The proportion of buy-to-let remortgaging hit a record high in the third quarter of the year, as more landlords looked to switch to secure cheap deals in order to maximise as much profit from their portfolios as possible to offset increased tax charges, new figures show.
Buy-to-let remortgaging accounted for 57% of all buy-to-let business, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index which has been capturing the experience and views of approximately 200 mortgage intermediaries on the development of the UK mortgage market each quarter since 1995.
The latest survey, tracking developments for Q3 2018, highlights a significant rise in the proportion of landlords remortgaging, up from 49% in Q2 to 57% of all buy-to-let business, as many shrewd landlords pay closer attention to how their portfolios are run.
In contrast, the proportion of first-time landlord business dropped from 14% to 10%, while landlords looking for finance to expand their portfolio were down from 23% to 19% of the total.
The proportion of landlords remortgaging has outstripped those seeking funds for portfolio expansion almost inexorably since back in 2015 following the announcement of significant tax changes for landlords in the Summer Budget.
Six out of ten intermediaries now say the main reason that landlords are remortgaging is to secure a better interest rate.
Overall, buy-to-let represented 19% of intermediary business during Q3, with the remainder taken up by mortgage applications from owner-occupiers.
John Heron, managing director of Mortgages at Paragon, said: “Landlords are investing less in the Private Rented Sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford. This is clearly a response to the increase in costs that landlords face following changes to stamp duty and tax relief on finance costs.
“It’s no surprise therefore to see that landlords are taking the opportunity to reduce their mortgage finance costs as one part of their strategy to mitigate the impact of higher taxation.
“Tax bills due in January 2019 will include the first phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead.”
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