There is no doubt that 2015 was an eventful year for everyone involved in the buy-to-let industry. Regulatory uncertainty preoccupied brokers, investors and lenders alike, with industry bodies working frantically to clarify FCA-led change across the sector with regard to authorisation and broker permissions.
The Autumn Statement sent ripples of anxiety across the borrower landscape while the recent budget announcement provided no relief for investors. However, in spite of some rather pessimistic coverage in the national press, property professionals and investors across the UK declared 2016 to be a year of opportunity in spite of initial nervousness.
An exercise in listening
One of our ongoing listening exercises is our regular surveys of both the broker and client landscape. The Shawbrook Client Barometer, was conducted earlier this year in order to gauge customer sentiment looking back at the previous year, and also to determine customer opinions over the next six months. This is a useful comparison given the recent turbulence across the political landscape with regard to the buy-to-let market.
Experienced investors to take the reins
The results from this showed that in spite of the challenges presented by the forthcoming tax changes, 56% of our clients intend to purchase an additional buy-to-let property this year. The Stamp Duty and interest relief changes should certainly be at the forefront of investor minds, but we are like to see the more experienced investors look to absorb the associated costs as part of a long-term investment strategy. On the other hand, we may see the smaller and accidental landlords exit the market altogether.
The challenges have been signposted for long enough for the more experienced landlords to act accordingly and, from our viewpoint, we are expecting an increase in activity from a pipeline perspective rather than a dramatic uplift in new applications.
The limited company route
Two fifths of investors in our survey said they were exploring the limited company route as a means of mitigating the impact of the new tax changes. In these cases we would advise anyone looking to go down this route to seek professional advice complementary to that of their broker.
A positive market
Although we have seen some caution following 1 April, the market remains positive with investors looking to expand and take advantage of opportunities as and when they arise. This sentiment is closely matched by our broker partners and sets the scene for a challenging yet exciting Q2 for lenders, intermediaries and customers.