Landlords have been hit with rising costs, fewer tax breaks and a market slowdown in recent years, but there are signs that the tide could finally be starting to turn.
Figures published by UK Finance, the banking trade body, show there were 5,700 new buy-to-let mortgages completed in December 2019. This represents a 3.6pc rise compared with the previous year. Remortgages were up 2.3pc year-on-year, to reach 13,300.
While this level of activity is still way below the heyday of buy-to-let, landlords have been enticed by banks offering low interest rates and attractive terms.
Lenders have increased maximum loan limits, allowed longer mortgage terms and changed their affordability calculations so that landlords can borrow more.
Greg Cunnington of Alexander Hall, a mortgage broker, said that The Mortgage Works, part of Nationwide Building Society, currently offered a two-year fixed-rate at 1.19pc – the lowest he had ever seen.
“This low interest rate environment is creating a huge opportunity for landlords to save money,” he said. “Compared to when rates were over 4pc a few years ago, this is a saving of more than £220 a month for a loan size of £100,000.”
Mr Cunnington said that Barclays would now let applicants use some of their own income to pass affordability tests. Smaller lenders have also offered better terms to borrowers, he added. Aldermore will now allow landlords to spread their loan over 40 years.
Chris Sykes of Private Finance, another broker, said this had helped landlords balance their books as tax reliefs had been phased out. From April, investors will be able to offset only 20pc of their interest costs against their tax bill, reducing their profits.
My Sykes said: “But lenders can only do so much within the regulations to help landlords. Tax changes around buy-to-let are the root cause of their problems, not necessarily mortgage availability; so is it too little, too late?”