One of the Major benefits would be an increase in stock coming onto the market. Especially with the old rental stock where there is the protentional to add value. So far this has not come and may have to wait for landlords to have done their tax returns next January and maybe redone the sums. However, one benefit we can see right now is Mortgages, not just with the low rates but lenders becoming more flexible with their terms and the amazing rates.
Lenders will Lend
Eventually if demand remains low then some lenders will have to leave the market, but at this very moment they are competing to maintain their lending volume by taking a bigger cut of a shrinking market.
This can be seen, by the effects of this competition taking forms- The most obvious is low interest rates, which is the result of competition as well as the low base rate. Fee free products are also increasing, as the lenders try to find ways to win business when they can’t cut rates any further. Less obvious but very important is the relaxing of criteria. And finally, Lenders are reaching out to customers they previously weren’t interested in lending to. There are now Lenders who lend to first time landlords who don’t own their own homes – which previously was a situation that made it impossible to secure a mortgage. There are now mortgages becoming available for other niche sectors like holiday lets and serviced accommodation, however currently are limited.
How about Limited companies?
Most of the improvements apply to the personal buy to let market and not limited companies, because competition is very high in this market as a result of so many investors moving to limited company structure.
Though it reinforces the fact that limited company ownership should never be the default choice and the decision is always case by case – the tax advantages needs to be weighed up against lower mortgage rates and more good criteria that might allow many to borrow more or to finance a property that you could not.
The time is now
The combination of these factors: low rate, high lender competition and a reducing investor pool, won’t be around forever. So, don’t go into making marginal investments that wont really work when conditions return to normal, but do review the lending across your portfolio and speak to one of our mortgage brokers at Nova Financial about how you can take advantage while lenders pain is your gain.