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  • Writer's pictureRob Lawson

Buy to Let Lenders Go All Out to Attract Landlords

It seems that the much-discussed new rules for buy to let investors may have a very small silver lining. With the overall size of the market declining, mortgage companies are going all-out to attract new customers with some of the best ever rates on buy to let mortgages.

Buy to let deal up by 188% in four years

In July 2014, just before the much-lamented George Osborne started to pick on small-time landlords, for reasons we're still not entirely sure of, there were 645 mortgage products available for buy to let investors. Fast forward to June 2019 and that number has grown to 1,045. That's a 118% increase and it comes in spite of many specialist providers recently exiting the buy to let market.

According to Moneyfacts, during the same period the average rate on a two-year fixed rate buy to let mortgage for a first-time landlord has fallen from 4.01% to 2.97%, while five-year fixed rates deals have dropped from 4.68% to 3.52%. These figures represent genuine monthly savings that can go some way to redressing the imbalance caused by tax hikes and Stamp Duty on second homes.

Buy to let continues to prosper despite government meddling

The number of new deals shows that buy to let lending remains a lucrative market for lenders, and many are seeking a large slice of what is admittedly a slightly smaller pie. What's also clear is that, now the changes to taxation have started to bed in, more people are coming back to the market, either as first time buyers or to expand their rental property portfolio.

Of course, there is no guarantee that the good times will last, so it pays to plan ahead. Interest rates have been low since 2008 and show no signs of shooting up anytime soon, especially with the current Brexit uncertainty, but it may still be worth taking a short-term hit on the monthly payments and going for a five-year fixed rate buy to let mortgage deal. 

Brexit has failed to dent confidence in buy to let investment

That leads us nicely on to a recent piece of research from specialist lender Cambridge & Counties Bank, which suggests that 64% of landlords maintain a positive outlook for the residential buy to let sector, despite the ongoing Brexit debacle. Only 19% of landlords said they were looking to sell, compared to 23% with ambitions to radically grow their portfolios over the next three years.

Given the relative stability of the rental market in recent years, despite the best efforts of the government to thrown multiple spanners in the works, I agree that the outlook does look positive. The most important thing is to locate your investment properties in the right places, keep it diverse and create equity where you can, which is why refurb-to-rent makes so much sense.

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