A new study has revealed that despite recent tax changes in the industry (the existing phasing out of mortgage tax relief and the introduction in 2016 of the 3% stamp duty surcharge on second properties) combined with tougher buy to let (BTL) lending conditions, nearly half of residential landlords are still planning to expand their property portfolios.
Reporting on the LandlordToday website, the results of the Mortgages for Business’ Property Investor Survey revealed that 48% of landlords are currently looking to add to their portfolios. This is a 3% increase since November and a 7% increase since a year ago.
Steve Olejnik from Mortgages for Business, said: “Although we expect buy-to-let lending to reduce somewhat this year, these results demonstrate that landlords are a resilient bunch, capable of adapting their investment strategies to successfully accommodate the new fiscal and regulatory landscape.”
Landlords are adapting
The study also highlights how property investors have been adapting to the changing environment with 62% of landlords consulting tax advisers to deal with recent tax amendments, and 42% opting for the longer fix-term mortgages.
In relation to the latter, landlords have been increasingly choosing to fix their BTL mortgage for five years instead of three. In May 2016, three and five-year fixes were each preferred by roughly one in five landlords (18% and 21% respectively). However, since then there has been a huge shift in investor preferences. Five-year fixed rates are now the preferred option for 42%, up from 33% in November and twice the proportion from May 2016. Three-year fixed rates, meanwhile, are now less popular even than ten-year fixes, being chosen by just 5% of respondents – less than a third of their popularity a year ago.
Mr. Olejnik added: “Incorporation is becoming a standard practice and the move towards five year fixed rates allows landlords to maximise their borrowing options.”