18th
Jan 2017
Rising property prices and stricter measures imposed by lenders on landlords when calculating rental value of a prospective property, has meant that landlords are now having to borrow more.
A mortgage broker has just released details of its latest research that shows on average landlords have borrowed £15,000 more last year when buying properties that they did in 2015. The average loan in 2016 was £185,188, whereas in 2015 it was £170,268.
The average LTV (loan to value) in 2015 was 61.6% in 2015 but fell to 59.7% in 2016 and the average deposit rocketed by 18.5% from £105,605 in 2015 to £125,016 in 2016.
Investors and landlords in the private rented sector had to pay an average of 12.7% higher for any new properties in 2016 of £310,265, whilst in 2015 it stood at £275,286.
The Council of Mortgage Lenders states that the gross buy-to-let lending in November was recorded as the highest monthly level since the 'stampede' of property sales being rushed through before the stamp duty increase came into force last April.
Figures showed that landlord borrowing in November 2016 was £3.2 billion, increasing 10% month-on-month, however it had fallen by 9% year-on-year.
The managing director of the company, Darren Pescod, said: “Landlords are certainly feeling the pinch, but the raft of tax changes that came into force in 2016, do not appear to have dampened the buy-to-let market. In many towns and buy-to-let market. In many towns and cities, landlords have increased their investment in buy-to-let property, despite the financial challenges that have been recently thrown at them by the Government.
“Our research shows that landlords are finding larger deposits and increasing their borrowing to secure property. With mortgage interest rates so low and the demand for rental property booming, the market still provides a great investment opportunity."
Pescod added :“Though the stamp duty additional levy and income tax changes that come into force in this tax year have slowed down this sector it terms of the number of applicants applying for new buy-to let mortgages. This may lead to some consolidation with larger landlords, scooping up rental opportunities in their local area and beyond. Our view is that smaller landlords with fewer than three properties may find it financially tough and will pull out of the market.”
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