THE NUMBER of first-time home buyers in the UK reached a 12-year high last year, but new buy-to-let (BTL) purchases fell sharply as tax and regulatory changes weighed on the sector.
UK Finance’s mortgage trends report, released on Tuesday, revealed an 11.5 per cent drop in BTL home purchases between 2017 and 2018. The £9bn of new lending seen in the sector last year was 15 per cent lower than the year before.
On a monthly basis, 5,100 new BTL home purchase mortgages completed in December 2018, 5.6 per cent fewer year-on-year and 12.5 per cent lower by value.
However, remortgage figures were much stronger, with a 25.3 per cent year-on-year increase in new BTL remortgages to 12,400 recorded in December, also representing a 25 per cent increase by value to £2bn. In 2018, there were 169,100 new BTL remortgages completed, some 11.2 per cent more than in 2017.
Many private BTL landlords have been exiting the market as extra stamp duty charges and the scaling back of mortgage interest relief made BTL look less attractive. The number of BTL investors selling their properties rose from an average of three in 2017 to four in 2018, according to figures from ARLA Propertymark.
Analyst John Cronin of Goodbody commented that BTL remains “a two-sided story”, pointing to the strong growth in BTL remortgaging which offset the sustained weakness in new BTL lending.
In contrast, the first-time buyer market was more buoyant, with 370,000 new first-time buyer mortgages completing last year, a 1.9 per cent rise and the highest number since 2006. The £4.6bn of new lending over the year represented a 4.9 per cent increase year-on-year.
In December, there were 30,900 new first-time buyer mortgages completed, up 1.6 per cent on 2017. The £5.2bn of new lending for the month was 4 per cent higher than the same month in 2017.
“The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and government schemes such as Help to Buy continue to boost the market,” said Jackie Bennett, director of mortgages at UK Finance.
“Homeowner remortgaging also saw strong growth driven by customers locking into attractive rates, a trend we expect to continue in 2019 as more fixed-rate mortgages come to an end.
“Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.”
Matt Andrews, managing director of mortgages at specialist lender Masthaven, added: “Despite the looming Brexit deadline, today’s figures show that first-time buyers aren’t put off as the property sector increasingly becomes a buyers’ market.
“Thanks to a combination of stamp duty relief and government initiatives such as Help to Buy, the future is looking particularly bright for this segment of buyers. Remortgaging figures are likely to remain steady with little threat of impending rate rises – at least for the time being anyway.
“It is interesting to note the continued downturn of BTL activity across the market. From tax alterations to regulatory updates, it seems the sector is really feeling the effects of these changes. In order to keep the market attractive to BTL investors and to avoid further market uncertainty, greater incentives and lending products will be paramount.”
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