Whether you’re a prospective or existing landlord, keeping up with the latest news in the world of buy to let is critical. From price growth projections to the availability of buy to let mortgages, our team has compiled some key updates to be aware of.
Is buy to let property still a good investment?
There’s no denying we’ve seen economic turbulence in the last 18 months, which can create anxiety about investment. In the early days of the Covid-19 pandemic, a great deal of buy to let purchasing activity stalled, and some were left wondering if investing in rental property was still a good idea.
As for finance, many lenders withdrew their buy to let mortgage products from the market – making it difficult for existing landlords to remortgage, or prospective buyers to move forward with a purchase.
Fortunately, this concern didn’t last for long. In fact, the rental market has proven itself incredibly resilient – and in many locations around the UK, the value of rental homes has increased. Research from one lender found that ‘the value of the private rented sector in England, Wales and Scotland has grown 5.8 per cent to £1.4 trillion following the housing market boom of the past year’.
In part, this was driven by the stamp duty holiday, which offered many landlords the opportunity to expand their portfolios while saving thousands on their tax bill. Yet while this holiday has now come to an end, our experience is that interest in buy-to-let property has by no means waned.
Low interest rates mean many are getting a limited return on their savings, leading investors to see rental property as the best possible asset to invest in for both a good short-term return and long term price appreciation.
Regional trends: where should buy to let investors look next?
So, it’s clear that rental property is still considered a sound investment – but where should prospective buyers be looking? At Articus Finance, we’ve seen increasing diversification in terms of asset location.
Property in London has always been regarded as a solid buy to let investment, given its historically strong price appreciation and reputation for stability. But while this remains a popular option, more and more of our clients are looking to invest across the UK.
The North and North West are particular areas of interest, offering some of the highest rental yields in the country – ideal for those looking to build an expansive portfolio. Accelerated price growth is also expected in these regions, with hybrid and remote working set to continue for the long term, and ‘levelling up’ regional economies so high on the government’s agenda.
The availability and cost of buy to let mortgage finance
Whether you’re buying a block of flats in Liverpool or refinancing a large rental in Surrey, the availability of the right buy to let mortgage is also a key concern. During the early days of the pandemic, buy to let mortgage finance availability fell drastically, with many lenders withdrawing products from the market.
Over a year on, the situation is very different. Recent research indicates that there were 2,709 fixed and variable rate buy to let mortgage products on offer at the start of July 2021, compared to just 1,738 in July 2020.
As for the cost of borrowing, the market is also positive. Figures show that the average two-year fixed rate is lower than it was in 2019, meaning there’s never been a better time to refinance or take out a mortgage.
These numbers are consistent with our experience at Articus. We’ve witnessed growing availability of buy to let mortgage products, along with a decrease in the cost of mortgage borrowing. Meanwhile, our brokers have successfully negotiated with private banks and specialist lenders across the market to secure fantastic buy to let mortgage deals for our clients, no matter the complexity of their portfolio or background.
That said, the Bank of England has indicated that interest rates will rise next year – so it could be sensible to lock in a lower deal now, if possible.
Preparing for 2022: buying or refinancing a buy to let property
The ultimate message? Whether you’re a prospective investor or an existing landlord, buy to let property in the UK has proven itself an incredibly stable asset over the last year, proving its worth both as a stream of income and for long-term asset price growth.
And with buy to let finance currently available at excellent rates, there’s never been a better time to make your move.
Seeking further guidance on the world of buy to let finance? Download our guide to learn more about the UK market.
