Landlords still Looking for Future Property Investments

Results from a recent Property Investor Survey show that the proportion of landlords looking to expand their portfolios in the coming months has grown. Although many landlords will have been affected by the recent and ongoing restrictions to tax relief on mortgage interest costs and the introduction of the stamp duty surcharge on second homes, a recent study has found landlords are still looking for future property investments.

Results from the Property Investor Survey show that the proportion of landlords looking to expand their portfolios has grown to 48 percent, up from 45 percent in November 2016 and 41 percent at the same time last year.

The survey, which was conducted over a two-week period in May this year, shows that optimism is slowly returning to the buy-to-let sector, despite the raft of changes that have impacted landlords and their buy-to-let property portfolios in recent years.

Landlords prefer 5-year fixed rate mortgage deals

Part of the reason for the increase in landlord optimism is down to the record-low interest rates that show no sign of rising anytime soon. To make the most of the incredible deals that are currently available, landlords have been increasingly opting for five-year fixed rate mortgages.

In May 2016, the same survey found that 21 percent of buy-to-let landlords were opting for five-year deals compared with 18 percent choosing the three-year alternative. Since then, there has been a dramatic shift in investor preferences, with five-year fixed rate deals now the preferred option for 42 percent of landlords. That’s twice the number in May last year and up 9 percent on November 2016.  

On the other hand, the number of landlords choosing a three-year fix has plummeted with just 5 percent of respondents going for that option, making it even less popular than ten-year fixed deals.

Adjusting to the current environment

Although the experts do expect buy-to-let lending to fall slightly over the course of the year, these latest results show landlords are starting to bounce back. Rather than exiting the sector, landlords are instead choosing to adapt their investment strategies to successfully accommodate the new regulatory landscape. Two of the biggest shifts we have seen are the rise in the number of landlords choosing to incorporate their buy-to-let portfolios and the surge in the popularity of five-year fixes as landlords maximise their borrowing options.

The survey also revealed some of the other changes landlords are making to adjust to the shifting economic environment. 62 percent of respondents said they had consulted a professional tax adviser, with 34 percent admitting to seeking advice specifically because of the changes to tax relief on finance costs. 28 percent said they already had an existing relationship in place.