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Brokers - what is the state of BTL?

Journalist: John Fitzsimons, Freelance

ended 18. April 2023

There has been some analysis out this week from Hamptons around the number of older landlords who are retiring https://www.mortgagesolutions.co.uk/news/2023/04/17/nearly-150000-landlords-retire-from-the-market-with-more-expected/

Is it a trend you're seeing among your older clients? If so, what is the motivator for selling up now?

Is there sufficient interest from younger investors to take up the BTL slack? Are there particular types of people drawn towards BTL at the moment?

And what's the general state of play like in the BTL space at the moment in terms of pricing and criteria? What could lenders do to boost it?

Any and all thoughts BTL very welcome on this one!

5 responses from the Newspage community

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Editor
Nicola Schutrups
Managing Director at The Mortgage Hut / William James Wealth Management
We've seen several smaller buy to let investors voice their concerns about the rise in interest rates coupled with the tax changes which has made UK property less appealing if you hold it in your personal name.

Only yesterday I spoke to a landlord who has a small portfolio and was looking to sell his properties to invest in the overseas property market.

That being said, we do see the aspiration of younger investors who want to start or build a property portfolio.

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Riz Malik
Independent Financial Adviser at R3 Wealth
Despite the fact that financing alternatives for landlords are the greatest they've been since September, even the most astute investors are now calling it quits. Unfortunately, the lustre of the golden era of buy to let is fading as interest rates rise, taxes tighten, and regulations tighten, causing an increasing number  of investors to cash out. But don't forget about our island's chronic housing shortage, which assures that for each investor who bails, another eager player is ready to take their place.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Given the number of buy-to-let investors whose very motivation for starting a property portfolio was as part of their retirement planning, it should be no great surprise that as these people reach that point in their lives they make good on that plan. Many will sell sufficient properties to repay the mortgages on those they wish to retain if the portfolio is large enough to allow that, others will sell up completely to repay the interest-only mortgage they took out and enjoy a lump sum of cash from the growth in property prices.
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Austyn Johnson
Founder at Mortgages For Actors
BTL is still a good option in my opinion. However, you MUST make your calculations tight. If you slip on the numbers, your profit could end up a deficit and you would be losing money rather than making it! Some of the newwer landlords are a little too gung-ho with their money and just want want want without thinking about the longer term. As said though, if you do it right, BTL can be a viable source of income. The main issue will be the stress rates on the mortgage loan. This will mean low rental properties and high rate tax pers will often not work out. This will push the higher-rate landlords to look at bigger properties and leave the smaller ones for the lower-rate ones. The market should still flow well, but you are less likely to be purchasing lots of small houses for your longer-term experienced clients.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
Pricing and the all-important impact of stress testing in the buy-to-let mortgage market - in line with the standard residential market - is unquestionably on a much more positive trend than was the case before. The upshot of this is that BTL investors can now more viably venture back into the market as worthwhile yields and cash flow become potentially more achievable and attractive again for longer-term investors.
Any return of this nature is most definitely a very tentative one at this point, however as, beyond the practical finance element of things, increasing concern around government intervention, regulation and taxation implications means that many landlords are choosing to sell up and leave the scene before they are pushed. The remainder of existing and would-be landlords appear to simply be staying on the sidelines for now whilst the dust settles down in the sector to more of a swift and unwelcome breeze as opposed to the volcanic eruption it had become.