Landlord remortgaging climbs to 57% of all B2L business

Written by Oliver Wade

The proportion of landlords looking to remortgage is now at an all-time high, with them accounting for 57% of all buy-to-let (B2L) business in the third quarter of 2018, new research has revealed.

Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index found a sharp increase in the number of landlords remortgaging, which Paragon managing director John Heron credited to the “increase in costs” that landlords are facing following changes to stamp duty and tax relief on finance costs.

“Landlords are investing less in the Private Rented Sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford,” he added.

Furthermore, the index showed the proportion of first-time landlord business fell from 14% in quarter two to 10% in the most recent quarter, while landlords looking for finance to expand their portfolio dropped from 23% to 19% of the total B2L business.

The proportion of landlords remortgaging initially outstripped those seeking funds for portfolio extension in 2015, following the announcement of significant tax changes for landlords in the summer budget.

Since then, remortgaging has continued to rise almost inexorably, with the index finding that six in ten intermediaries stating that landlords are remortgaging to secure a better interest rate.

Heron added: “It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation. Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”

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