As Buy-to-Let (BTL) investors contend with the new tax rules regarding their property purchases there has been some more welcome news in the form of relevant mortgage products – there are more of them on the market.
The latest data from BTL mortgage specialists Mortgages for Business shows that in the first three months there were 1,105 BTL mortgage products available for use in the market. While the number of lenders offering BTL mortgages remains unchanged at 33, the number of products is higher than the 963 that were available in the fourth quarter of 2015 and the 839 available between January and March of last year.
Other interesting details in the company’s latest Complex Buy-to-Let index are that remortgaging activity is ahead of new purchases for all sectors except for Homes of Multiple Occupancy (HMOs) where new purchases have exceeded remortgages. The reason for this? Because the yield for HMOs has risen recently, providing an attractive regular income for investors in this area.
“With tenants looking for less expensive accommodation and landlords looking for higher yields it is no surprise that the number of HMO purchases has risen in the last quarter,” said David Whittaker, managing director of Mortgages for Business.
In research covering new mortgage rates on offer in April, BTL mortgage products on offer from lenders Skipton, Accord, NatWest, Leeds Building Society and Coventry for Intermediaries have all been reduced. This highlights that lenders are acutely aware that they will have to work harder to attract new business from BTL landlords as new tax implications begin to bite.
Aside from a wider range of products and some lower mortgage interest rates on offer, looking at different types of property investments could also yield a good financial reward. Rather than purchasing residential only lettings, doing some research into the semi-commercial, or mixed use sector could prove a worthwhile endeavour. That’s because landlords of properties that contain both commercial and residential space, such as a building with a shop on the ground floor and separate living accommodation upstairs, would be classed as a commercial property which are exempt from the 3% stamp duty tax increase (section 2.16) imposed on purchasers of multiple residential properties.
Indeed, now that the recent stampede to buy property ahead of the new tax changes come into force is likely over, there are expectations that demand for semi-commercial properties will increase.
“I would expect to see the number of landlords purchasing semi-commercial property to rise in the coming months,” Mr. Whitaker said.
So, if you want to remain active in the BTL arena and expand your portfolio, there are still ways to do this and remain financial savvy from the outset.