0:01 AM, 23rd July 2024, About A year ago 2
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The volume of lending for buy to let purchases plummeted by more than half compared to the same period last year, with just 12,422 new loans granted, figures from UK Finance show.
It attributes the dramatic slowdown to rising interest rates which have made it increasingly difficult for aspiring landlords to pass lenders’ affordability checks.
The total number of outstanding BTL mortgages also dipped for the first time to 1.98 million, from 2.039 million.
Landlords with just one property – and most of whom aren’t set up as a company – make up one third of the BTL market, and 10% of BTL mortgages are held by landlords who have set up as companies.
The head of analytics at UK Finance, James Tatch, said: “A flexible and well-run private rental sector is an essential part of the housing market.
“Landlords face a number of challenges, from changing regulations to rising interest rates, but have shown resilience.
“However, given the new government is committed to abolishing Section 21 ‘no-fault’ eviction notices, it must make sure that responsible landlords have other options for when they have legitimate reasons to take their property back.”
He added: “Without more unexpected negative shocks, strong rental demand and strong lending standards could mean the buy to let sector emerges from last year’s downturn sooner than previously expected.”
UK Finance says that the profitability of buy to let has been eroded by tax changes introduced in recent years, including the stamp duty surcharge, and the phasing out of higher-rate tax relief on mortgage interest payments.
While fixed-rate mortgages remain the preferred choice for most buy to let borrowers, accounting for 90% of new lending, a larger proportion of BTL mortgages are on variable rates compared to the residential sector.
UK Finance says this has contributed to a higher rate of arrears among buy to let mortgage holders.
The number of BTL mortgages in arrears climbed by 93% year-on-year to 13,570, although this still represents just 0.68% of the total.
However, the figure has plateaued since the final quarter of 2023.
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Member Since May 2018 - Comments: 1959
10:09 AM, 23rd July 2024, About A year ago
This is an interesting statistic.
“Landlords with just one property – and most of whom aren’t set up as a company – make up one third of the BTL market, and 10% of BTL mortgages are held by landlords who have set up as companies.”
Small portfolio landlords cannot offset their interest costs against rents and pay CGT if they sell as opposed to CT. So the smaller players are penalised by the legislation.
The larger incorporated landlords who make up 10% of the market do pay SDLT at the higher rate (or are supposed to) but they can deduct their finance costs against their rents. If they sell they are potentially liable to CT, which is lower than CGT, although I don’t know whether they would be allowed to sell one property, roll-over the gain and defer the tax liability by purchasing newer properties. Anybody know the answer to this one?
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Member Since November 2023 - Comments: 20
10:25 AM, 23rd July 2024, About A year ago
Try looking at the huge fees these BTL companies want to charge
It’s extortionate and way beyond the work they have to do to formalise the loans