Despite the challenges facing landlords due to recent regulatory and tax changes, growing numbers of borrowers are taking out Buy-to-Let mortgages.
According to trade body UK Finance, there were 48,862 new Buy-to-Let mortgages advanced in the UK between June and September last year, with a value of £8.6 billion. The number of mortgages taken out was 6.5% higher than in the same three months the previous year, with the value of these mortgages 8.9% higher than in the comparable period in 2023.
Owning a rental property remains an appealing option for those looking to boost their income, whilst also offering the prospect of potential capital growth over the long term. However, landlords face steeper purchasing costs following the Budget in October last year, which saw the stamp duty surcharge for those buying second homes rise from 3% to 5% with immediate effect.
Thankfully Buy to Let mortgage rates remain competitive, and at average of 5.22% for new loans taken out between April and September 2024, were only marginally higher than in the preceding three months. They remain lower than in the same period the previous year and, with many commentators anticipating a rate cut as early as February this year, we could see rates reduce further in coming months.
Fixed rate mortgages remain the most popular option for Buy to Let investors, with 1.4 million fixed rate deals outstanding in the third quarter of last year. This was 3.3% up compared to the same period in 2023. In contrast, the number of outstanding variable rate mortgages dropped by 14.9% to 541,488.
If you’re considering purchasing a property to rent out, you can explore current best Buy-to-Let mortgage deals and learn more about how Buy-to-Let works here.
