House rules

Even though it’s a difficult economic environment, with ongoing tenant payment concerns, there is still much out there for Landlords to be positive about.

The Buy-to-Let sector saw its highest purchase activity in Q4 2020, since Q1 2016, with 22,500 loans taken out. Whilst much of this would have been driven by the reduction in Stamp Duty, there is some anecdotal evidence that Buy-to-Let house purchases may remain robust, with landlords expecting a return to ‘normal’ as the vaccine programme rolls out.

Additionally, the extension of both the Stamp Duty reduction and Furlough scheme can only help matters. With the latter possibly allaying some fears over facing missed rental payments.
(Sources: UK Finance, Household Finance Review & Paragon comment, March 2021)

Regional trends

Tenant demand reached a 5-year high during the final quarter of 2020, with nearly a third reporting increased levels. Although there were strong regional differences, such as 10% of landlords saying there was increased demand in London, and 58% said the same for the South West.
(Source: Paragon, February 2021)

As for the average monthly rental income, this is still holding up across the UK, at £984 (up 3% year-on-year). Ten of the 12 regions showed an increase, with the exception of Northern Ireland and Greater London – albeit the average rental value for the latter was still £1,572 vs. an average of £840 for the rest of the UK (exc. London).

But for Greater London that figure was down 4.7% year-on-year – partly a reflection of how people currently want to live within a different property setting, and with many people not going into the workplace.
(Source: HomeLet Rental Index, February 2021)

Consider your Remortgaging options…

As set out above, we’ve seen a recent surge to purchase new properties ahead of the end of the Stamp Duty reduction, initially planned for 31 March (now extended), despite the fact that Landlords still have to pay the 3% surcharge.

Ironically, it was this same surcharge that resulted in a higher volume of purchases ahead of its introduction back in April 2016, with a 5-year fixed rate being a preferred route for many. Five years on, lots of those deals have now been remortgaged (or will be). Whilst interest rates are edging up, the average 5-year fixed rate Buy-to-Let deal in March 2021 was still 3.41%, against 4.04% back in March 2016. So, if your deal period has come to an end, or if you simply want to see what’s on offer, do get in touch.
(Source: Moneyfacts, March 2021)

Alternatively, you may be looking at other rental options, such as different regions, or looking at holiday lets. Although, as ever, there remains the fairly strict lending criteria, made even more so by the impact of COVID. For example, some lenders will now want to know if you’ve utilised support schemes such as the Self-Employment scheme, Bounce Back loans, or furloughed any staff.

So, do talk to us to see if we can identify (and hopefully secure) the most suitable deal for your needs.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that the rental income will be sufficient to meet the costs of the mortgage.
The value of your Buy-to-Let property and income from it can go down as well as up. You may also require advice on the legal and tax issues.
The Financial Conduct Authority does not regulate legal and taxation advice, and most Buy-to-Let mortgages.
HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

Your property may be repossessed if you do not keep up repayments on your mortgage.