Although the world continues to change, the fundamental principles underpinning the private rented sector remain. Despite talk of a mass exodus from urban districts, according to new research from Paragon Bank, over two-thirds of landlords will continue to look for property in such areas for their next portfolio purchase. 36% plan to buy in a suburban area and 6% are looking at rural locations. 66% of landlords said they plan to buy in the same area as their existing properties, with 10% targeting new areas. 20% said it would be a mixture of both.
Following Kensington’s successful webinar on self-employed mortgages which took place earlier this week, Frances Taylor, Head of National Accounts, reviews some of the findings.
As we start the new year with a return to nationwide lockdown, we’re all hoping it’s the final addition to this particular trilogy.
The mortgage industry has seen immense change over the last 12 months and with the uncertainty prompted by the pandemic set to extend into 2021, we wanted to kick off the first of our webinars this year by addressing a topic that we’re seeing real demand for more information about: mortgages for the self-employed.
The growth in the appeal of limited company lending has been evident since 2016 when the 3% investor stamp duty surcharge came into force and the proportion of tax-deductible mortgage interest on buy-to-lets held in personal names began to be phased out. In fact, since the beginning of 2016 and the end of 2020, more companies were set up to hold buy-to-let properties than in the preceding 50 years combined.
This progression was recently highlighted in research from Hamptons which showed that there were a record number of new limited companies set up to hold buy-to-let properties in 2020. Last year there were a total of 41,700 buy-to-let incorporations, an increase of 23% on 2019. The numbers have more than doubled since 2016, rising 128%. This means that at the end of 2020 there were a total of 228,743 buy-to-let companies up and running, an all-time record.
I’m sure we’re all glad to see the back of 2020 but there’s no getting away from the tough start ahead of us in 2021.
Although, I refuse to be too downbeat. So, let me take this opportunity to wish you all a happy New Year and try to inject a little optimism.
The fact is we are all better placed, practically and hopefully mentally, to deal with some short-term hardships and we have to keep reminding ourselves that there is certainly plenty of light at the end of the tunnel.
2020 has, at times, been a year which seems to have lasted forever. On the other hand, there have also been moments when it feels like it has flashed by in the blink of an eye. It has certainly proved to be a year of two halves.
When focusing on the buy-to-let and housing markets, there are many reasons to be optimistic moving into the new year. Whilst we can’t, or shouldn’t, gloss over how tough the past nine months have been, we – as a company – feel we are in a stronger place than ever. The dedication, flexibility, drive and skill shown by all our people throughout this time has been truly inspirational.
I was just undertaking a review of the buy-to-let sector over the past six to eight weeks and, especially when combined with the amount of business we have written over this period, I was hugely encouraged by what I saw.