Buy-to-let landlords rush to expand portfolios

Buy-to-let landlords are rushing to expand their portfolios before the stamp duty surcharge kicks in on 1 April.

The surge means that buy-to-let purchases means are likely to outstrip landlord remortgages in the first quarter of this year.

This would reverse last year’s trend, when remortgage transactions outstripped purchases by more than 2:1, according to the latest Complex Buy to Let Index from specialist brokers Mortgages for Business.

Its Q4 results revealed that remortgages for vanilla buy to let property accounted for 64% of transactions.

Houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs) saw even greater remortgage activity at 78% and 88% of transactions respectively.

David Whittaker, managing director of Mortgages for Business said landlords have been making considerable savings through remortgaging.

“However, I anticipate that we will see a reversal of this trend in the first quarter of this year as landlords hurry to expand their portfolios.”

Whittaker said the number of enquiries for purchase finance is up sharply on last year, particularly from those looking to sell their personally owned property into a corporate vehicle.

Although yields across all property types rallied in Q4 2015, in real terms they continue to plateau as rental income fails to keep pace with rising property prices, Whittaker added.

“However, returns for the more complex properties remain healthy and well above the psychologically important 6% mark.”

The study also showed that the number of lenders operating in the market remained static at 33, although the number of buy-to-let mortgage products available to borrowers grew slightly to an average of 975.