Record number of buy to let landlords remortgage for property improvements
A record number of buy to let landlords in Britain are remortgaging to release money for improvements to their properties at a time when rents are rising, the latest research suggests.
In the last 12 months, out of the 171,421 landlords who re-mortgaged their buy to let property some 9,523 did so to take money out to spend on their investment, according to the monthly lettings index from Countrywide.
This is up from 8,459 in 2017 and three times more than in 2016 and overall in the last 12 months 5.6% of landlords who re-mortgaged released cash to spend on their property, up from 1.9% in 2016.
The letting index also shows that this comes at a time when landlords are likely to secure higher rents. The average cost of a new let reached £951 per calendar month in March 2018, 1.7% up on the same period last year.
The Midlands saw the fastest rental growth, up 2.8% year on year to £668, followed by Wales up 2.1% to £650 and Greater London up 2.1% to £1,675. Average rents in Scotland fell for the second month in a row, down 1.5% to £615, but the rate of decline slowed in March.
The data also shows that rents increased by 1.8% in the South West to £779, by 1.2% in the East of England to an average of £936, by 0.9% in the North of England to £626, and by 0.8% in the South East to £1,026.
In terms of landlords spending money on improvements, the greatest increase was in the East of England where, 10.4% of landlords who re-mortgaged released money to spend on home improvements, up 6.8% in the last two years.
Every region across the UK has seen a rise, but regions in the South have seen the biggest growth in landlords releasing cash. In London 7.4% of landlords re-mortgaging released money for home improvements, up 4.4% in the last two years.
Landlords in London took out the most money to spend on buy to let improvements at £35,470 on average. This is over three times the amount an average landlord in Yorkshire and the Humber withdrew at £11,150. Across Britain as a whole, the average landlord re-mortgaging to make improvements took out £22,850.
‘A record number of landlords are re-mortgaging to release money to spend on their properties instead of trading up. The additional transaction costs incurred from the stamp duty changes for second home owners means more landlords are choosing to invest in their properties, refurbishing and improving them and holding on to them for longer to maximise gains.’ Said Johnny Morris, research director at Countrywide.
‘Average rents grew in seven out of eight regions across Britain, with Scotland being the only region to see falls. Rental growth during the first quarter of this year stands at 2.1%, some 0.5% faster than the same period in 2017, as low stock levels continue to drive growth,’ he added.