From September, any landlord who owns four or more mortgaged buy-to-let properties will have to submit income and mortgage details on all of them every time they refinance one, or purchase a new property, which is likely to prove a headache for those owners and brokers. As such, remortgaging is likely to remain strong over the coming year, with a 10% rise already seen in October month-on-month.
There is also likely to be a continued pick-up in the number of landlords restructuring their portfolios into limited companies. While still affected by the Stamp Duty increase, being a corporate entity means landlords don’t incur the changes to mortgage tax relief, which some have predicted may price some landlords out of the market. In line with this, 100,000 buy-to-let mortgages were given to limited companies in the first nine months of the year, double the total number in the whole of 2015.
The 25% fall in year-on-year lending in October to buy-to-let landlords looks fairly dramatic, but it is worth taking into account that the final quarter of 2015 was unusually buoyant, particularly as many property owners will have brought forward planned purchases ahead of the Stamp Duty changes in April 2016. Prior to the 3% increase in Stamp Duty on second homes in April 2016, the number of approved buy-to-let mortgages shot up by a staggering 226% in March.
This year we will see a slower, but upward trend, in house prices, and it will probably be the year we see the price of an average property in the UK break the £300,000 mark. For landlords, we are likely to see a lower level of activity in London, but some regions, such as the North of England, should see a faster rate, influenced by increased activity from landlords seeking relatively better yields.