Despite the government’s decision to cut tax incentives and increase stamp duty rates for landlords, many mortgage brokers believe that demand from those looking to invest in the buy-to-let sector looks set to remain solid during the second half of this year, according to new research from Legal & General.
In spite of the recently introduced 3% stamp duty surcharge for buyers of second homes, the scrapping of the 10% Wear and Tear tax relief for landlords and the mortgage interest tax relief cut, coming into play from next year, for many people buy-to-let remains an attractive income investment at a time of low saving rates and stock market volatility, with average buy-to-let returns currently beating all other mainstream investments.
The study found that brokers in Scotland are the most confident about buy-to-let’s future, with 63% of Scottish brokers predicting that in 2016 the buy-to-let market will remain the same size as last year, despite the 2015 surge in activity.
The positivity amongst advisers north of the border is followed by brokers in Nottingham, where 57% of brokers surveyed predicted that the buy-to-let market would either expand or remain the same this year, followed by 49% in London.
However, opinions regarding the future of the buy-to-let market varied significantly across the UK, with 71% of intermediaries in Manchester believing that there will be a reduction in the sector this year.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “Despite a whirlwind of changes to the buy-to-let market, including the government’s stamp duty hike and the reductions in tax relief on the horizon, it’s clear that a large number of brokers remain confident that buy-to-let will remain strong in 2016. Though there are concerns that government interference could mean a reduction in buy-to-let activity this year, our research shows that many brokers in both England and Scotland believe the market to be well positioned to absorb the impacts of these measures.
“Even now, amid the uncertainty brought about following June’s referendum result, borrowers will be looking to remortgage their buy-to-let properties as a potential reduction in rates looms. Brokers need to grasp this opportunity by contacting their books now to ensure these individuals get the crucial advice they need when it comes to securing a better rate on their mortgage.”