As rumours abound over what the Chancellor may announce in next week’s Budget, could there be more landlord bashing?
As we edge closer to next week’s Budget, the Chancellor appears under more pressure than ever. Talk of whether his brand of austerity is working, and of the need for even deeper cuts, is gathering pace.
Rumours abound over what he may do next, with pensions looking like the biggest sector up for review in terms of tax treatment. A reduction in the top tier of income tax has also been mooted.
But what about property? Could we see yet more landlord bashing, another Help to Buy something or other, or an extension of starter homes discounts?
Meanwhile, there has been further debate around buy-to-let in general, with the Bank of England’s Sir Jon Cunliffe saying its growth poses a risk to financial stability. The problem, he suggests, is that large numbers of landlords exiting the market at the same time would result in a “spiral of house price decline”.
Too much regulation and landlord bashing could result in the very thing the Government wants to avoid.
It was interesting to hear views at the recent Paragon Great Buy to Let Debate, with many agreeing that the latest policies are politically motivated rather than ethically sticking up for first-time buyers. Mortgages for Business managing director David Whittaker goes so far as to suggest landlords are being used as a “scapegoat for a housebuilding industry struggling to build enough homes”.
With a further threat coming from Basel, which wants lenders to hold more capital for ‘riskier’ buy-to-let loans, we could see further changes yet.
In the markets, three-month Libor has continued its stationary strike at 0.59 per cent while swap rates have bounced up a touch once more.
2-year money is up 0.05% at 0.77%
3-year money is up 0.07% at 0.83%
5-year money is up 0.10% at 0.99%
10-year money is up 0.11% at 1.42%
NatWest has continued its tweaks and will now instruct valuations from day one for residential and buy-to-let cases up to £500,000. The change is welcome and it is good to see this becoming the norm from lenders.
As far as lending on a second property is concerned, NatWest now requests that customers outline all their committed expenditure relating to any existing residential property. This includes monthly mortgage payments, utility bills and council tax, in addition to the usual financial commitments.
Post Office has some new products, including 60 per cent LTV deals at 2.19 per cent fixed for three years and 2.44 per cent fixed for five, available for interest-only. At 75 per cent, two-year fixes are available from 2.05 per cent.
Meanwhile, well done to Marsden Building Society, which has widened its range to older borrowers between the ages of 55 and 85. One product is interest-only up to 40 per cent LTV at 2.99 per cent and the other is a repayment mortgage up to 60 per cent LTV at 2.79 per cent. Both have £299 booking fees and £299 arrangement fees.
Kent Reliance is the latest to lend to the self-employed with only one year’s accounts required, albeit for professionals only. We are seeing more clients with a record in a particular profession who have recently set up their own business or moved to a freelance/contract position, so it is good to see lenders taking note that they need more flexibility.
Santander has introduced a 60 per cent LTV buy-to-let tracker at 2.64 per cent with a £995 fee, while Accord has cut its buy-to-let rates by up to 15bps. A two-year fix at 75 per cent LTV now starts at 2.34 per cent with a £2,495 fee.
Finally, it was interesting to see bridging lending passed £3.5bn in 2015, according to West One. The market has come a long way and there is still room for growth.
Andrew Montlake is director at Coreco