However, given much of the negativity facing the sector, let’s instead focus on some of the more positive aspects which might be currently overlooked.
Firstly, in terms of current pricing and costing, advisers should be able to provide significant savings. Recent figures from Mortgage Brain suggest average costs for a two-year fix at 80% LTV are now 4% lower than August; the same goes for your average two-year tracker at 70% LTV which is now 3% less over the same timescale, while a five-year fix at 60% is 2% less than in August this year.
From a general perspective, competition in the sector does not appear to have been hindered. Given we’re still approaching the end of year as lenders rush to meet targets, now appears to be as good a time as any to secure that mortgage; especially given changes to underwriting that lenders have to introduce from 1 January.
Certainly, the buy-to-let remortgage market has shown considerable signs of life in recent months, no doubt helped by the PRA’s deadline and the competitive pricing. We only have the latest CML figures for September, but during that month two-thirds of all loans were remortgages – a considerable turnaround from the start of the year.
Overall buy-to-let activity over the last few months appears to have pushed out of the summer lull with some momentum, and the lending figures look likely to bear favourable comparison with the same period in 2015. Unsurprisingly, it is remortgaging that is leading the way, however, this doesn’t mean that purchase activity is bouncing along the bottom, it just means that it’s far more likely for landlords to purchase via limited company vehicles than ever before.
And this has to be one of the big takeaways for advisers as we move closer to 2017. There has been much written about limited company activity, but it bears repeating, because of the benefits it will provide clients in terms of accessing larger maximum loans. Plus, of course, these vehicles are not subject to the mortgage interest tax relief changes that will kick in for individual landlords from April next year. If those two reasons are not the catalyst for clients to look at their tax affairs and to understand how they might benefit from going down the limited company route, then I don’t know what is.
In the buy-to-let sector we all know the forces at play, and what can seem like a self-defeating need to interfere and seemingly ‘punish’ those who are active. However, advisers need to make sure their clients don’t lose sight of the fundamentals; the continued attractiveness of the asset, the demand for rental properties from tenants, the lack of housing supply and the difficulties faced by first-timers. Lending activity is also a plus and, certainly in our case, there is the appetite to lend and continue working with intermediaries in this brave new buy-to-let world that will exist from 1 January.
We think this all adds up to a significant specialist market for some time to come, and therefore as we move into 2017 our optimism for the sector is undiminished. I suspect advisers will find that their clients are also still keenly interested and looking to refinance their loans and add to their portfolios.