Fresh figures confirm buy-to-let rush
04-14-2016
By Peter Walker
Product choice for buy-to-let mortgages jumped during the first quarter, following the introduction of more offers targeted at limited company borrowers.
The number of products rose to 1,105 from 963 in the fourth quarter last year.
Mortgages for Business’ results for Q1 also revealed remortgages yet again outstripped purchases in all categories with the exception of Houses in Multiple Occupations (HMOs), where purchase numbers were slightly higher.
The firm’s managing director David Whittaker said: “With tenants looking for less expensive accommodation and landlords looking for higher yields, it is no surprise that the number of HMO purchases has risen in the last quarter.”
Even though remortgage transactions were higher, he said it did not follow purchase numbers were down.
“All types of residential investment showed a marked increase in the number of purchase transactions, as investors rushed to beat the 3 per cent stamp duty surcharge deadline.”
Yields for semi-commercial property also rose in the first three months of this year, making it the second highest yielding property type.
Mr Whittaker said market activity was being led by the stamp duty hike on second properties introduced this month.
“I would expect to see the number of landlords purchasing semi-commercial property to rise in the coming months, as mixed use properties are technically classed as a commercial premises and as such will not be liable for the stamp duty surcharge,” he said.
Chancellor George Osborne announced the tax hike during his Autumn Statement in order to cool the market and tackle the issue of second homes bought by those who live overseas.
In the months that followed, landlords looking to keep adding to their portfolio before the 1 April deadline looked to using limited company structures to get round the rules, although only a handful of high street banks have revealed they are currently assessing whether to get involved in this market.
Figures this week from the Council of Mortgage Lenders confirmed the surge in buy-to-let deals being done in the first few months of this year, with director general Paul Smee stating the sector has seen substantial year-on-year increases, with particularly strong growth in remortgaging.
“Activity has been boosted by landlords seeking to complete purchases before tax changes in April,” he commented, adding that the CML does not expect activity to show such strong year-on-year growth later in the year.