Landlords are displaying increased caution due to anticipated hikes in Capital Gains Tax (CGT) and new Energy Performance Certificate (EPC) regulations.
- Owners examine their rental portfolios and liquidity, with £24bn in mortgages managed by Acre this year.
- The loan-to-value (LTV) ratios peaked at almost 72% in September, revealing shifts in borrowing strategies.
- Buy-to-let mortgage applications decreased, with non-proceeding cases rising from 6% to 10.5% in September.
- Some landlords choose to optimise finances through remortgage options, keeping BTL remortgage cases stable.
Landlords are proceeding with increased caution as they anticipate changes in Capital Gains Tax (CGT) and new Energy Performance Certificate (EPC) regulations. This has resulted in a comprehensive review of rental portfolios and liquidity management amid market uncertainties. Acre, which has managed over £24bn in mortgages this year, highlights the growing concern amongst landlords.
In September, landlords leveraged more against their properties than at any other time this year, with loan-to-value ratios peaking at nearly 72%. This shift indicates that borrowers are taking larger loans relative to property values, either by leveraging more debt or by responding to lowered mortgage rates. However, despite some landlords increasing their borrowings, there is a notable re-evaluation of investments, with nearly 10% of buy-to-let (BTL) purchases and mortgages not proceeding due to owners’ decisions.
The average loan-to-value for BTL purchases has risen by 2.5% over the past year, reaching 71.75% in September 2024. This increase reflects landlords’ strategic response to current economic conditions. The volume of BTL purchase and remortgage cases that did not proceed jumped from 6% in August to 10.5% in September, with further increases observed in October, underscoring the volatility and reassessment trends among property owners.
The proportion of buy-to-let applications abandoned by clients rose from 1.2% to 8% over the past three months, indicating a considerable reassessment by landlords of their property portfolios. Moreover, new mortgage applications in September for BTL acquisitions accounted for 4.9%, a drop from nearly 6% a year earlier, suggesting that landlords are opting to exit the market rather than secure new properties amidst increasing tax and regulatory pressures.
Despite this, buy-to-let remortgage cases remained stable over the year, constituting 8.19% of all mortgage cases, which suggests that existing landlords may be pursuing opportunities to optimise their finances through remortgage options. The average loan-to-value of BTL mortgage and remortgage cases stood at 61.5% in September 2024, illustrating a conservative approach to financial structuring among landlords.
Landlords continue to adapt to potential CGT changes, prioritising financial stability and liquidity management.
