As the government continues to battle out the UK's Brexit, we take a look at the latest research from Foundation Home Loans on what landlords believe may stimulate the buy to let market.
With the stamp duty increases and cuts to mortgage interest tax relief, it’s little surprise there’s some hesitation in the buy to let market, as both these changes have had a huge impact on landlord’s profits. Demand from tenants for good quality properties, however, remains high and therefore landlords are still reaping the financial benefits, albeit perhaps slightly depleted than before. Lenders are therefore suggesting that they expect the buy to let market to continue to increase. However, we can’t ignore that concerns do still remain around Brexit and the effects it may have economically.
The most recent research from Foundation Home Loans – in conjunction with BVA BDRC (a leading market research group) – shows that the majority of landlords believe that the Government may backtrack on the changes to stamp duty on additional property and mortgage interest tax relief, which would almost certainly stoke both buy to let and private rental markets into increased activity.
When asked, 51% of landlords said that both changes would have to be readdressed in order to “help build greater confidence in the sector”. Interestingly, 22% thought that remaining in the EU would have the most positive effect, while 14% believed that finalising the UK’s withdrawal would be the most beneficial to the sector.
"In the current market, would you choose to make your first investment in property?"
40% said that they would still invest as buy to let continues to be a good investment in the long term. Why? Because the returns are still better than other types of investment and that property could still deliver capital growth. On the other hand, 50% said that they would most likely not make a first property investment in the current market, down to the recent regulatory changes, economic uncertainty and lack of returns.
Ultimately, with the continued demand for rental property, buy to let landlords are still going to see returns and lenders are still going to need to put out a variety of mortgage and re-mortgage products to meet that demand. In all, the future for buy to let still looks bright, despite the current uncertain economic backdrop.
Source: Foundation Home Loans, August 2019.