Tax changes take effect:

The changes to mortgage tax relief came into effect recently which means buy-to-let investors can no longer offset all their mortgage interest against their profits. Furthermore, by 2020, none of the interest will be tax-deductible.

Currently, under the new law which came into effect on 6 April, landlords can offset 75% of their mortgage interest against profits, but this will be reduced by 25 per cent each year, until it reaches zero in 2020.

Fortunately, landlords have had adequate prior notice of the tax changes, after they were detailed in George Osborne’s 2015 budget, and the four-year phasing in process will help investors adapt to the changes.

Investors appear to have taken various steps in order to weather the changes, including forming limited companies and switching to commercial and semi-commercial property investment instead of residential.

Very robust market:

The buy-to-let sector has taken a bit of a hammering in recent years, what with the stamp duty surcharge and scrapping of tax relief, the latter of which came into effect at the start of the new tax year, April 2017. However, this doesn't seem to have put off landlords to any extent: experienced landlords still have an average of 13 properties each, with a typical loan-to-value (LTV) of just 35%, so it's clear that buy-to-let could still pay off.

That's according to recent research, which found that the average investment portfolio among experienced residential landlords stood at 13 properties during the first three months of this year.

Meanwhile, the average LTV continues to fall, declining by 2% compared with the previous three-month period to stand at just 37%, down from 42% five years ago. Indeed, 64% of landlords now have buy-to-let mortgages of less than half the value of their portfolios, hinting at the profitability many landlords are experiencing.

Company BTL numbers soar:

The number of limited company buy-to-let products to choose from has increased by a third in the first quarter of 2017 the buy-to-let Index has revealed. There are currently 266 products, up from 198 in the fourth quarter of 2016.

With the changing face of the buy to let mortgage market, it is no surprise that lenders are keen to appeal to limited company borrowers.

The majority of brokers have been recommending for some time that clients seek professional tax advice to determine whether incorporation is the most suitable route for their circumstances, and these figures can only further encourage landlords to consider their position. Set up costs of a limited company can be expensive but the long-term benefits can be very beneficial.

Buy-to-let’s have a great start to the year

It makes no sense to tempt fate in this marketplace, and one swallow does not make a summer, but the latest CML statistics for the buy-to-let sector in January and February appear to show a relatively strong start to the year.

These initial statistics certainly chime with our own experience as we moved into 2017 with plenty of enquiries, applications and activity. This all seems to set a foundation for a solid set of figures for 2017.

Overall, the statistics are clear on where the current balance of power lies within the buy-to-let sector right now with re-mortgage activity in the ascendency. During January, purchase activity was at an eight-month low, but as the CML itself said, there is always a winter lull.