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BTL landlords are remortgaging in order to build war chests

Buy-to-let landlords remortgaging are currently doing so with a view to adding to their buy-to-let portfolios, according to Mortgage for Business.

The buy-to-let broker says 30% of property investors are now taking out a BTL remortgage with a view to expanding their portfolio and growing their cash reserves.

The research also indicates 46% of landlords are increasing the size of their loans – significantly higher than the long-term average of 38%. 


Steve Olejnik, managing director of Mortgages for Business, said: “The number one priority of active, professional landlords is to set themselves up with a war chest so they can look for growth.  Smart landlords know that the time is coming to bag some bargains and start expanding portfolios.  Increasingly, that is where their remortgaging priorities lie.”


This time last year, the main concern of remortgaging landlords was not to build up a war chest but to manage risk by, for instance, moving onto a longer fixed rate mortgage and away from variable rate products. Mortgages for Business’ research suggests the management of risk is now the third most important concern.

But with landlords remaining somewhat risk-averse, they are increasingly looking to manage their cashflows.  

Lowering monthly payments is now the second most important concern when remortgaging – it was the third in 2019.

Olejnik added: “Twelve months ago, in 2019, a lot of the landlords we worked with were looking to guard against risk. That’s shifting now as opportunities to purchase cheap properties presents themselves.  

“With property prices poised to drop before the end of the year, the balance between risk and reward is shifting.  It will be interesting to see how landlords’ investment strategies adjust to changing tenant demand.”

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Poll: Are you planning to add to your property portfolio this year?


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    This is surprising to me given that landlords will continue to be targeted as "greedy" and the changes in eviction procedures means greater risk. Can one ever imagine a time when mortgage payments will be allowed to be set off against tax again?! Nope, neither can I.


    For most LLs, income is still taxed less overall than PAYE. Mortgage payments can be set against tax at a maximum of 20%, so if you are a lower rate taxpayer for your income (excluding mortgage deductions) then it makes no difference.
    However, tax on property income has a hidden 12% advantage over "earned" income up to the higher rate due to the lack of NI, as long as you have other employed or self-employed earnings. Once you get into higher rate tax, NI is only 2% and interest relief is restricted to 20%, increasing the marginal rate well above PAYE, so the overall advantage starts to dwindle.
    My guess is is that they could start charging NI on private landlord income to level the playing field at the lower rate, creating a big disadvantage for higher rate tax payers. Fortunately, interest rates are currently so low that mortgaged LLs on higher rate tax may still be slightly better off overall than they were 5 years ago.

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    if ni is levied=a business=tax relief on pension contributions

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    • 30 June 2020 16:52 PM

    Unfortunately S24 taxes mean thst many LL would be better off reducing their job income or stopping work completely.
    S24 still makes a mockery of of being a leveraged LL..............which of course was the intention.
    Only those S24 LL without a job can generally avoid S24 taxes.

    But for most leveraged LL they needed a decent paying job to become one in the first place.

    S24 is another reason I am leaving the BTL PRS

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    Increasing debt to build a war chest ? sounds plain daft to me.

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    • 30 June 2020 18:11 PM

    Reducing debt increases resilience.

    It does seem that the lenders have a vast self interest in having new LL entrants.

    The shine has surely come off high LTV mortgages especially when LL are prevented from evicting and tenants can legally evade paying any rent.

    Lenders are desperately trying to talk up the BTL market.
    They are talking rubbish.
    The PRS is seeking to reduce it's size and exposure to leverage.
    Things won't change overnight as it takes time to change BTL property circumstances.
    Lenders are living in a dreamworld if they believe there will be sufficient new entrants to replace those leaving or reducing leverage.

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    No Peter we are not better off than 5 years ago & worse off than we were 40 years ago, where have you being do you not know about a whole raft of anti-LL regulations adding costs whole sale designed to drive us out. Taking away our 10% wear & tear allowance that was there as long as letting it self, De-regulation Act & its implications, Rogue 'How to Rent' literature as if people didn't know by Shelter that supplies no Housing, 'Right to rent' cost and incumbrance our free or unpaid time means nothing to them, licensing schemes, fines , Penalties, banning orders, Section 24 tax grab, Super Stamp Duty Land Tax, Super Capital gains tax, Section 21 undermined & rocking. Peter please tell me where is my 12% advantage, I pay 40% on most and 60% on part as they taken away my personal allowance but the people that don't work so hard are rewarded with £12k pa, tax free to encourage them to do less and the millions that milk the system get Housed & kept for free. The more you are prepared to work the more you are penalized, the less you do the more you are rewarded, should it not be other way around.


    Excellent post Michael! The CGT penalty is particularly cruel to older landlords trying to implement an exit strategy. Stock market investors can get over £11000 capital gains tax free every year but we can't roll up any unused GGT exemptions to reduce our much higher 28% tax bill if we want to sell up.


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