The buy-to-let sector was handed a boost of confidence last week, as mortgage lender Fleet Mortgages returned to the market after a three month absence.
The lender halted its new lending on January 8th, the day after fellow mortgage lender Secure Trust Bank stopped accepting new business for owner occupiers, sparking fears that we are returning to a 2007-style environment – when lenders started closing their doors one after another. Since then another residential lender in Magellan has pulled out of the market.
However Fleet is now back – and it has £1bn to lend to the UK’s property investors, with products focused on individuals, those using limited companies and people looking to invest in a house in multiple occupation HMOs, where most of the highest yields can be found if you’re a savvy investor.
Fleet didn’t pull out in January due to a lack of custom; it was down to an issue with one of its funders that may have got the jitters owing to the current Brexit uncertainty affecting the UK.
Tougher buy-to-let environment
Fleet’s exit and return happened amid a tougher environment for buy-to-let.
Government measures making it harder for investors include the 3% stamp duty surcharge affecting new buyers, the reduction in mortgage interest tax relief, as well as stress tests from the Bank of England that mean you have to prove you can repay the mortgage if interest rates rise.
These changes seemed to dampen down buy-to-let activity, and in an environment where business is harder to come by some within the mortgage industry were worried that Fleet wasn’t coming back.
However, specialist buy-to-let lenders have, in some ways, taken advantage of the increasingly complicated nature of buy-to-let. For example, owing to the mortgage tax relief changes buying through a limited company has become a popular way to avoid paying more tax – and Fleet has taken the lead with its limited company offering.
More power to you
Ultimately the more high quality lenders there are in the market the better, whether you’re looking to buy a house to live in or rent out.
If there are more lenders fighting for the same business the more likely you are to find the ideal mortgage tailored to you, whether you’re looking to invest in a flat or a HMO, or whether you’re a prime borrower, self-employed or have adversities in your credit.
The competition also drives mortgages rates down, which have become incredibly competitive in the past few years.
While buy-to-let may have taken something of a battering from government changes there is always likely to be demand for rental property, seeing as having a place to live is such a basic human need. Indeed, UK rents are currently rising by 1.1% on average as of February 2019 according to the Office for National Statistics.
There is still value in investing in buy-to-let – and Fleet Mortgages’ return underlines that fact.
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