Half of UK landlords are cautious of the BTL market
Despite the resilience in the (buy-to-let) BTL market, landlords are taking a ‘wait and see’ approach to assess how the market will adapt to Brexit uncertainty before making further purchases, according to Shawbrook Bank.
Its annual ‘BTL Market Barometer’ revealed the biggest challenges facing investors over the next six months. Landlords cited regulation (22%), interest rate movements (21%) and lending restrictions (16%) as the most taxing.
Some 52% of landlords said the reduction on the tax relief for buy-to-let mortgages has had the biggest impact thus far – an increase from last year’s results, where 35% said this had affected them most.
Landlords rated the 3% extra stamp duty levy as the second biggest regulatory change that has had an impact, with 21% feeling the effect of this.
In order to counteract these measures, some landlords are looking for ways to protect their portfolios. A third (33%) of landlords are planning to (or have already) set up a limited company, 18% intend to re-mortgage and 19% are looking to sell their property/properties.
In contrast, 49% of landlords claim they are going to wait and see what happens over the next 6-12 months before they put any measures in place.
“Stricter affordability tests for portfolio landlords and interest rate rises will make it harder for some to get funding and this month will also see the next phase of reductions in tax relief for buy-to-let, further hitting landlords’ profits,” said Karen Bennett, managing director of Shawbrook Bank Commercial Mortgages.
“It is encouraging to see professional landlords adapting their strategy in line with regulatory change, thereby helping to ensure the long-term sustainability of the industry.”
Shawbrook Bank has seen slight cooling as landlords evaluated their options, opting to be patient with purchases and holding existing property.
Bennett added: “It is important to recognise, however, that BTL market remains a crucial component in the wider UK housing landscape, and data suggests that although investors may tread carefully throughout 2018, they retain confidence in the fundamentals of this market.”