Although the Budget did not reverse the planned buy-to-let tax relief changes, the sector still has plenty going for it
The buy-to-let sector has come under more scrutiny than most over the past 12 to 18 months. Well-publicised policy and tax changes have led to landlords, lenders and intermediaries having to carefully manage their involvement within this marketplace.
The recent Spring Budget was mooted as an opportunity to reverse tax relief changes due in April. This did not happen but, at the same time, no further pressure was heaped on landlords. That said, how a clear hardening of government policy towards incorporation may impact them over the longer term remains to be seen.
Despite some market and widespread economic issues, funding lines have remained relatively robust across all types of housing tenure. However, there are some questions being raised over whether the balance of borrowing may be shifting.
The latest National Mortgage Index from the Mortgage Advice Bureau appears to signal a correlation between the improving fortunes of first-time buyers and the difficulties of those looking to buy-to-let. It highlights that the price of the average property bought by a first-time buyer fell by 2.7 per cent in January, which it suggests may be down to these buyers facing less competition from buy-to-let investors. In contrast, the average purchase price of a buy-to-let property had plummeted by almost 13 per cent year-on-year.
As pointed out in the data, it is too early to judge whether this is an ongoing trend. However, although it represents good news for first-time buyers, we have not seen the end of buy-to-let.
Rental prospects remain strong and lending policies are evolving to provide a range of appropriate solutions for landlords. In recent weeks a variety of lenders have refreshed buy-to-let offerings and cut rates. According to Mortgages for Business, the prices of two- and three-year fixed-rate buy-to-let mortgages are at an all-time low.
So let’s not dismiss the value of, or opportunities within, the current buy-to-let marketplace. After all, it has a history of punching well above its weight.
Tony Fullbrook is head of mortgage purchases at Barclays Mortgages