All-time high for landlord remortgaging

Chris Broome – Chartered Financial Planner

With challenging times in the buy-to-let property market, landlords are increasingly looking for ways to maintain their income and secure returns from their portfolios.

According to new figures, the proportion of landlords looking to remortgage has reached an all-time high.

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The latest Financial Adviser Confidence Tracking (FACT) Index from Paragon shows a sharp increase in the proportion of landlords remortgaging.

During the third quarter of 2018, the proportion of landlords remortgaging rose to 57% of all buy-to-let business. This was up from 49% in the second quarter.

The index is based on the experience and views of approximately 200 mortgage intermediaries on the development of the UK mortgage market each quarter. It’s been running since 1995.

Despite this sharp rise in landlords looking to remortgage in the third quarter, there was a fall in the proportion of first-time landlord business. This fell from 14% in the second quarter to 10% in the third quarter.

Landlords looking for finance for portfolio expansion also fell in the third quarter, to 19% from 23% in the previous period.

The proportion of landlords remortgaging first outstripped those seeking funds for portfolio expansion back in 2015 following the announcement of significant tax changes for landlords in the Summer Budget.

Since then, remortgaging has continued to rise and today six out of ten intermediaries say the main reason that landlords are remortgaging is to secure a better interest rate.

Buy-to-let represented 19% of the intermediary lending market in the quarter, according to Paragon. The remainder was taken by mortgage applications from owner-occupiers.

John Heron, Managing Director of Mortgages at Paragon, said: 

“Landlords are investing less in the Private Rented Sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs.

“It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”

As well as being experts in all things pensions, investment, and tax planning; here at Longhurst we’re also expert mortgage consultants.

So, if you’d like a no-obligation chat about your current buy-to-let (or residential) mortgage position, just drop us a line.