Buy-to-let market trends
What are the current trends in the buy-to-let market?
How buoyant is the buy-to-let market at present?
What are your expectations for the buy-to-let market in 2023?
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8 responses from the Newspage communityCopy all
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The Government has done a great job of bringing the rental sector to a halt. Rents are at an all time high, mortgage payments have gone up for many. Section 24 has made it impossible for a lot of landlords to break even let alone make a profit so they have been forced to leave the sector. Regulationary burden is also increasing- it is the perfect storm and nothing more than a ticking time bomb.
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The buy to let market right now is not the easiest of places to operate in for borrowers mainly due to the the numbers not working in many areas and the requirements for bigger deposits but with rates reducing I expect the market to pick up and many to continue actively purchasing in 2024.
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I think the buy-to-let market has really struggled in 2023, the higher stress rates that lenders are now using have led to landlords struggling to secure new purchases or even to remortgage on a like-for-like basis. This has meant that a lot of landlords that we deal with having to stay with their existing lender and complete a product transfer if one is available. Lenders have tried to assist the market by offering reduced rates but with significant arrangement fees, however we've felt that it hasn't been worth while for clients to pay such high fees for their mortgage to move it. We are hoping that with the cost of borrowing reducing, this will be passed onto the cost of mortgage products and make the market more appealing. Hopefully, these reduced rates will will breath new life back into the buy-to-let market in 2024.
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The buy-to-let market is extremely tough right now. Many part-time landlords have left the industry or are looking to sell. It is currently very difficult for landlords to remortgage to new providers as the affordability tests are vastly unachievable. Highly geared properties or properties with low rent are impacted the most and experienced landlords have had to rethink their growth plans. High fees are the only strategy currently available if you want a low rate, but for 2024 it would be good for providers to start thinking outside the box to help stimulate this market.
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Landlords have weathered an unprecedented storm over the past 18 months. The relentless battering from a surge in interest rates, suffocating red tape, flip-flopping on EPC requirements, and a tightening web of restrictions on possessions has left the buy-to-let landscape permanently scarred. The market's pulse is intricately tied to the ebb and flow of mortgage rates and as we know, BTL rates have fluctuated like a rollercoaster this year. CBRE recently reported the sale of approximately 400,000 rental homes that have been lost in the PRS, underscoring the challenges faced by landlords and tenants alike. Rising costs, tax burdens, high product fees, and mortgage rate fluctuations have driven some to exit the market. Yet, for those with a strategic eye on the medium-to-long-term, current conditions offer probably the best time to buy now. Softening prices, a downward trend in mortgage rates, and steadily rising rents contribute to the attractiveness of buy-to-let investments.
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It's been a tough year for the buy to let sector, as am experienced broker, I have a similar number of enquiries from either first time investors or experienced investors, however after going through rates, product fees, legal fees, very little has turned into applications and purchases.
There appears to be plenty of pent up demand, but with the current rates and product fees, clients are struggling getting the returns needed.
Lenders need to follow the same cuts in interest rates as they have in the residential market, and not cut the rates and increase the product fees
There appears to be plenty of pent up demand, but with the current rates and product fees, clients are struggling getting the returns needed.
Lenders need to follow the same cuts in interest rates as they have in the residential market, and not cut the rates and increase the product fees
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Buy to let purchases have fallen off a cliff in 2023 due to high mortgage rates. This has meant that the stress test formulas lenders use to calculate how much can be borrowed are resulting in lower mortgage amounts. Lower mortgage amounts means that landlords are having to put higher than usual deposits down, this is untenable for most and therefore purchases are simply not happening. Lender arrangement fees have also increased dramatically this year which has also resulted in a drop off in remortgage business, with many landlords choosing to take a product transfer with their current lender.
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The buy-to-let market is currently very challenging, with high mortgage rates and stringent affordability tests causing difficulties for landlords, especially those with highly geared properties. Increased regulatory pressures and tax burdens have led to a decline in landlord participation. Despite these hurdles, there's potential for strategic long-term investments, as softening prices and rising rents present opportunities. For 2024, innovative solutions from lenders are needed to rejuvenate this sector.