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Number of buy-to-let deals for first-time landlords hits record high

The number of first-time landlord buy-to-let mortgage products hit a record high of  1,474 in October, up 297 on the same period last year, according to the latest buy-to-let market analysis by Moneyfacts. 

The data shows that mortgage lenders are still working hard to expand their range to cater for prospective landlords, despite the government’s decision to phase out tax relief on mortgage interest payments by April 2020, while the market adheres to stricter lending criteria rules introduced by the Prudential Regulation Authority. 

Rachel Springall, finance expert at Moneyfacts, commented: “It’s encouraging to discover that first-time landlords have a huge choice of deals right now, particularly during a time of economic uncertainty. However, landlords will need to keep a close eye on their projected profit margins, especially as tax relief on mortgage interest will be scrapped in April 2020. 

“Landlords are already feeling the squeeze to make a decent profit within the buy-to-let sector, with the average landlord left with just £2,000 from an annual return of £13,000 once landlord costs are paid, according to recent research by lettings platform Howsy. 

“So, while lenders work hard to accommodate prospective investors with an array of buy-to-let options, the costs of managing a property or concerns about a volatile property market could deter some from investing in this arena altogether. In fact, according to the Land Registry, house price growth slowed to 0.70%, the lowest in almost a decade. 

“As it is a mere few months until tax reliefs are scrapped, it’s vital consumers seek independent advice to work out whether buy-to-let is a viable investment opportunity for them and to be made aware of upcoming changes facing the market.”

Buy-to-let market analysis – First-time landlord products

 

Oct 2014

Oct 2018

Jul 2019

Oct 2019

Average two-year fixed rate

3.83%

2.89%

2.97%

2.87%

Average five-year fixed rate

4.45%

3.43%

3.52%

3.38%

Number of overall products

660

1,177

1,405

1,474

Source: Moneyfacts.co.uk

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