A Slow Down in Buy To Let House Purchases?

June 2018

A recent report in the Financial Times on the 22nd June indicated that By to Let Landlords have cooled their appetite for property purchases.  

The report indicated that the number of flats purchased in England and Wales fell by 10 per cent in the year to December 2017 compared with the previous year. There was a fall of just 2.1 per cent for all types of property over the same period, including detached, semi-detached and terraced houses as well as flats.  

The analysis by Neal Hudson, director at Residential Analysts, a research company, looked at Land Registry data including typical residential transactions but also those bought with a buy-to-let mortgage, whether held by an individual or through a limited company.  Buy-to-let investors often look to buy flats or smaller homes, sometimes choosing to use debt to buy more than one in order to boost their capital returns should house prices rise. But a tax and regulatory crackdown on buy-to-let, as well as a slowing market in the south, has made it much harder for mortgaged landlords to maintain high yields in areas with high house prices.  

Mr Hudson said that in parts of the country where prices were lower, first-time buyers have stepped in to fill some of the gap left by landlord investors. But where housing was expensive, first-timers were less likely to pass mortgage affordability tests — leading to the drop in transaction numbers for flats.  “Buy-to-let landlords have withdrawn from the market, particularly in London and parts of the south-east, but first-time buyers haven’t been able to replace them there. We were already dealing with such a select number who were able to be first-time buyers, but there haven’t been the number at current price levels to step in and replace the investors,” he said.

Sean White Senior Partner at Courtyard Solicitors said; “The pressure on landlords highlighted in this report has been building over the last few years as new government laws start to bite. It is not unsurprising to read that the number of new property purchases has been dropping in the last couple of years.”

Courtyard Solicitors can help landlords with dispute resolution and fixed fee conveyancing for new property purchases.