The number of buy-to-let mortgages taken out in November was up 35% from the previous year, according to new statistics.
Figures from the Council of Mortgage Lenders (CML) showed that 23,300 buy-to-let mortgages were taken out in the month of November, although this was actually a 6% decrease from the month before.
This shows that the number of people investing in buy-to-let properties has remained strong, despite the tax changes due to come into force for these types of mortgages from April. And lenders expect the trend to continue, with even more buy-to-let mortgages to be taken out over the coming months.
November was a strong month for buy-to-let mortgages, despite the fact it was down slightly from October. In fact, it was a good month for mortgages in general, with 60,100 completed, down 9.2% from the previous month. This was likely to be a seasonal dip according to the CML, so it seems that buy-to-let mortgages are still performing better than some analysts had expected.
After the changes to stamp duty were announced in the Autumn Statement Spending Review 2015 which revealed that buy-to-let landlords would pay 3% more in stamp duty than first-time buyers from April, it was thought that many people would start to avoid investing in these types of properties. But that doesn’t seem to be the case so far – although the tax change doesn’t come into force for a few months yet.
In fact, a survey by the Bank of England (BoE) suggested that the demand for buy-to-let would continue to grow rather than start to contract, despite the stamp duty hike. According to the figures, 30% more mortgage lenders expect buy-to-let demand to grow in the first quarter of 2016 than those predicting there would be a fall. This could be due to those looking to invest in buy-to-let wanting to get in quickly before stamp duty changes, and it may be that we see a different story after April.
Tips for buy-to-let
Investing in buy-to-let properties has long been touted as a way for some people with large amounts of savings to get a good return on their money, but it’s certainly not risk free and is not suitable for inexperienced investors. For example if you find yourself without a tenant for a few months you may be unable to pay the buy to let mortgage, damaging your credit record, incurring extra charges and potentially putting the property at risk of repossession. If you’re considering buying a property to let, make sure that you understand all the risks and what the realistic potential returns are.
Savings rates have been low for a while now but this could change from April as you’ll no longer have to pay income tax on the first £1,000 of savings interest. This could mean you might be able to find a better rate-of-return for your money than buy-to-let with less risk.
However, if you’re sure you want to buy-to-let, make sure to research the market thoroughly first. Get an idea of property prices in the area you’re looking to buy in and average monthly rents, and it’s probably worth speaking to a financial expert for advice before you make any decisions.
If you’re looking for a buy-to-let mortgage, search a few different lenders to find the best deal for you. You could also use a mortgage broker like Ocean to find a deal that’s right for your situation. Mortgage brokers search a range of lenders for a suitable deal for you and they might even be able to find a rate for you that you couldn’t get on the high street, as some deals are exclusive to brokers.
Disclaimer: All information and links are correct at the time of publishing.