Two years on from sweeping tax reforms to the buy-to-let sector, the industry is rapidly shifting towards professional landlords, according to senior mortgage experts.
Mortgage advisors came together this week at the Mortgage Strategy Leaders Forum in London where they discussed the changing tax landscape and the impact that it has had on buy-to-let property owners, and were unanimous in their opinion that the government’s plan to professionalise the industry appears to be working.
With some accidental and part-time landlords exiting the market as a result of tax legislative changes, the profile of the typical buy-to-let landlord appears to be evolving, shifting towards professional landlords focused on growing their portfolios, according to Rob Jupp, CEO at Brightstar Financial.
He commented: “There’s no truth to press reports that landlords are leaving in droves. But the tax changes have been the death knell for dinner party landlords.”
David Whittaker, CEO at Keystone Property Finance shared similar sentiments, pointing out that the bulk of properties sold by landlords had been acquired by other investors, most notably professional landlords, rather than first-time buyers.
He said: “Increased yields in some areas have mitigated the tax changes. As a long-term business plan with yields of 4.5% or 5% and mortgage rates about 3%, buy-to-let is still a good investment.”
Many experts have long argued that first-time buyers are unlikely to benefit from the government’s cut to tax relief for buy-to-let landlords, and this was a view shared by the panel, despite figures this week showing that the number of first-time buyers in the UK has reached its highest level since June 2017.
There were 35,500 new first time buyer mortgages completed in August, up 2% compared to the same month last year and lending to this group increased by 5.2% to £6.1bn, according to the data from UK Finance.
But according to Mortgage Strategy, the panel suggested that the jump in lending to first-time buyers had more to do with Help To Buy rather than the squeeze on landlords.
Adrian Moloney of One Savings Bank commented: “Help to Buy has been the stimulus for an improved first-time buyer market, not landlords selling up.”