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Buy-to-let shows signs of strength – so should the government stop more regulatory changes?

2-minute read

Mollie Millman

27 February 2020

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Fears that landlords would stop buying properties due to tough new tax changes and regulations have failed to materialise, new data seems to suggest.

The latest mortgage figures from trade body UK Finance revealed that 5,700 buy-to-let mortgages were approved in December last year, up 3.6 per cent on a year earlier.

These loans were specifically for funding the purchase of new investment properties, as opposed to remortgaging.

Meanwhile, the figures for those landlords remortgaging in the same month reached 13,300, which is an increase of 2.3 per cent on the same month in 2018.

Experts responded positively to the figures, saying they showed renewed strength in the buy-to-let market.

The Budget should focus on other areas of the market

Shaun Church, of mortgage brokers Private Finance, said: “After a period of continuous decline, the buy-to-let market is finally starting to show signs that it is regaining strength.

“News of a strengthening buy-to-let market should be welcomed by landlords and renters alike.

“An increase in buy-to-let purchase activity will mean a greater supply of rental housing stock, generating more choice and more competitive prices to be enjoyed by renters up and down the country.

“With the Budget around the corner, the Government might be tempted to tweak buy-to-let regulation further. However, with the buy-to-let market now starting to show glimmers of growth, we strongly urge the Government to focus on redressing other areas of the market that are in need of attention, primarily the challenges facing last-time buyers and second-steppers.”

The situation for landlords remains a ‘new normal’

The regulatory and tax changes seen by landlords in recent years include the introduction of a three per cent surcharge and a reduction in the tax relief that landlords can claim on mortgage interest.

Damian Thompson, from the bank Aldermore, said: “It is encouraging that 2019 finished with the strongest quarter of the year for buy-to-let volumes, but the sector remains in a ‘new normal’ since the regulatory change, with a continued split between muted house purchase activity and more buoyant remortgaging.”

Jeremy Leaf, a north London estate agent, added: “The strong increase in buy-to-let home purchases is something that we have noticed on the ground as aspiring first-time buyers squeezed by strict lending criteria continued to rent.

“This has encouraged more landlords to expand their portfolios or join the sector.”

What do you make of the renewed strength of the market? Let us know in the comments below.

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