MortgagesFeb 4 2016

Brokers braced for buy-to-let downturn

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Brokers braced for buy-to-let downturn

Mortgage brokers are positive about the health of the buy-to-let (BTL) market but have concerns about the potential for growth in 2016, according to research by Natwest Intermediary Solutions.

From a survey of 441 intermediaries, 66 per cent said they had seen an increase in demand for BTL mortgages from customers over the past six months, with just 7 per cent having experienced a decline.

A third expected to see a further increase in BTL business, but four in 10 expected to see a decrease and just over a quarter expected it to remain stable.

Graham Felstead, head of Natwest’s intermediary arm, said it appeared some of the uncertainty surrounding the interpretation of the new Mortgage Credit Directive, the new tax regime for landlords, and the Government’s focus on boosting home ownership had muted the optimism for further growth among a sizeable number of brokers.

He said: “We may well witness a ‘wait-and-see’ approach by many until the new factors bed in.”

In the Autumn Statement, chancellor George Osborne announced a new rate of stamp duty that will see BTL investors and owners of second homes pay 3 per cent more from this April.

The Government will also restrict mortgage interest relief on residential property to the basic rate of income tax from April 2017.

Karen Bennett, sales and marketing director at Commercial Mortgages, said while it was obvious that 2016 would see some big changes in the BTL market, it appeared most brokers were not buying in to the commentary that the market will suffer.

“The majority of our broker partners are confident that the market is one in which their business can grow, and BTL presents many opportunities to investors,” she added.