From a mortgage market, and to a lesser extent, housing market perspective, the Spring Statement was something of a ‘damp squib’. Part of me thinks that this is the Chancellor, Philip Hammond’s, intention anyway and it is now positioned as a ‘state of the economy’ address rather than an ‘introducing changes and measures.
However, this doesn’t of course stop some in the mortgage market from putting on their lobbying boots prior to it, and calling for changes, particularly in the area of stamp duty. I’ve thought for some time that there’s about as much chance the government rolling back on the extra stamp duty charges for landlords/second-home owners, as there is of getting an clarity over Brexit, and the longer time goes on, the more this appears to be the case.
It’s an interesting period for the buy-to-let market from both a political and regulatory point of view, because while there have been some seismic changes impacting on landlords over the last few years, things are ‘relatively’ quiet at the moment. The ongoing impact of the government’s attempts to get a ‘fairer’ private rental sector appear to be falling on the letting agents, rather than the landlords, although this will undoubtedly trickle down eventually.
What has been most interesting to see is the government’s attempts to turn the PRS into a far more attractive proposition for corporate landlords; however with some notable exceptions – Legal & General for example – I don’t see any significant shift. Indeed, you might say, that the private landlord – and their stock of properties – has actually grown in importance, rather than fallen. Indeed, one can’t help feeling that we’d have a much more serious ‘housing gap’ to overcome if the government’s plans had actually been much more successful than they have been.
That does mean that the PRS remains an attractive proposition for landlords, and there is an increasing move to increase the number of properties within portfolios and to use, for example, limited company vehicles in order to do this. We, like many other lenders, have undoubtedly seen a shift in this direction and – certainly when it comes to purchase activity – the vast majority are now being bought via a limited company.
So, how looks the buy-to-let market for these professional/portfolio landlords at present? Well, it’s a very positive outlook, especially from a remortgage perspective where competition means we have low rates, plus the specialist buy-to-let lending community are much more in tune with the wants and needs of landlords, and the increasingly complex cases that are being brought to market.
Purchase activity is holding solid and I would expect many more landlords to be looking to add to portfolios during the year ahead, especially if we do get that much-needed clarity over Brexit. Although that looks less likely by the minute – however things could have changed significantly by the time you read this.
What we do know is that while there has been a slight movement of property from amateur landlords to first-time buyers – as the government would wish – this is not happening between professional landlords and first-timers. Instead, what is happening, is that this latter bunch are holding onto their properties, or if they are selling then these are being purchased by other landlords. In that sense, I suspect the government will be somewhat thankful because the PRS needs this supply to cope with demand.
All in all, the outlook is positive – properties are being bought and refinance, landlords are looking to diversify, demand from tenants is strong for good quality properties, and lenders have an appetite to lend. In that sense, advisers are in a good position and those that can market their services to the professional landlord brigade should find a deep well of work to draw from.
Bob Young is chief executive officer of Fleet Mortgages