There has been a surge in advice enquiries as buy-to-let landlords race to beat new stamp duty and tax rules, new research has confirmed.
As many as 101 mortgage brokers were surveyed by Pollright in January as part of a survey commissioned by Nottingham Building Society.
According to the survey, more than a third (35 per cent) had seen an increase in enquiries from existing landlords, 42 per cent reported enquiries about re-mortgaging and 31 per cent saying landlords wanted to expand their portfolios.
Landlords face two major changes in legislation, with a 3 per cent surcharge on stamp duty for buy-to-let purchases coming into effect from 1 April, which have led some to expand their portfolios, while changes to tax due in 2017 are encouraging others to sell.
Despite concerns that existing landlords will sell their portfolios and flood the market, the research showed only one in five (19 per cent) existing landlords plan to sell some or all of their portfolio in response to the tax changes, which prevent owners from deducting mortgage interest costs from rental income.
“It is striking that one in five landlords are planning to sell some or all of their properties, but people need to think carefully before rushing into decisions driven by tax changes”, said Ian Gibbons, senior mortgage broking manager at Nottingham Mortgage Services.
“Brokers we speak to are seeing a wide range of enquiries from customers that are not focused simply on selling, but also on re-mortgaging and ensuring they have the most competitive deal.”
The study also revealed landlords in London are the most likely to sell some of their portfolios, compared with those in the north east who are the least likely to sell.
In February, several lenders declared their readiness for any uptick in buy-to-let mortgage applications, while another trend to emerge in recent months has been for landlords with larger buy-to-let portfolios to transfer from their individual name into a company or limited liability partnership structure.
Earlier this week, OneSavings Bank’s specialist lenders Kent Reliance and InterBay Commercial were amongst the first to confirm new policies for such landlords.
During FTAdviser’s live debate on buy-to-let market opportunities today (22 March), Andrew Montlake, director at London-based mortgage broker Coreco, said the death of buy-to-let has been over-exaggerated of late.
He said: “It is important to take advice from a proper tax expert around how you set up the mortgage finance, use a good broker who has experience in this market and look at utilising decent lenders who also understand the needs of landlords.”
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