This month alone, we have already seen several lenders in the buy-to-let market drop their rates, including Landbay.
As a mortgage platform dedicated to the buy-to-let market, we’re supporting landlords of all sizes in meeting the strong demand for rental properties.
We run surveys that ask existing landlords about a range of topics to determine their attitude and intentions. The latest of these showed that just over a third of landlords (36 per cent) felt positive about the future of their buy-to-let business and investments. This is only 10 per cent less than in our Q2 survey.
Of those feeling positive, the strongest sentiment was among those with portfolios of between 11 and 20 properties, shortly followed by those with four to 11 properties. Reasons for optimism included high rental demand, high yields and continued investment opportunities, particularly in the North East of England.
The landlords with the most positive outlook are the ones taking a pragmatic approach to buy-to-let. Some told us that, because they were invested for the ‘long term,’ they were not worried by ‘short-term blips’. As buy-to-let has survived countless crises and changing governments over the years, this is a sensible view to take.
An uncertain economy
Some landlords are unsure about their future prospects, given the uncertainty in the wider market and the economy. The survey found that 40 per cent of landlords feel neutral about their future prospects, a rise from 35 per cent in the Q2 survey.
We also asked landlords about the future of the UK economy, and more than half of landlords (51 per cent) were neutral about this topic too. Some are waiting to see what happens at the upcoming general election and whether there will be a potential change in government. But less than a third felt negatively about the economy, while 19 per cent were positive.
Alongside market volatility, the other concerns for landlords were interest rates and the unpredictability of Bank of England policy.
For those set to remortgage properties or hoping to expand portfolios, higher rates and the associated stress testing requirements are presenting some challenges. Mixed messaging from the central bank on its plans for the base rate makes it harder to confidently plan ahead. While in one moment the message is ‘higher for longer’ and a ‘Table Mountain’ profile, in the next there are talks of a potential cut to rates.
Regular rate cuts in buy-to-let market
While it is true that mortgages rates are higher than in recent times, landlords can be encouraged by news of regular rate reductions across the market – not just for new business, but on like-for-like buy-to-let mortgage products too, for example. Alongside greater competition on rates, lenders continue to innovate to support landlords in meeting tougher affordability requirements – with the likes of a variable fee structure being a good example.
But there’s no question the government’s attitude towards landlords needs to change. Landlords in our survey cited government interference and a lack of support, particularly on landlord taxation, as a concern. Landlords need nurturing and to be in a position where they can generate a return on their investment. They must feel confident enough to not only enter the market, but to expand their portfolios. After all, a reliable supply of rental properties is key to the health and prosperity of the wider housing market.
With affordability still a real challenge for buyers and demand for homes continuing to far outstrip supply, the need for quality rental properties has never been so apparent. Furthermore, government housebuilding targets are consistently missed, with too few homes built. The Home Builders Federation revealed in December that the number of planning permissions being granted for new homes has fallen to another record low. Rather than tackling this, successive governments only seem to focus on minimising landlords, which magnifies the issue.
Buy-to-let market continues to thrive
Despite ups and downs, buy-to-let continues to thrive. Even in uncertain times, there are still many reasons to be optimistic about this sector. As a buy-to-let lender, we are incredibly positive about its future and remain committed to innovating to meet the needs of landlords. In addition to lenders willing to lend and valuable investment opportunities, there’s also an abundance of tenants that are ready to rent across the country.
