As many landlords seek to mitigate higher tax costs, the number of landlords looking to remortgage has reached and all-time high.

Paragon surveyed around 200 mortgage intermediaries and found that as a proportion of the buy-to-let market, remortgaging had an 8% increase from Q2 2018 (49%) to Q3 2018 (57%).

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

Landlords have had to adapt to a multitude 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, however the Government began phasing this out and replacing it with a phased in tax credit at the basic rate of income tax (20%).

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

Managing director of mortgages at Paragon, John Heron, 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.”

Quote from Nigel Holland:

“The constant altering of mortgages and tax for landlords is clearly causing confusion among landlords. This has caused many people to turn away from letting as was shown in the survey by Paragon. Overall, it is making it harder for tenants to find a property that matches their financial situation and therefore less people will be able to get the house they really want.”