14th January 2016

Buy-To-Let Mortgage Activity Shows Strong Rise

Home loans advanced to UK buy-to-let investors in November leapt 35% from a year earlier, ahead of key tax changes. The rise took the number of buy-to-let loans to 23,300, although this was down 6% compared with October. Landlords in England and Wales will have to pay a 3% surcharge on each stamp duty band from April.

In addition, changes being brought in over the next few years will alter tax breaks available to landlords. Landlords may be disgruntled by the double whammy of tax changes and the impending hike on stamp duty, but they can't complain about some of the cheapest buy-to-let rates ever. Many landlords are taking advantage of low rates and the removal of tax breaks with remortgaging accounting for the majority of activity in the sector. However, lenders are imposing tighter criteria on buy-to-let mortgages when it comes to stress testing, and others are expected to follow, making it harder to qualify for higher loan-to-value mortgages, particularly in the south [of England] where yields are low.

The value of loans advanced in the buy-to-let sector increased by 46% in November compared with the same month a year earlier, to £3.5bn.

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