UK buy-to-let growth despite Budget changes

UK buy-to-let growth despite Budget changes

Despite George Osborne changing tax relief limits landlords enjoy on mortgage repayments, lenders believe a number of factors will keep market buoyant.


  • A number of leading banks and mortgage providers believe that the UK buy-to-let market will continue to see sustained growth despite changes to tax reliefs for landlords’ mortgage repayments outlined in last week’s Budget
  • Growing demand for rental accommodation just one of the reasons why lenders remain upbeat
  • Cash-rich investors, or those that enjoy strong yields to make profit rather than using tax reliefs, will remain largely unaffected by these recent changes

Analysts and executives at a number of leading mortgage providers have dismissed any suggestion that new changes outlined in last week’s Budget will slow the UK buy-to-let market’s growth.

Experts from OneSavings Bank and Paragon Bank point to a number of key factors that will ensure investors will continue to enjoy the strong returns that they currently do.

Last week George Osborne announced that, from 2017, landlords will see their mortgage interest relief cut from 40% or 45% to the basic rate, which is currently 20%. For investors who borrowed money to purchase property, this change means that they will no longer be able to offset their mortgage interest repayments against the income generated from rents.

However, key figures from a number of lenders believe that this will have little impact on the long-term performance of the market.

One of the reasons highlighted is the proliferation in the number of people in the UK that now choose to rent their property. Paragon Bank said that “one-in-five households in England rely on the private rented sector as their home and demand from tenants is expected to remain high for the foreseeable future”, meaning that “landlords are likely to continue to see the benefits of making further investments in the sector.”

Chief Executive of OneSavings Bank, Andy Golding, agreed: “The sheer demand and demographic growth prospects for private rented property are likely to keep the market growing despite these small changes to the tax regime.”

Investors with a property in strong yielding regions such as Glasgow and Manchester, the UK’s buy-to-let hotspot, will be largely unaffected as strong yields will be able to drive profit levels, rather than having to rely significantly on current tax reliefs.

Furthermore, investing in student property, usually more affordable to purchase than traditional residential property, will mean that more investors will be able to purchase with cash rather than having to rely on a mortgage.

Subscribe to our newsletter

Please enter your name and email address

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Select Property Group in relation to its property investment brands.

There was an error with your subscription. Please try again.
Thank you for subscribing. You will now be fully informed of all investment property news and insights.