Buy-to-let remortgage transactions outstripped purchases by more than 2:1 in 2015, according to the latest Complex Buy to Let Index from specialist broker Mortgages for Business.
The results for Q4 revealed that remortgages for “vanilla” buy-to-let property accounted for 64% of transactions with Houses in Multiple Occupation (HMOs) and Multi-Unit Freehold Blocks (MUFBs) seeing even greater remortgage activity at 78% and 88% of transactions respectively.
David Whittaker, managing director of Mortgages for Business, said: “The results aren’t surprising; for some time now landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plan further purchases. 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 before the stamp duty surcharge kicks in on 1st April.
“The number of enquiries for purchase finance is already well ahead of where we were this time 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. However, returns for the more complex properties remain healthy and well above the psychologically important 6% mark.
The number of lenders operating in the market remained static at 33. However, the number of buy-to-let mortgage products available to borrowers grew slightly to an average of 975.
“It is unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies,” said Whittaker, “Of course, that figure is only an average - at one point at the beginning of December our tracking system, Mortgage Flow, showed 1,168 products.”