The game has changed!

March 20, 2019 by Jamie @ Affinity Mortgages

Landlords…. The guys who keep us in property to rent and keep this market alive – it is fair to say they have seen some changes to their little investments and their plans for growth moving forward – by growth I mean not to their bank balances, but to how they plan to grow a sapling to a tree usually.

How people have managed to accumulate some property over the last 20 odd years has been varied, it could be they have saved really hard to achieve enough of a deposit to put down towards a purchase of their investment, it could be that they have become what we call an ‘occasional’ landlord – this being they live in a home that has encountered some growth in terms of its value and they have been able to withdraw some money, usually enough to put down as a deposit on their next home, and go from there. Then there are the more serious type of landlord whom are really trying to achieve a whole portfolio of property.

Whatever the reason or goal landlords have been helping to fuel the rental property market for some years, and keeping house prices ticking over and plugging the gap that first time buyers could not fill. The ultimate issues for the majority of first time buyers that we see is that earnings very rarely reach the required level on a sole income – generally our first time buyers have to wait until they are ready to buy with another party – be it a partner or a parent.

So, in this instance a landlord or buy to let scenario could be a great fit.

In came help to buy to try and assist within the new build sector, and in came the tax changes – stamp duty was the obvious one and this was increased by 3% for second homes – if that wasn’t bad enough the changes were rung with the mortgage interest relief that landlords could offset – essentially this means that a landlord would not be able to offset the cost of borrowing against any income received (over a period of time – so not being hit with the whole thing immediately)….. it is this part that is really the most dramatic from the landlords perspective, and almost makes the investment need to perform even better just to cover the costs of an increased tax bill…..

Looking then even closer at financing these properties, lenders (within what has always been an unregulated market) have been told by the ‘regulator’ that stress tests need to be even greater from rental against income.

All in all an extremely buoyant market has been hugely affected – and we as advisors have had to move our buy to let offerings in line with all of these changes – thankfully for landlords and perspective landlords our group of brokers has incredible insight in this area and work very closely with a number of accountancy practices to find the most cost effective way of purchasing their investment.

The slightly worrying news for tenants however is that landlords will have to pass the cost of all of these changes onto someone – either that or dispose of their properties – so placing anyone looking at renting in a supply and demand situation this can really only mean one thing – the cost of renting is certainly going to increase in my humble opinion.

For sellers an increase in property to the market and less people to sell them to will also have an obvious impact on the price of their houses, we are already seeing some house price correction.

However whilst this market is tricky, it could also be a super time to set yourself up in the property rental sector – house prices dropping slightly, perspective landlords hard to find, rental properties reducing in numbers….. and with the right advice the chances of mitigating some of these tax changes are possible with the right advice!

If you want an informal or formal chat about buy to let mortgages please get in touch today on 01702 337003 or find us at


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