Buy to let purchases took a greater share of the market in the back end of 2016, prompting Mortgages for Business chief executive David Whittaker to say the market has “returned to normal”.
With vanilla buy to let transactions 39% were for house purchase in Q4, up from 28% in Q3 and comparable to the 38% recorded in Q2, Mortgages for Business’ Complex Buy to Let Index found.
Similarly on HMO buy to let more than a quarter (26%) of transactions were for purchase in Q4, up from 23% in Q3. However in Q2 47% of HMO transactions were for purchase.
Whittaker said: “It is encouraging to see that the share of lending for purchase in the buy to let mortgage market returned to normal in Q4 2016.
“Following a notable shift towards lending for re-mortgage in the third quarter, landlords showed they were once again willing to commit to new purchases.
“The outcome of the EU referendum, and the subsequent macro-economic uncertainty dampened purchase lending in Q3, with many landlords initially opting for a cautious approach.
“While changes to stamp duty on second properties and landlords’ tax relief mean that landlords need to approach their investments intelligently, there are still excellent returns to be had in the market – especially compared to other asset classes.”
The index also found an increase in average property value and loan sizes in the multi-unit block mortgage market, as 30% of applications involved properties worth more than £1m in Q4.
Whittaker added: “There is clearly an appetite among investors for more valuable multi-unit blocks, with the lending share of million-pound plus blocks from growing under a fifth in Q3 to almost a third in Q4.”