The rise of the corporate landlord

In recent years, there has been a significant increase in the number of landlords forming limited companies to manage their buy-to-let business. This trend is primarily driven by the impact of the introduction of the Section 24 tax changes, which limits the extent to which landlords can offset mortgage interest against their tax liability, particularly for higher-rate taxpayers. For landlords who are considering transferring existing portfolios into a corporate structure, it is vital that they seek advice from experienced tax professionals.

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Property investors transitioning from ‘part time’ to full professional landlord status will need mortgage advice

Moving from a portfolio of 1-3 residential properties to a portfolio of 4-10 or more properties requires more than just additional purchases. Operating as a professional landlord requires careful thought and planning to ensure you have considered regulatory requirements, stricter financing criteria, tax-efficiency and the economic/interest rate environment. The impact on a landlord’s ability to secure the right mortgage will be critical to economic success.

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Mortgage considerations in light of the recent Bank Base Rate reduction

During 2024, as inflation has fallen to the Bank of England target, speculation grew as to when the Monetary Policy Committee (“MPC”) would reduce the Bank Base Rate (“BBR”).  Whilst on 1st August the MPC decided to reduce the BBR by 0.25%, many banks had already reduced their mortgage interest rates over the summer months in anticipation of this decision.

So, whether you are stepping on, up/down the property ladder or considering purchasing/refinancing a buy-to-let property, your mortgage is likely to be more affordable than last year.  However, if inflation remains under control (or even falls below target) speculation for further rate cuts will continue. In an environment where the BBR is ‘expected’ to fall, careful thought and research needs to be undertaken to ensure the right mortgage product and lender is selected to meet your personal circumstances.

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The importance of researching your mortgage and some factors to take into consideration

In the last few months, mortgage interest rates have fallen significantly as speculation grows as to when the Bank of England will begin to reduce the Bank Base Rate. So, whether you are stepping on, up/down the property ladder or considering purchasing/refinancing a buy-to-let property, your mortgage is likely to be more affordable than a few months ago.  However, careful thought and research needs to be undertaken to ensure the right mortgage product and lender is selected to meet your personal circumstances.

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Rents rising and property prices stagnating/falling; can landlords take advantage?

Whilst it is generally well understood that the days of making a ‘quick profit’ from buy to let “BTL” are over, for seasoned landlords and well-advised new landlords who take a long-term view, the current market conditions could provide an opportunity to make new acquisitions. With rents rising significantly and property prices stagnating/falling, opportunistic acquisitions may emerge.  How do potential buyers take advantage?

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Be prepared to act quickly

Despite the increase in the Base Rate to 5% by the Bank of England in June, speculation remains as to when the next rate rise will come and where rates will peak. With the expectation that UK inflation will remain stubbornly high for longer, some experts are forecasting rates to reach as high as 7% and remain higher for longer than was anticipated earlier this year. In this uncertain climate, mortgage lenders continue to withdraw and re-issue mortgage products at short notice.

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For landlords, ICR will be a challenge, but some lenders are showing flexibility

Whether you have a single buy to let (BTL) or are a portfolio landlord, if you are considering a new purchase or refinancing an existing BTL mortgage, then each lenders’ Interest Coverage Ratio (ICR) requirements/policies will be crucial to your success.

In the current times of high interest rates, lenders have set challenging ICRs and many landlords may struggle to secure the finance that they need.

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Property wealth has the potential to help older AND younger generations

In March the Equity Release Council issued their 2022 Later Life Lending report. The report highlights that in the UK, property wealth has reached £6.7trillion and £5.2trillion after mortgage debt. A significant portion of this wealth is in the hands of the over 55s. For some, the equity in their home could far exceed the value of their pension/investment savings and therefore have a significant impact on the quality of their retirement.

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The impact of the ‘bank of mum and dad’ on first time buyers

During the December festive holidays, many families would have gathered and spent valuable time with parents and grandparents. Often, it’s an opportunity for the older generation to reach out to children/grandchildren to offer financial support at this critical stage in their lives, when they are looking to take that first step onto the property ladder. Despite the rise in cost of living and mortgage interest rates, First Time Buyers (“FTB”) will remain crucial contributors to the housing market, however, they face two key challenges: the level of deposit and affordability.

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Residential remortgage rates fall

In October, we experienced a significant level of uncertainty in the mortgage market resulting in lenders withdrawing a number of residential mortgage products.

In the immediate aftermath of the ‘mini-budget’, 5-year fixed mortgages hit rates above 6%, creating anxiety for existing borrowers who were considering refinancing options. 

Since then, the combination of Rishi Sunak and Jeremy Hunt has brought some stability to the market and we are now beginning to see rates drop.

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