27 June 2017

BUY-TO-LET FALTERS AS TAX CRACKDOWN AND TOUGHER CRITERIA BITE

THE COUNCIL OF MORTGAGE LENDERS (CML) HAS REVISED ITS BUY-TO-LET FORECASTS DOWNWARDS, EXPECTING £35 BILLION OF LENDING IN 2017 AND £33BN IN 2018, DOWN FROM £38BN EACH YEAR. THE CML SAID THAT BUY-TO-LET HAS HAD A WEAK START TO 2017 WITH THE SECTOR’s CONTRIBUTION TO OVERALL NET MORTGAGE LENDING FALLING CONSIDERABLY OVER THE PAST YEAR.

It is no surprise that buy-to-let lending has been subdued as the sector is still coming to terms with various changes, such as the reduction in mortgage interest tax relief, tougher lender criteria and higher stamp duty of 3 per cent. Landlords are being more cautious when it comes to expanding portfolios while others are considering whether incorporation is the sensible way forward. Most of the work SPF Private Clients is doing is focused on remortgaging and restructuring of existing buy-to-let portfolios.

With further Prudential Regulation Authority guidelines to be introduced in October, there are new challenges ahead for the sector and we are awaiting detail from lenders as to how they are going to deal with these. The Mortgage Works has been first out of the blocks and it would be good if other lenders follow their lead and released more detail so that landlords have some clarity.

As always, independent knowledgeable advice is crucial so landlords should speak to a mortgage broker about the best way of investing in buy-to-let or structuring their portfolios in the future.

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