Three times as many landlords are upgrading their properties instead of buying new ones than three years ago, research by Countrywide reveals.
This is yet another sign that the government’s recent extra 3% Stamp Duty on buy-to-let properties is forcing landlords to change their business plans.
The company says that nearly 10,000 of its landlords remortgaged their properties last year to fund an upgrade, more than three times as many as did in 2016.
And one in ten of Countrywide’s landlords in England who remortgaged over the past 12 months did so to upgrade their properties.
In London the average spend was £35,470, three times more than in Yorkshire & The Humber where they withdrew £11,150. The UK average was £22,850.
“A record number of landlords are re-mortgaging to release money to spend on their properties instead of trading up,” says Johnny Morris, Research Director at Countrywide (pictured, left).
The company has also recently said that the Stamp Duty will “bite harder over the next three years, making profit more susceptible to landlords’ levels of borrowing” and leading to more highly-geared landlords selling up.
The Countrywide research also reveals what proportion of landlords remortgage every year. Based on the Council of Mortgage Lenders’ ownership figures per mortgaged landlord, approximately a third of landlords remortgage their properties every year.
Rents continue to rise, Countrywide says, particularly so in the West Midlands where they increased by 2.8% year-on-year as well as Wales and Greater London (both +2.1%). The average in the UK for a rental property is £951 pcm.
“Average rents grew in seven out of eight regions across Great Britain, with Scotland being the only region to see falls,” says Johnny Morris.
“Rental growth during the first quarter of this year stands at 2.1%, 0.5% faster than the same period in 2017, as low stock levels continue to drive growth.”