Capital Gains rise will not stop investors
THE number of landlords planning to purchase property for investment purposes has nearly doubled, research from leading specialist buy-tolet lender Paragon Mortgages has revealed.
Paragon’s Trends research, a quarterly panel survey of landlords, shows that 21 per cent of landlords plan to purchase property during the third quarter of the year, up from 11 per cent who said they planned to purchase during the first quarter and 12 per cent who planned to purchase in the second.
Terraced housing topped the popularity list of those looking to buy, with 74 per cent of landlords stating that they intended to purchase this type of property, followed by semi-detached housing, flats and detached property.
However, mortgage finance remains a major obstacle. Four out of 10 landlords said that they attempted to secure buy-to-let finance for purchase or remortgage purposes during the second quarter. Of those that did, 52 per cent said that it was more difficult than previous attempts to secure finance, with just 13 per cent stating that it was easier. The remaining 35 per cent said they noticed no difference in the availability of finance.
The Trends research showed that a wider availability of mortgage finance was the main factor that would encourage a landlord to expand their portfolio. Nearly half (46 per cent) said wider mortgage finance would encourage them to expand their portfolios, followed by better tax incentives (43 per cent) and sustained levels of tenant demand (42 per cent).
John Heron, Paragon Mortgages’ managing director, said: “There has been a significant jump in the percentage of landlords looking to purchase property. However, accessing mortgage finance remains difficult for a large number of landlords.
“We have seen new entrants into the buy-to-let market, but the criteria attached to the majority of buy-to-let mortgages is targeted at small scale investors rather than professional landlords. If the market, and the private rented sector, is going to expand, then criteria needs to be adapted to allow larger-scale landlords to grow their property businesses.”