Interest Rates Support Buy-To-Let

Interest rates support Buy-to-Let

24 Jan 2019

There exists a lack of clarity on new tax rules and the impact of Brexit on buy-to-let options. Regardless, the demand grew in the UK commercial property sector from Dec- Jan, when several European investors bought low-risk properties.

Numerous Far East and China buyers acquired over 12 per cent of such properties. The lack of availability of stocks has been a major issue for such investors seeking investment options in the North East regions.  

The data from HMRC indicates the number of residential properties sold in the last year in the UK was 1,194,980, which was slightly low compared to 1,220,060 homes in 2017, and was lower compared to 1,235,020 transactions in 2016.

About 103,240 residential properties were sold in the country in December, lower than November by 11.45 per cent. The first quarter of 2018 was slow, mostly due to heat waves and bad weather conditions. However, the analysts believe the y-o-y comparison will increase in 2019. 

Change In Tax Rules to Take Effect In 2019 – 2020

Recent changes in regulations will make buy-to-let less profitable. However, the interest deducted from rental income will reduce by 25 per cent, and the share of interest payments suitable for tax credits will grow by 25 per cent. In addition, with new taxes, landlords will have to pay the income tax, stamp duty, corporation tax, inheritance tax and ATED. 

There is a difference between standard and buy-to-let (mortgage), where the interest rate of buy-to-let is often more than standard ones. Such investments have higher associated charges, taxes, and fees. 

Acquiring Mortgages For Buy-to-let

In the case of buy-to-let, the lenders will have to pay higher deposits, which can be 20 to 40 per cent of the property's value, and the amount is mostly 25 per cent of the property price.

Bigger deposits are needed to get a better deal. The lender assumes the rental income should be 30 per cent higher than the payments, i.e. the rental income should be 125 per cent to 150 per cent of the monthly interest. 

Most lenders approve loans; if the earnings are over £25,000 in a year. The amount of interest determines the overall profit generated from such investments. 

The head of lending for Mortgage Advice Bureau, Brian Murphy, suggests- there are opportunities in the current situation for the borrowers to get an ultra-low rate on a mortgage in the first few months of the year 2019, as the lending situation remains competitive and Buy to let mortgages low rates are offered by many lenders for the borrowers.  

Rightmove claimed the number of users increased in the last months of 2018 compared to the same period in 2018, and January's first few weeks had been busy business weeks for the estate agents around the North, Wales, and Midlands, that are getting a maximum number of registrations from the buyers and sellers. 

To know more about UK properties, click Hamilton International Estates ( 

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