Buy-to-let mortgage activity has fallen by half since April 2016, according to new figures from the Council of Mortgage Lenders.
In the year since April 2016, 71,000 new mortgage applications were submitted by people looking to purchase buy-to-let property. However, the total number of applications made in the preceding 12 months stood at 142,100.
Let’s take a look at why the rate of applications has fallen. We’ll also explain what you can do to make sure you get offered the most cost-effective mortgage rates.
Why has buy-to-let mortgage activity fallen so dramatically?
New government legislation is the main reason why mortgage activity has plummeted so dramatically in recent years.
The government has applied an additional 3% stamp duty surcharge to purchases of all second homes and buy-to-let properties. This came into effect in April 2016.
In the preceding budget (autumn 2015), the government decided to limit tax relief on buy-to-let income. The National Landlords Association estimated that this would push nearly half a million landlords into higher tax brackets.
On top of this, despite increased competition pushing mortgage repayment rates to new lows, banks are proving remarkably resistant to lend. Simon Bennett, a buy-to-let landlord with 35 properties, commented: “They had their fingers burnt before, so they are not lending” (BBC).
With the government putting the squeeze on buy-to-let landlords like never before, keeping your financial affairs in order is now more important than ever.
Call on the experts at 3 Wise Bears for more buy-to-let accountancy news and advice.