Research from buy-to-let specialist Landlord Mortgages reveals that 25 per cent of landlords have refinanced over the last year to create ‘war chests’ in anticipation of a softening housing market. The money they put by is earmarked to allow them to take full advantage of lower prices.
Lee Grandin, Managing Director, Landlord Mortgages, says, ‘Landlords are preparing themselves for a much-publicised softening property market by refinancing their portfolios rather than trimming them down. The benefits of this are two-fold: investors avoid capital gains liabilities and put themselves in a strong position to snap up potential bargain properties if the property bubble bursts.
‘The experienced landlord will be taking advantage of this ‘cheap’ money and will be ready to make the most of an uncertain market. At Landlord Mortgages we are seeing a great deal of ‘pound cost averaging’ in the landlord community whereby investors even out house price fluctuations by buying at regular intervals, thus averaging out the returns over a longer period of time.
‘For those landlords whose portfolio needs external management, fees will be a factor in keeping margins to a satisfactory level and as a result landlords will need to review the deals their lettings companies offer. Most companies charge approximately 15 per cent for full management but the recently launched www.lettingagent.com charges 8 per cent or less. So if landlords are paying more than this they need to ask their management companies why.’