a rate of nearly 4,000 a month, there are obvious reasons why.
Read more about the 2022 buy-to-let tax changes in our article.
We’re also yet to find out whether a proposed lettings fees ban currently going through parliament will come into effect. This could lead to costs being passed on to landlords.
This slowing of the buy-to-let market has encouraged mortgage lenders to lower their interest rates to try to attract landlords.
According to Moneyfacts.co.uk, the average buy-to-let mortgage rate has fallen to its lowest level ever recorded, with the average rate for a five-year fixed term mortgage just 3.4 per cent, down from 3.77 per cent in October 2016.
Some landlords are choosing to leave the market after facing increased costs due to tax and regulatory changes.
But it seems there’s at least some light at the end of the tunnel for landlords, with mortgage lenders being forced to offer more favourable interest rates.
Which? suggests that with rates already creeping up and more rumoured rises, a five-year fixed buy-to-let mortgage could be a good option for landlords. Bear in mind, however, that early repayment charges may apply if you need to sell up for some reason within that five-year period.
It’s worth seeking professional advice from a reputable mortgage broker to make sure you’re getting the right deal for your situation.
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