Buy-to-let landlords are benefiting from cheaper mortgage rates and a wider choice of deals as lenders compete for their business.
Recent weeks have seen several lenders reduce buy-to-let mortgage rates, including Halifax, Barclays and Nationwide Building Society, which has cut rates on its broker-only products.
Figures show average buy-to-let interest rates have come down since the beginning of the year, with higher loan-to-value mortgages seeing the biggest reductions in rates.
Research by Mortgage Brain, a platform used by mortgage brokers, also found that the cost of a 60% loan-to-value two-year tracker buy-to-let mortgage is now 3% lower than it was three months ago. The same product with a 70% loan-to-value now costs 2% less than it did in March.
Buy-to-let remains popular
A wider choice of buy-to-let deals combined with a reduction in rates is welcome news for those looking to purchase rental properties, particularly as landlords have had to adjust to a raft of tax and regulatory changes in recent years.
These include the introduction of a 3% surcharge on top of standard stamp duty rates for buy-to-let property purchases and a gradual reduction in the amount of tax relief landlords can claim on mortgage interest payments Those with several buy-to-let properties also face greater scrutiny of their whole portfolio when adding to it.
Despite these challenges, plenty of investors are still interested in buying property to rent out. Figures from trade body UK Finance show that there were 5,500 new buy-to-let mortgages completed in May this year, the same number as in May last year. Buy-to-let remortgage numbers were up 2%, with 15,000 remortgages in the buy-to-let sector completed in May.
Calls to freeze further buy-to-let changes
Earlier this month the Intermediary Lenders Association (IMLA) called for the government to freeze further changes to buy-to-let, amid concerns that smaller landlords are no longer investing in rental properties. It claims that the number of landlords with one rental property has fallen from 78% eight years ago to 45% today.
“We have repeatedly called for government to put the brakes on regulating and taxing our nation’s landlords,” said Kate Davies, executive director of IMLA. “We urge a more moderate approach to ensure our private rental sector remains strong for the millions of renters who rely on it.”
Lenders cut mortgage rates for landlords