Mortgages for Businesses is urging landlords who wish to expand their portfolios to do so now thanks to the recent stamp duty cut, effective until March next year.

Essentially, it means that landlords are now charged 3 per cent tax on properties that cost up to £500,000, whereas previously, the tax bill would have paid this plus residential rates of up to 5 per cent.

A landlord buying a property at £500,000 will consequently see their tax bill drop from £30,000 to £15,000.

The broker says that landlords are currently in a much better position than other buyers to purchase undervalued properties.

“We know property investors have been remortgaging with a view to picking up some bargains,” says MFB managing director Steve Olejnik.

“Owner occupiers have not been doing the same. Landlords have been preparing since the start of the lockdown, remortgaging to enlarge potential war chests with an eye on bagging bargains in the future. First-time Buyers don’t have that flexibility and owner-occupiers haven’t been remortgaging in the same way.  That means landlords are currently very well-placed to seize the day,” he continues.

Olejnik adds that the stamp duty holiday also makes it cheaper to move properties into a limited company structure, allowing for tax relief on mortgage interest.

He concludes: “Over the last few years, property investors have been the chancellor’s whipping boy while FTBs have been the government’s golden child.

“Landlords have been hit by higher taxes and tighter restrictions on borrowing. Ahead of those restrictions coming in, landlords flooded the market. Now, some restrictions are temporarily easing. Property investors know that, come March, those restrictions will be back in place. As a result, in the run up to the deadline, the monthly volume of deals is going to double once more, making it much less certain loans will come through in time.”

“Furthermore, while lenders have slightly less appetite to lend than they did pre-Covid, that caution is currently only manifesting itself in the form of more underwriting questions. That will not last either – rates will only rise between now and March 2021 as competition between lenders eases.

“It’s been a long time since the last lender price war now. So, if you’re a landlord, and you’re thinking of expanding your portfolio, do it now!”