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More buy-to-let landlords searching for mortgages on cheaper properties + housing market shows no sign of slowing down winter months

More buy-to-let landlords searching for mortgages on cheaper properties

Purchasers of buy-to-let properties are turning to the cheaper end of the market as low rates encourage buying but incoming regulation douses demand for more expensive homes.

Landlord borrowers are moving away from higher-priced properties towards those valued below £150,000, according to research that tracks 250,000 monthly mortgage product searches carried out through price comparison websites.


The data, produced by the broker Mortgage Advice Bureau and search tool provider Twenty7Tec, will cause concern among housing policymakers who have warned of intensifying competition between first-time buyers and buy-to-let landlords for affordable properties.

The number of buy-to-let landlords searching for mortgages on cheaper properties has risen to 70%, up 17% on the same quarter last year, according to the Mortgage Search Tracker from Mortgage Advice Bureau.

Seven in ten buy-to-let investors looking for a mortgage in Q3 2015 based their search on a property valued below £250,000. The figure is the highest seen in two years since 82% in Q3 2013.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “In recent months we have seen a surge of buy-to-let landlords looking for mortgages on lower priced properties.

As rental demand remains strong nationwide, opting for a cheaper property can result in more attractive yields. It appears many landlords are looking to invest in areas outside the South of England, where property prices won’t hold them back from making a profit.”


October was the fifth successive month in which there were more than 1000,000 residential property transactions, according to HMRC property transactions; a sign that the housing market shows no sign of slowing down as we enter the winter months.

Brian Murphy, head of lending at Mortgage Advice Bureau, said demand from potential buyers remains high, with many taking advantage of the “excellently priced mortgage rates available on the market.

The number of buy-to-let landlords searching for mortgages on cheaper properties has risen to 70%, up 17% on the same quarter last year, according to the Mortgage Search Tracker from Mortgage Advice Bureau.

Seven in ten buy-to-let investors looking for a mortgage in Q3 2015 based their search on a property valued below £250,000. The figure is the highest seen in two years since 82% in Q3 2013.

Brian Murphy, head of lending at Mortgage Advice Bureau, said the broker had seen a surge in buy-to-let landlords looking for mortgages on lower-priced properties. “As rental demand remains strong nationwide, opting for a cheaper property can result in more attractive yields. It appears many landlords are looking to invest in areas outside the south of England, where property prices won’t hold them back from making a profit.”

Mr Murphy said: “You could remortgage back up to 75 per cent or more and probably do it at rates cheaper than you were originally borrowing at . . . You can understand why the business has been growing at the rates it has.”

Another factor is the move by George Osborne, chancellor, to limit the mortgage interest tax relief available to landlords — measures which start to come in from 2017 but which are already being factored in by borrowers.

David Lawrenson, a landlord adviser at LettingFocus.com, said the changes have damped demand for more expensive homes. “By and large there’s going to be less advantage to gearing up and buying a larger property.”

The researchers said there was evidence that many borrowers were switching from the previous hotspots of London and the Southeast to other parts of the country where rents remain relatively high but prices significantly lower. “You’re making a much better return pound for pound,” said Mr Murphy.


Housing market shows no sign of slowing down into winter months


October was the fifth successive month in which there were more than 1000,000 residential property transactions, according to HMRC property transactions; a sign that the housing market shows no sign of slowing down as we enter the winter months.

Brian Murphy, head of lending at Mortgage Advice Bureau, said demand from potential buyers remains high, with many taking advantage of the “excellently priced mortgage rates available on the market.

“Affordability has also benefited from an improving economic outlook, with low inflation and rising wages helping to offset house price rises, which have been more moderate compared to last year. The outlook is certainly positive for those who meet lenders’ criteria.”

Further Reading 

CML and Which? reveal new mortgage tariff to help consumers compare fees and charges