"It’s encouraging to see intermediaries forecast a more stable outlook for buy-to-let business after such a long period of negative sentiment"
This is the first time that intermerdiaries have forecast a stable outlook for buy-to-let since the 2015 Summer Budget when George Osbourne announced plans to phase out tax relief on buy-to-let mortgages.
Taken together with the 3% stamp duty surcharge on rental properties and new PRA rules on buy-to-let affordability and underwriting, the tax changes have had a significant effect on property transactions.
Latest figures from UK Finance show that buy-to-let mortgage purchase transactions have fallen by around 40%, dropping from 8,900 in May 2015 to 5,500 in May this year.
However landlord remortgaging has risen sharply over the same time period, up 64% from 8,900 transactions to 14,600.
Intermediaries say almost half (49%) of landlord mortgage applications are for a straightforward remortgage, with six out of ten landlords who are remortgaging looking to lock in a better interest rate.
Encouragingly, Paragon's research also includes the first increase in the proportion of landlords raising finance for portfolio expansion since 2015 - up marginally from 22% in Q1 2018 to 23% in Q2 - and a small increase in applications from first-time landlords, edging up to 14% of the total.
John Heron, managing director of mortgages at Paragon, said: “It’s encouraging to see intermediaries forecast a more stable outlook for buy-to-let business after such a long period of negative sentiment. Purchase activity continues at much lower levels but it is interesting to see the step up in remortgage business as landlords look to maximise certainty and minimise costs as the interest rate changes start to take effect.”