Why BTL Mortgage Market Valuations Have Fallen

By | 14 August, 2017

Why BTL Mortgage Market Valuations Have Fallen.  It’s well over a year ago that the stamp duty tax surcharge for owners of multiple property came into action. That’s plenty of time for the dust to settle and see exactly what impact it’s having on the Buy-to-Let market.

Read on to discover more detail about life after the stamp duty tax change!

BTL Valuation Activity Slumps

The April report from Connell Surveys & Valuations, shows BTL mortgage valuations, at 7% below the five-year average. The BTL property experts said the slowdown was likely due to fewer smaller, investors entering the market since the stamp duty change.

“This [decline] could suggest that smaller, private landlords, who typically use buy to let mortgages, have not been investing on the same scale as previously seen,” said John Bagshaw, corporate services director of Connells Survey & Valuation. “Buy to let used to be seen as a viable way to gain additional income or to fund retirements.”

The survey also shows an increase in the level of BTL re-mortgage activity. The number of BTL re-mortgages in April 2017 was 4% higher than the five-year average. And, separate data from Mortgages for Business, shows an increase in the proportion of 5-year fixed BTL mortgages. At the same time, the number of agreed 2-year fixed BTL mortgages, has slipped a little.

This likely reflects an appetite among BTL lenders to take advantage of lower rates. Particularly as they’re expected to move higher at some point in the not to distant future.

BTL Mortgage Activity More Than Halves in a Year

Data from the Council of Mortgage Lenders (CML) confirms a sharp drop in the number of agreed BTL mortgages. In the first quarter of 2017, new BTL mortgages totalled 18,100. That’s less than half the 49,100 in the first three months of 2016.

Re-mortgage activity also slowed, but by a much smaller proportion. Where there were 43,000 BTL re-mortgages in Q1 2016, the number fell to 38,000 a year later.

Of course, the tax change was always going to skew comparisons between March and April 2016 and 2017. But, the size of the difference is vast, probably much more so than expected.

First-Time Buyer’s Benefit from Fewer BTL Purchases

But, it’s not all doom and gloom, at least not for first-time buyers. Of course, the tax change was always going to skew comparisons between March and April 2016 and 2017.

Of course, housing activity is much slower now than it was in the early months of 2016. But, as more FTBs are able to buy a home, it’s likely the number of renters has fallen a little, too.

“The relatively sluggish activity among home-movers stands in contrast to the growth in first-time buyer and remortgage activity, but in aggregate the market is showing broadly the levels of activity we expected,” said Paul Smee, director general of the CML. “As we head into the summer, we expect a continuation of these trends.”

The outlook further ahead for the FTB market, is as clouded as it is for the BTL market. Want to ignore Brexit negotiations and house building rhetoric, while still renting out your property? Then get in touch with Incrent.

Our property specialist knowledge means we can make sure your property works hard for you. What’s more, you’re guaranteed to receive the rent for whatever period we agree, while we do all the work!


Alessio Tondo & Fabio Tarantino
Two ordinary guys who turned their passion into a business.
Co-Founded INCRENT
Rent 2 Rent specialists, London
Focused on how to Increase Your Rental Income.

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