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Buy-to-let remortgaging reaches record high

The number of landlords looking to remortgage has risen to an all-time high, as many seek to mitigate higher tax costs.

A survey by Paragon of around 200 mortgage intermediaries found that as a proportion of the buy-to-let market, remortgaging increased from 49% in Q2 2018 to 57% in Q3 2018.

Meanwhile, the proportion of first-time landlords fell from 14% to 10%, and landlords looking to expand their portfolio declined from 23% to 19%.

Landlords have been hit by a series of tax changes in recent years, including the phased withdrawal of mortgage interest relief.

Before April 2017, landlords could offset their entire mortgage interest against rental profits, at which point the Government began phasing this out and replacing it with a phased in tax credit at the basic rate of income tax (20%).

In 2017/18, it was possible to deduct 75% of your mortgage interest. This went down to 50% in 2018/19 and will hit 25% in 2019/20, before being eliminated altogether by 2020/21.

John Heron, managing director of mortgages at Paragon, said:

"Landlords are investing less in the private rented sector which, in time, is going to make it more difficult for tenants to find a property at a rent they can afford.

"Tax bills due in January 2019 will include the first-phase impact from the withdrawal of mortgage interest tax relief and landlords are preparing carefully for the next stages ahead."

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