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18th January 2017

Fourth quarter of 2016 saw rebound in new buy-to-let lending

While the UK’s rent indemnity policyholders may have largely focused on remortgaging rather than new lending in recent times, there are signs of a reversal in the trend, with new data suggesting an increase in the number of landlords purchasing properties in 2016’s final quarter.

The UK electorate’s vote to leave the European Union (EU), combined with proposed changes to stamp duty for additional homes, made it unsurprising that in the third quarter of last year, there was a drop in the number of mortgages for new purchases.

Indeed, remortgaging continued to make up the bulk of activity in the latest quarter, except that the share of the lending market taken up by purchases returned to the levels seen earlier in 2016.

Marked increases are a good sign for landlords

Whereas the share of lending for purchases in the ‘vanilla’ buy-to-let market – that is, in relation to standard buy-to-let transactions – was just 28% in the third quarter, it jumped up to 38% in the final three months of the year. The share of purchases in the Houses in Multiple Occupation (HMO) lending market, while not seeing quite as dramatic a change, also saw a rise of its own to 26%.

Mortgages for Business chief executive officer David Whittaker described the trend as “encouraging”, adding: “Following a notable shift towards lending for remortgage in the third quarter, landlords showed they were once again willing to commit to new purchases.”

The data came from the broker’s latest buy-to-let index, which also found continued stability in average loan to value (LTV) ratios across all products at 67% in the year’s final quarter, as gross yields also remained unchanged.

Landlords looking with optimism towards 2017

The welcome increases come as many holders of a rent indemnity policy have also indicated a high level of confidence in the market.

A poll found that 36% of landlords rated their confidence level in the year ahead at eight out of 10 or higher. 88% of those surveyed said that they intended to remain as landlords for the next year, while a third indicated they would increase their portfolios.

For landlords across England and Wales, 2017 promises to be another lucrative year – and here at Advanced Rent, we look forward to providing the very highest levels of support to buy-to-let investors through our rent indemnity and other acclaimed products.

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