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Lender competition will power the buy-to-let market – Cox

by: Steve Cox, chief commercial officer at Fleet Mortgages
  • 07/01/2022
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Lender competition will power the buy-to-let market – Cox
Firstly, may I wish you all a very Happy New Year. 2021 was undoubtedly ‘eventful’ for all manner of reasons and, even if we think the next 12 months is unlikely to be a similar kind of rollercoaster, then I can almost guarantee there will be plenty of surprises along the way.


No sooner have we kicked off the year, than everyone is trying to get a handle on what it might deliver.  

The buy-to-let sector is no different to others in that regard and, prior to the end of last year, UK Finance offered its predictions on the level of lending we are likely to see in the sector. 

It’s always useful to have these kinds of benchmarks, especially given they do not anticipate a significant drop-off in activity that some are predicting for our sector, especially after the stamp duty holiday(s) of 2021. 

For what it’s worth, UK Finance predicts 2021 buy-to-let lending will finish in the region of £45bn, split between £18bn of purchase and £27bn of remortgage activity. In 2022 it predicts the remortgage figure will stay at £27bn however there will be a drop-off of £5bn in purchasing, meaning we get to a total figure of £40bn. 

Interestingly, it also predicts 2023 being back to the 2021 level of £45bn, however with remortgage activity reasserting itself considerably – no doubt fuelled by landlords coming off two and three-year deals secured in 2020 and 2021 – up at £33bn with purchasing at £12bn. 

It makes for an interesting set of figures – ones I don’t entirely disagree with.  

Certainly, it’s likely that gross buy-to-let lending will tail-off slightly over the course of 2022 because we won’t see the purchase levels we saw last year. 2023 does seem like a stretch to predict but again if the gross figures start with a four, I don’t think we’ll be doing too badly as a sector. 


Good times ahead 

Overall, therefore, I think it’s possible to see a positive year for buy-to-let in 2022, especially when you add in the fact these figures do not include any product transfer business, and more lenders are offering these to their existing customers coming to the end of the deals. 

There is further good news for advisers, and their landlord clients, in terms of competition and product choice.  

Some have suggested the sector has all the competition it needs at present and there may be an element of over-supply here. 

I tend to disagree and it’s certainly not the view of some institutions who have either entered the sector in the last 12 months, or plan to do so in 2022.  

In that sense, competition will only grow, but we will have to wait and see how these new propositions differ from what is already available from established players like ourselves. 


New players in the market 

From what I can see, the new buy-to-let lenders are understandably targeting complex buy-to-let because there is more margin here, but what will they bring that is different? 

Most are being funded through the capital markets which is likely to mean pricing is similar to those existing lenders who do it the same way. And as mentioned, advisers and landlords already have access to these types of propositions who already have everything in place, particularly in terms of admin, technology and servicing. 

Plus, we should not forget those lenders – like ourselves – who are not reliant on the capital markets for funding and who might therefore be able to be more competitive on price than their peer group.  

Also, not forgetting those who have returned to this sector, such as a number of regional building societies.  

Will there be enough supply of business for all to be successful? We shall have to wait and see but it seems likely that competition is not going to be falling in 2022 and that does spell good news for buy-to-let advisers and their clients.  

In my view, the fact we can kick the year off on such positives is something to embrace. 

2022 – “let’s hope it’s a good one, without any fear”. 

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