Mortgages  

Buy-to-let surges in post Brexit bounce

Buy-to-let surges in post Brexit bounce

Research from Connells Survey & Valuation showed buy-to-let activity surged 12.7 per cent in August as the sector successfully absorbed the government’s 2015 policy changes and a post-Brexit bounce.

According to the firm, changes to the tax treatment of the buy-to-let sector looked to be choking off activity in 2015 and early 2016.

John Bagshaw, corporate services director of Connells Survey & Valuation, said now the effects of the government’s legislation have been digested by lenders and investors alike, buy-to-let activity has increased sharply.

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“The market’s fears over the impact of Brexit are calming, too and the Bank of England’s decision to cut the base rate last month for the first time in seven years may also have a psychological impact on property investors.

“Encouraging economic data, high levels of employment and fading fears of a recession have also injected life into the sector.

“While we can still see the impact of last government’s damaging set of changes to legislation in the year on year numbers, August’s surge in activity highlights the resilience of the buy-to-let sector.”

According to Connells Survey & Valuation, the rebound in buy-to-let investment reflects developments in the wider economy where an immediate and detrimental impact on consumer confidence post Brexit has not materialised as predicted.

Additionally, UK retails sales figures rose in July while consumer confidence rose in August.

Remortgaging activity has also seen an increase in valuations on both a monthly and an annual basis.

On a monthly basis, remortgaging valuations saw a growth of 4.2 per cent and a 1.5 per cent increase year-on-year to August 2016.

Mr Bagshaw said: “First-time buyers have enjoyed a month of growth and the sector is continuing to thrive following a strong July – given first-time buyers are the engine of the property market, this is very significant.

“August has also seen a surge in activity in the remortgaging sector, partially fueled by the interest rate.”

“Overall market activity remains steady and fears of a post-Brexit slump has failed to emerge. In the first full month after the Bank of England’s decision to cut interest rates, the buy-to-let market has seen a surge in activity.

“Powered by low interest rates, landlords have taken the opportunity to remortgage.”

ruth.gillbe@ft.com