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First-time BTL market buoyant despite regulatory toughening

  • 01/07/2019
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First-time BTL market buoyant despite regulatory toughening
The choice of deals available to first-time landlords has soared by 118 per cent in the past five years, despite the efforts of the Prudential Regulation Authority (PRA) to tighten lending rules.


The number of first-time BTL mortgages rose to 1,405 as of 1 July 2019, up from 645 in 2014.

The year-on-year rise was 11 per cent, up from 1,268 in July 2018. The 2018 number had been a yearly uplift of 23 per cent from 1,034 in 2017.

Moneyfacts, the financial product price comparison site, reported that the expansion in range had occurred despite the PRA introducing stricter lending criteria and phasing out tax relief on mortgage interest payments by 2020.

Further, the average interest rates on first-time BTL deals have fallen over five years.

The average two-year fixed rate for a first-time BTL product was 2.97 per cent as of today, a rise from 2.83 per cent a year ago and 2.85 per cent in July 2017. The rate five years ago in 2014 was 4.01 per cent.

The average five-year fixed rate for a first-time BTL was 3.52 per cent to date. This compares to 3.94 per cent at the same point in 2018, 3.63 per cent in 2017 and in 2014, 4.68 per cent.

“Two years after the PRA introduced rules expected to tighten lending in the buy-to-let market, the move hasn’t shaken up lenders’ attitudes towards attracting first-time landlords. In fact, the number of deals available to these individuals has boomed to a record high. This is good news for prospective landlords,” said Rachel Springall, finance expert at Moneyfacts.

“However, the financial strain of recent tax changes on those already invested in property may be starting to show. Private rental prices in London rose by 0.9 per cent in the year to May 2019, which may be the result of landlords seeking to boost their income in response to the gradual reduction of tax relief on mortgage interest,” Springall added.

Springall added that although fixed rates for first-time landlords start at 1.5 per cent, borrowers should look closely at upfront product fees.

“The market is awash with uncertainty and regulatory adjustments. Consumers would do well to consider independent financial advice if they are considering a BTL investment,” Springall said.

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