Future looking bright for the majority

Eight out of ten landlords (84%) say they will expand their buy-to-let (BTL) portfolio over the next 12 months, according to a recent report.

In a report entitled ‘The Mortgage Lender: Buy to let: The Landlord Experience’, conducted by One Poll with 100 landlords, half agreed that tax changes have reduced the number of private landlords.

However, only 1% said they think that has led to an increase in quality of rental property.

It also highlighted that only one in eight landlords had arranged specialist tax advice to help them manage their portfolios while only four in 10 used a specialist buy-to-let mortgage broker when arranging borrowing.

This is despite 45% stating that they already owned between two and four properties.

Getting cheaper

According to Mortgage Brain’s quarterly product data analysis, the cost of a 60% LTV two-year fixed buy-to-let mortgage is now 1.9% lower than it was three months ago, which represents an annual saving of £144 on a £150k mortgage. The cost of a 70% LTV three-year fixed buy-to-let mortgage has fallen by 1.1% – an annual saving of £90 on a £150k mortgage compared to three months ago. The Mortgage Brain data also shows that borrowers looking to fix for longer can benefit from better annualised savings. For example, a 80% LTV five-year fixed buy-to-let mortgage is now 3.5% lower compared to 12 months ago, representing an annual saving of £324.

Competitive market

One factor driving down the costs of BTL mortgages is the number of products now available on the market. The Mortgage Brain analysis revealed that there are now 3,859 BTL products on the market from mainstream lenders, which represents an increase of 11% compared to a year ago.

Landlords pleased with broker services

The majority of landlords are most likely to source their next buy-to-let mortgage from their existing broker, new research shows.

According to the latest PRS trends report for the third quarter of 2019, 57% of all landlords are most likely to use the same mortgage broker when taking out their next mortgage, while 41% state they would be most likely to go direct to a lender for a buy-to-let mortgage.

Just 16% of respondents to the survey stated that they are likely to consider an online mortgage broker service and just 10% are likely to switch brokers.

The report reveals little disparity between portfolio (59%) and non-portfolio landlords (50%), with both groups most likely to stick with their existing broker when choosing a new mortgage.

Lending figures are increasing rapidly

Buy-to-let lending saw its highest monthly increases in July and August since stamp duty changes were introduced.

Landlord borrowing was up 11.4% for the two months, although this figure was 2.2% down on the previous year. Over two-thirds of buy-to-let loans were re-mortgages rather than house purchases. Buy-to-let lending, driven by re-mortgage activity saw its strongest monthly lending level since the stamp duty changes on second properties was introduced.

It’s expected now buy-to-let lending levels in 2019 will be slightly higher than in 2018.

Forecasts for 2019 have definitely taken a turn upwards which in general has surprised the market. Suppliers have been very quick to recognise this trend and produced more than usual seasonal deals to match the increase in interest.