Changes to the Stamp Duty rule were implemented back in April 2016, resulting in a 3% Stamp Duty levy on all buy-to-let purchases. This resulted in many landlords buying property in an attempt to avoid the extra tax.
Finance Expert at moneyfacts.co.uk, Charlotte Nelson, has said:
“Many borrowers rushed to make purchases in the first few months of 2016, to beat the Stamp Duty hike… Because of this, a substantial chunk of borrowers are likely to be remortgaging in the coming months.”
Looking at research from moneyfacts.co.uk, we can see from current rates that mortgage providers are aware of this, and changing their rates to attract this target audience. The research shows that the average five-year fixed rate has fallen to a record low of 3.43% (which was also the rate in October 2017).
It makes sense that the providers want to entice landlords into a five-year fixed rate, as it keeps clients with them for longer. If you as the landlord are happy with the rates, then you are also locking into the security that it won’t change.
There is always the possibility that rates may drop further, but, looking at how they have been changing in the last year, they seem to be already adequately lowered. In March 2017, the average five-year fixed rate was 3.77%. Fast forward to January 2018, we see them at 3.45%, and now here we are at the beginning of March looking at an average of 3.43%.
As always with mortgages, it is worth considering the other costs attached with that provider, such as arrangement fees. Interest rates are the main starting point for finding a mortgage that appears to be the best value, but being thorough can save you from missing out. As well as this, there are rules and regulations to adhere to, which are forever changing. Nelson also made the point:
“Despite all this good news for landlords, the market has significantly changed in two years and borrowers now have to work their way through a maze of extra regulation, as well as stricter lending requirements… It is more important than ever for landlords to seek financial advice to ensure they get the best possible option for them.”