There’s a lot of noise surrounding the buy-to-let market at the moment, but the strength and resilience of the sector is buoying landlords’ hopes.
Almost two thirds (58%) of landlords have said they think buy-to-let property investment is “highly attractive” in the current climate, despite talk of reform and the upcoming Budget sparking debate across the industry.
This is according to a new survey released by Butterfield Mortgages Limited, which also found that the highest proportion of landlords (49%) plan to maintain the size of their existing property portfolio, while 38% said they will increase it over the next 12 months. Meanwhile, 10% said they would reduce their portfolio size.
The survey, which assessed the responses of 501 UK landlords with buy-to-let mortgages, also found that 60% of investors are optimistic in terms of the capital growth and rental returns of their properties.
Influencing factors for landlords
Anyone with a mortgaged property is likely to be keeping a close eye on interest rate movements at the moment, with the latest positive inflation news making it more likely that the Bank of England will cut rates next month.
This generally has a knock-on effect with mortgages, meaning anyone with an existing mortgage or looking to take out new borrowing might benefit from lower rates in the coming months.
Already, reductions in mortgage rates have had a positive impact on thousands of landlords, with more than half of this survey’s respondents (57%) saying the latest interest rate cut from 5.25% to 5% has had a positive impact on their investments.
The latest statistics from Moneyfacts.co.uk revealed that average mortgage rates have fallen over the past month, while the number of products available from lenders has increased, bringing more choice and better deals for borrowers.
Another influencing factor for landlords at the moment is the upcoming Budget from new Chancellor Rachel Reeves, which seems likely to contain some announcements affecting the buy-to-let sector. The hope is, though, that there will be no nasty surprises, and anyone who has been sitting on the fence about boosting their investments will be able to move forward with confidence.
Eager to invest
While there are certainly challenges to be faced by many landlords, historically UK property investment has proven to be a worthwhile and robust sector for investors. Alpa Bhakta, CEO of Butterfield Mortgages Limited, points towards the need for flexibility as well as guidance for those operating in the market.
“It cannot be denied that the buy-to-let (BTL) sector has faced considerable challenges in recent years, but our findings show that landlords remain eager to invest in the UK rental market,” said Alpa.
“The sector’s resilience can be attributed to two key factors: strong rental income and steady capital growth. Encouragingly, both of these indicators have shown positive momentum in recent months, suggesting that landlords’ appetite for investment will continue to grow as economic conditions improve.
“That said, brokers and lenders must be mindful of the challenges that lie ahead, particularly as we approach the Autumn Budget. Additional taxation and regulation are likely to be introduced, so landlords will need ongoing support and tailored guidance to navigate any new hurdles that arise.
“Flexibility and bespoke solutions will be critical to the sector’s success going forward, so brokers and lenders need to collaborate to ensure borrowers have access to the financial products they need to thrive in the latter half of this year.”
If you’re looking to expand your property portfolio in one of the UK’s most lucrative locations, get in touch with BuyAssociation today, who specialise in staying ahead of the property market.
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