Landlords are buoyant and prepared

Landlords are still reducing borrowing as levels of gearing – the ratio of long-term debt compared to its equity capital – reached an all-time low in quarter 4 of 2017.

Based on a review of landlords, the report established that the average loan-to-value (LTV) of investment property portfolios was 36.5% in Q4 2017, the joint-lowest level recorded in over 12 years.

With all the recent regulatory changes, landlords have less motivation to take higher LTV buy-to-let mortgages. However, respondents appeared confident of coping with increased outgoings, with over 50% of landlords saying that mortgage interest rate does not determine any decision to buy or sell properties.

It seems very clear landlords are less willing to take higher loan-to-value mortgages and borrow more, whilst regulatory changes, though welcomed by lenders, have constrained the market in its ability to offer higher LTV mortgages.

The review revealed that any decision to increase rents was not dependent on mortgage interest rates, and 58% said that mortgage interest rates did not affect any decision to refinance properties. There is no evidence to suggest lending to landlords has been anything other than sustainable in the last few years.

With low levels of gearing landlords appear well positioned to withstand the higher interest rates that the markets are anticipating, which is good news for buy-to-let and the wider private rented sector.

These findings go to show landlords have taken on board all the regulatory changes along with the tax hikes very seriously and have responded in a positive manner.

If you are looking for a new or re-mortgage, please do make contact and one of our qualified advisers will be happy to assist.