Buy to let valuations fall as landlords react to lettings fee ban in England
First time buyers, home movers and those looking to remortgage are active in the UK housing market but valuations in the buy to let sector have fallen, a new report reveals.
The number of valuations carried out for the buy to let sector fell 6.1% month on month in October and are down by 18.5% year on year.
According to the latest research from Connells Survey & Valuation it is remortgaging that is driving the lending market at present and landlords are being put off by a rash of policy changes.
John Bagshaw, corporate services director of Connells Survey & Valuation, pointed out that landlords have had to content with a lot of change including the extra 3% surcharge on additional homes, the removal of 10% wear and tear allowance, face repercussions from the decision to ban lettings fees in England, tougher lending criteria for buy to let mortgages from January 2017 and changes to mortgage tax relief next April.
‘Fortunately, June through to October were all relatively good months for buy to let remortgages with activity rising on a seasonally adjusted basis. The sector was beginning to find its footing again. However Chancellor Phillip Hammond’s latest proposals regarding lettings fees appear to have unsettled the market again,’ he said.
The data also shows that there was a slight lull in activity in the home mover segment with demand from those already on the property ladder and looking to move home falling 0.8% month on month. But in the first time buyer sector the number of valuations carried out in November increased 1.8% month on month and 13.1% year on year.
‘On an annual basis first time buyers, home movers and those looking to remortgage are pretty active. The annual increase in activity in these sectors has demonstrated the current strength in the market and there has been no drastic change in activity on a monthly basis, as the market remains stable and will be adjusting to changes in the coming months,’ Bagshaw explained.
There was a surge of activity in people looking to remortgage in November with valuations rising 4.9% compared to October and a 24.6% increase on an annual basis. But on a seasonally adjusted basis, overall valuation activity was virtually static in November as the number of valuations fell marginally, down 0.1% on October. There was, however, a 6.6% increase in the number of valuations undertaken compared to November 2015.
‘There’s no doubt that remortgaging is driving the mortgage market at the moment. While the number of buy to let valuations is down almost 19% compared to November last year, remortgaging activity is up 25%. Home owners want to lock into deals before rates rise,’ added Bagshaw.