Buy-to-let remortgage transactions outstripped purchases by more than two to one last year – but could we see this reversed in 2016?
According to a recent report, remortgages for ordinary buy-to-let properties accounted for 64% of transactions. Houses in Multiple Occupation and Multi-Unit Freehold Blocks saw an even greater remortgage activity at 78% and 88% of transactions respectively.
David Whittaker, Managing Director of a UK mortgage brokerage company, was not surprised by the statistics, explaining that ‘for some time landlords have been making considerable savings through remortgaging.’ However, Whittaker does foresee this changing in Q1 as landlords will hurry to expand their portfolios before the Stamp Duty changes in April.
The surge means buy-to-let purchases are more than likely to outstrip landlord remortgages in Q1 this year, reversing last year’s trend.
He went on to say that ‘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 of 2015, in real terms, they’re actually continuing to plateau as rental income fails to keep up with the rise in property prices. On the other hand, returns for the more complex properties remain well above the 6% mark.
In light of this, Whittaker affirmed that ‘it is unlikely 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. Of course, that figure is only an average.’
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