Landlords want U-turn

Given that Britain will soon have one of the toughest tax regimes for private landlords in the western world once mortgage interest relief is finally phased out in 2020. Landlords would quite understandably like to see a reversal of changes to tax relief on buy-to-let mortgage interest.

A new survey of over 250 private landlords, has found that most landlords would like to see the Government more than anything reverse recent changes to income tax relief.

Scrapping the 3% stamp duty surcharge for second homes, which was introduced in April 2016, would also be warmly welcomed, according to respondents. This was a strong second but not seen as important.

According to the report among the most commonly reported actions taken by landlords in the second quarter of this year was to increase rent, and secondly reduce any mortgage debt which has helped increase profitability.

Landlords need to prepare!

The vote was 5-3 in favour of keeping Bank of England base rate on hold but the last time three member of the MPC voted for a rise was in May 2011.

So, if history is to repeat its self landlords need to be prepared for a future rise in Bank base rate. At this time the economy is fragile, the government is weak and there is a wealth of uncertainty over Brexit. With these fragile conditions mortgage interest rates may rise in the near future and landlords would be well advised to review any standard rate mortgage they currently have.

In a speech at Mansion House on the 20th June, it would appear that the governor of the Bank of England, Mark Carney has a warning “From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin the adjustment”. “But this could change in the not too distant future”.

Limited company deals gather momentum

For the first time, limited companies have outdone landlords when it comes to buy-to-let lending. Buy-to-let lenders deciding to incorporate, due to recent tax changes have now reached a point where these incorporated landlords make up 51% of lenders by volume.

Recent data shows that in the second quarter of 2017 (April-June), limited companies borrowed more than landlords when looking at the volume of buy-to-let in British pounds. In fact, limited companies performed 73% of buy-to-let purchase completions, an increase of more than 10% on the 62% figure from the first quarter of the year.

When it comes to re-mortgaging, individual landlords still outperform limited companies, but not by much, with the volume of re-mortgage lending for limited companies increasing by 3% to 40%. What this could mean is that while first-time landlords are buying properties after incorporating, possibly following expert advice, existing landlords are still hesitating to make the jump.

Buy-to-let or Holiday let?

The average holiday let property generates a whopping £1150 a week, almost six times the average weekly rent in the UK.

There are now over 160,000 holiday let properties in the UK, with the average income per booking up 7% in the first four months of 2017.

The areas in the UK where holiday let rental growth was fastest in the first four months of 2017 were: South of England (+17.3%) Cornwall (+14.5%) Devon (+8.9%)

The rise in rental income is being boosted by international and domestic visiting looking for short-term stays in popular UK holiday destinations.

There were a record number of visits to the UK in 2016 over (37m) and overseas visitors contributed more £22bn to the UK economy. The number of overseas visitors increased 7% in the first three months of 2017 (compared to the same period in 2016) and the amount they spent increased 11%.