Buy to let loans could outstrip remortgaging within a matter of weeks as landlords rush to beat the April 1 stamp duty surcharge deadline.
Business for Mortgages says the volume of remortgages outstripped loans intended for purchases in 2015, but that this trend could reverse in the first quarter of 2016.
“For some time landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plan further purchases. However, I anticipate we will see a reversal of this trend in as landlords hurry to expand their portfolios” says David Whittaker, managing director of Mortgages for Business.
He says the number of enquiries for purchase finance is already well ahead of the level seen at this time last year, particularly from those looking to sell their personally owned property into a corporate vehicle.
Although yields across all property types rallied in the final quarter of last year, in real terms they continue to plateau as rental income fails to keep pace with rising property prices.
The number of lenders operating in the market remains static at 33. However, the number of buy to let mortgage products available to borrowers grew slightly to an average of 975.
“It’s unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies. Of course, that figure is only an average - at one point at the beginning of December our tracking system showed 1,168 products” says Whittaker.
Meanwhile a high-end buying agency is also reporting an increase in buy to let purchases ahead of the April deadline.
“As predicted in December, we are seeing a flurry of activity from potential buy to let and second home investors. We are also seeing an increased interest in sub £1m properties, where the impact of the rise is lower than on more expensive real estate” explains Camilla Dell, founder of Black Brick buying agency.
“However, we believe that these planned exemptions will encourage those with upwards of £2m to invest to consider buying multiple residential or mixed-use properties. Such purchases can be significantly more complex than individual acquisitions but, given the continuing upward pressure on rents, especially in London, there’s a strong case for investing in rental properties in the capital.”
These multi-property investments are likely to be much more attractive after April’s tax rise, Dell says.