B U Y - TO - L E T In focus
New beginnings in buy-to-let
S
eptember always feels like the start of something new – a school year is beginning and Autumn is heralding what looks likely to be a hugely important three to four-month period as we push toward the end of 2024. As I write this, Prime Minister Keir Starmer is standing in the garden at 10 Downing Street outlining what can only be described as a hugely negative and depressing appraisal of the public finances. It’s difficult, at this stage, to read between the lines of what is fact and what is potentially party political manoeuvring, but what seems obvious to note is that next month’s Budget is going to contain a ra of cuts and taxraising measures. Whether those measures target the buy-to-let (BTL) sector, and landlords in particular, remains to be seen. They have certainly been in the crosshairs in the past, and therefore we can’t rule out further a empts to secure tax revenue from them. However, what the Government will need to weigh up is the further disincentive to invest and offer properties to the private rented sector (PRS) that any further significant taxation measures might deliver. Particularly at a time when we have seen positive movement elsewhere – notably in terms of interest rates – and when as a result there has been an easing of affordability, which might well allow landlords to seek to invest further rather than pull back.
Thriving PRS Let’s not forget that the housing strategy of this Government is also going to depend upon it having a thriving PRS, not least while it tries to up the number of homes being built over the course of the next Parliament. Regardless of whether it gets anywhere near to hi ing its targets or not, there are still going to be millions
upon millions of people who either don’t wish to buy, or still can’t, and therefore we need PRS housing in order to be able to meet their needs. It would seem like any a empt to tax landlords further, or disincentivise them from continuing their investments or adding to portfolios, is simply going to draw supply from the market and ultimately lead to higher rents. Add in potential policy measures such as rent controls, and the situation will be worsened. Of course, this hasn’t stopped previous Governments from going a er the landlord tax ‘dollar’, but it is to be hoped this incarnation recognises the consequences of such actions. From a more positive perspective, as mentioned, we have seen the Bank Base Rate and swaps falling in recent weeks, and this has been reflected in falling product rates, which clearly help landlords in terms of securing the loans they need at more affordable prices. That ma ers in the next few months, particularly for existing landlord borrowers coming to the end of their deals, and we know September through December is a peak time for maturities.
Boost to BTL According to data from CACI earlier in the year, we have approximately £11.5bn of buy-to-let mortgages coming to an end through this four-month period, with October in particular seeing £3.4bn in just one month. Notable regional ‘hotspots’ for maturities are London, the South East, North West, North East and South West, although of course there are deals coming to an end right across the entire country. To say this represents a strong opportunity for advisers would clearly be an understatement, and it’s obviously important that communication is being made right
STEVE COX is chief commercial officer at Fleet Mortgages
now with all landlord borrowers who are coming up to the end of their special rates. There is a two-fold point to make here. Clearly, a large number of landlords will be coming off 5-year fixed rates at this time, and there is likely to be a marked difference in terms of the rate they achieved back in 2019 compared to now. However, there will also be some borrowers coming off 2-year deals secured in the immediate a ermath of the miniBudget, and who therefore might be able to secure a much be er rate. The fundamentals of this, of course, remain the same: advisers have the opportunity to secure the finance their landlord clients need, either presenting options which keep any mortgage payment increase to a minimum, or ensuring 2022 borrowers are able to secure loans at cheaper rates than were achievable back in those dark days. What happens next in terms of rates is, of course, up in the air. There may be future cuts to come, but there are no guarantees. While some might be willing to wait a bit longer, maybe on trackers, others will want payment certainty for at least a couple of years, when they can revisit their options again, potentially in a rate environment which has moved down further. Overall, while we await the Budget and what might befall landlords, the options and pricing available to borrowers now is be er than it has been for some time when it comes to mortgage finance. Advisers should seek to make the most of this, and to ensure their clients are placed in the best position possible in order to continue to run profitable portfolios. ● September 2024 | The Intermediary
33