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The choice of products available to first time landlords has reached a record high, according to research.

The number of deals available to first time landlords has risen to 1,405 today, up from 645 five years ago. The past 12 months alone has seen 137 products enter the market.

This is in spite of the introduction of stricter lending criteria by the Prudential Regulation Authority, the phasing out of tax relief on mortgage interest payments by April 2020 and increased stamp duty on second homes.

Rachel Springall, finance expert at Moneyfacts, said: “Entering the buy-to-let market hasn’t been without its hurdles, and almost two years since the PRA introduced rules expected to tighten lending, the move doesn’t seem to have shaken up lenders attitudes to attract first-time landlords.

“In fact, the number of deals available to these individuals has now boomed to a record high.”

But Ms Springall added that while the increased choice was a positive for prospective landlords, those currently invested in property were feeling the strain.

Data from the Office of National Statistics showed London private rental prices rose by 0.9 per cent in the 12 months to May 2019, the highest annual growth seen in almost two years.

Ms Springall said: “This rise may well be linked to the staggered loss of mortgage interest tax relief, which in turn has seen landlords seeking out other ways to boost their income.”

In July 2014, an average two-year fixed rate stood at 4.01 per cent, while the average five year fixed rate was 4.68 per cent.This compared with July 2019, when the average rates are 2.97 per cent and 3.52 per cent, respectively.

Ms Springall warned, however, that borrowers must ensure they weigh-up the true cost of any deal before they commit.

“Choosing the lowest two-year rate in the market from Barclays Mortgage at 1.46 per cent would cost £20,901 in repayments after the first two years, which includes its £1,795 product fee,” she said.

“However, if they opted for a deal with a lower fee, such as the mortgage from Post Office Money priced at 1.48 per cent with a £1,495 product fee, they would have saved £255, as the repayment would be £20,646 over two years.”

By Jennifer Turton

Source: FT Adviser

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