Good news for investors in buy to let property comes in the shape of lower mortgage costs, according to a report published by Landlord Today on the 9th of July.
Record reductions in the average cost of fixed-rate buy to let mortgages were noted – with those offered on the lower loan to value (LTV) ratios attracting the biggest discounts:
- between June and July, for example, monthly repayments on a five-year fixed-rate mortgage fell by £36 where the LTV was 65%; and
- by £3 a month when the mortgage offer represented 75% of the property’s market value;
- two-year fixed-rate mortgages were £5 a month cheaper for buy to let mortgages with LTVs of between 50% and 65%; and
- £8 a month less expensive when the mortgage represented 75% of the property’s market value.
The reductions help to reverse what had been an upward trend in previous months and are welcome news for landlords who have faced recent financial burdens – through the loss of mortgage interest relief on income tax and, not least, through the abolition of tenants fees (about which we commented last week).
The Money Advice Service explains how the changes to the rules on tax relief on mortgage interest repayments are changing – a reduction of 25% a year until 2020, when the only relief available is through the tax credits system.
It remains to be seen, of course, whether the favourable mortgage rates are sustained so that buy to let landlords may continue to make ends meet and turn the profit necessary to attract new investors.