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Buy to let investors are planning to proceed with caution before putting in any measures to mitigate the impact of regulatory changes, according to new research from Shawbrook Bank.

Shawbrook Bank found that 49 per cent of landlords plan to wait six to twelve months before putting measures in place to prevent the impact of regulatory changes.

The Bank’s annual buy to let Barometer found that 22 per cent of landlords saw regulatory changes as possible threats. 21 per cent found interest rate movements particularly worrying, and 16 per cent were largely concerned about lending restrictions.

The regulatory change that has most affected landlords so far has been the reduction of mortgage interest tax relief for buy to let mortgages. 52 per cent of landlords stated that this had had the largest impact.

According to the landlords surveyed the extra 3 per cent stamp duty was also a significant issue, with 21 per cent feeling affected by this.

Managing director of Shawbrook Bank Commercial Mortgages, Karen Bennett, said: ‘Stricter affordability tests for portfolio landlords and interest rate rises will make it harder for some to get funding and this month will also see the next phase of reductions in tax relief for buy to let, further hitting landlords’ profits. It is encouraging to see professional landlords adapting their strategy in line with regulatory change, thereby helping to ensure the long-term sustainability of the industry.’

He continued: ‘We have seen a slight cooling as landlords evaluate their options, not rushing into purchases and holding existing property. It is important to recognise however, that buy-to-let remains a crucial component in the wider UK housing landscape, and data suggests that although investors may tread carefully throughout 2018, they retain confidence in the fundamentals of this market.’

In order to mitigate the regulatory changes some landlords were looking for ways to protect their portfolios. 33 per cent of landlords had already, or were planning to, set up a limited company. 18 per cent were planning to re-mortgage and 19 per cent are looking to sell their properties.

Senior mortgage technical manager at John Charcol, Ray Boulger, added: ‘Brexit uncertainly is really only a material factor at the top end of the London market. Mortgage lending figures demonstrate very clearly the impact of the various recent regulatory changes. In 2015 gross buy to let lending was 17.7 per cent of total mortgage lending but in 2017 had fallen sharply to only 12.8 per cent. A positive note for landlords is that the weaker demand for buy-to-let mortgages is incentivising lenders to improve criteria where they have identified there is scope to do so without compromising the quality of lending and strong lender competition is also reflected in the rates on offer’

Source: Residential Landlord

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