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Buy-to-let product availability stabilises – Moneyfacts

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  • 22/04/2024
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Buy-to-let product availability stabilises – Moneyfacts
Buy-to-let (BTL) product availability, including both fixed and variable rate options, has increased to a total of 2,883 deals in April, higher than the previous month and the same time last year.

According to a report by Moneyfacts, the increase comes after a fall of 276 BTL deals between January and February, which is the largest drop since June 2023.

BTL product choice in March this year stood at 2,844, and in April last year, the product count came to 2,628.

Digging into the different BTL product areas, two-year fixed rates contrasted from 966 in March to 947 in April due to decreases at 60% loan to value (LTV) and 75% LTV.

The total number of five-year fixed rates rose month-on-month from 1,223 to 1,270, with products at 60% LTV and 80% LTV growing.

Regarding BTL pricing, average fixed rates for two- and five-year terms went up by 0.01% to 5.52% and have stayed below 6% since the start of 2024.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said that the “stabilisation” of BTL product availability is a “positive turn of events for landlords after recent months of contracting choice”.

 

Lenders need to ‘remain fluid’

She continued: “Lenders will no doubt need to remain fluid with their product ranges and ensure they can react quickly to market uncertainty, such as volatility surrounding swap rates.

“Deeper analysis of product choice shows that lenders are now offering more two- and five-year fixed deals year-on-year. However, month-on-month, the choice of two-year fixed deals fell slightly, but five-year options rose.”

Springall added: “Landlords with a limited deposit or equity will find a growing pool of products at 80% LTV, with deals over two- and five-year fixed rising month-on-month, and up year-on-year.

“This improvement in choice should be welcomed, but the real challenge surrounds affordability where both the average two- and five-year fixed rates at 80% LTV remain above 6%. However, looking at the overall average rates, both have managed to remain below 6% throughout 2024 so far.”

She said that the potential returns from investing in the BTL sector could “inspire borrowers to take the leap, but it is vital they seek advice to ensure it’s right for them”.

“Indeed, the margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements. The cost to rent has been rising at a time when affordable housing is scarce,” Springall explained.

She said that recent figures from the ONS showed that the average UK private rent increased by 9.2% in the 12 months to March 2024, up from 9% in the 12 months to February 2024, representing the highest annual percentage change since the UK data series began in January 2015.

“However, those looking to sell up this year may note house prices have fallen, plus landlords who sell will see a higher capital gains tax bill than in previous tax-years, which could dampen the overall return on their original investment,” Springall noted.

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