Specialist Lending Solutions talked to some brokers who gave their predictions on the buy-to-let mortgages for the year ahead.
Ying Tan, CEO and founder of The Buy to Let Business and Buy to Let Club, said it has been a relatively calm year for the BTL sector.
He added: “Lenders have done their best to ensure property investment remains an attraction proposition by cutting their rates to record lows and I imagine we’ll see more of this in 2019.
“Next year will see the continued growth of limited company buy to let as the roll-out of the tax changes continues and we’ll see increased regulation around the rental market as a whole.
“We’ve already seen the start of this with government consultations on lettings fees and the discussion around longer tenancies continuing. I think the government is finally recognising the private rental sector as an acceptable form of tenure and as such there is a greater focus on ensuring it is fit for purpose.
“We’ll also see more landlords looking to the north for property investment as the region continues to be a hotspot for buy-to-let.”
Continued regulatory demands
Andrew Turner, chief executive at Commercial Trust, is expecting a continued trend of creative product options from lenders.
He said: “However, the days of rock bottom buy to let mortgage interest rates, may be numbered. The number of incentives added on products perhaps underlines that interest rates cannot go any lower, but that lenders are still keen to attract landlord business.
“When the base rate increased again by 0.25% in August, some lenders absorbed the extra costs and in some cases, even reduced mortgage interest rates. I believe that this cannot continue indefinitely.”
Further, Turner explained that Minimum Energy Efficiency Standards (MEES) rules mean that from April 2020, regardless of tenancy status, all rental properties will have an Energy Performance Certificate (EPC) rating of at least E.
“So 2019 will impact more landlords, in preparation for the 2020 deadline. Houses in multiple occupation (HMO) licensing also remains a hot topic and the changes have not resolved all issues.
“Questions remain over their effectiveness in identifying those unwilling to follow the law and this subject is likely to rumble on into 2019.”
He also noted that the government had recently announced plans to review existing health and safety regulations as the current regulations have not been reviewed for 12 years.
“Once again though, having the resources to enforce represents a challenge. Landlords need to keep abreast of 2019 changes to health and safety legislation.
“Many of the above topics fall under landlord legal obligations and carry severe penalties for non-compliance,” he added.
Rates falling with some lenders
Jonathan Clark, mortgage partner at Chadney Bulgin, said in 2019 rates may reduce further with some lenders.
For instance, he suggested the difference between residential and BTL pricing will narrow as mainstream lenders look to increase profitability on lending.
He added: “Longer-term fixed-rate products of 10 years could increase in popularity, as investors look to secure their outgoings during uncertain times.
“More lenders will follow the likes of Virgin Money and Godiva in offering very competitive customer retention rates in order to retain their customers, shrinking the BTL remortgage market,” he added.