A Brief Look at the Buy-to-Let Landscape Right Now

Buy-to-let was popular in the UK long before the concept was formally introduced, almost exactly 25 years ago. For investors, the appeal of an attractive buy-to-let investment is obvious.

Along with providing regular income through rental payments, capital gains through house price increases are also on the cards.

It comes as no surprise to learn that interest in buy-to-let investments remains consistently high across the UK.

30 years ago, average UK house prices were somewhere around the £60,000 mark. Today, the figure has exceeded £250,000. Homeownership is simply impossible for many, or not the preferred option for others.

As a result, the UK’s private rental sector continues to go from strength to strength, with investors reaping the benefits of record-high demand.

Flexibility and compassion

The unfortunate events of the past 18 months have cast further light on the attitude and approach of today’s buy-to-let landlords. For example, research suggests that during the course of the pandemic, around two-thirds of private landlords in the UK demonstrated flexibility with tenants’ payments, who were struggling financially as a result of the crisis.

Furthermore, around 80% said that they would be happy to accept a lower monthly rent payment in return for reliable long-term tenants. Only 55% indicated their intent to increase monthly rents over the course of the next year, suggesting that almost half will not be putting their prices up.

In terms of portfolio expansion, almost 40% of investors said they had purchased another buy-to-let property between July 2020 and September this year. Interestingly, almost one third said that they had attempted to expand their portfolio, but were unsuccessful in doing so.

Issues with qualifying for loans with conventional high-street banks were cited as one of the main reasons for failed investments, with many having turned to flexible bridging loans to expand their property portfolios.

An attractive and profitable venture

Perhaps most importantly, around 70% of landlords believe that buy-to-let investments are still an attractive and potentially profitable option. This is particularly relevant when considering the UK’s skyrocketing average house price, making it more expensive than ever for investors to buy homes.

In addition, the UK government continues to make life difficult and expensive for private landlords, who have been hit by a raft of taxation and regulation adjustments over recent years. One of which was the additional stamp duty levy of 3% introduced in 2016, followed shortly by a significant mortgage interest tax relief reduction.

Still, nothing seems to have quelled the appetite of investors, who continue to see BTL as a comparatively safe haven. With available inventory and affordable housing having all but dried up across the country, the private rental sector will continue to play a pivotal role in the UK’s wider housing market indefinitely.