It means that if you’re a property investor, you’re willing to work within a long time horizon, you’re not thinking investment or being a landlord is some sort of ‘get rich quick scheme’, you chose your properties wisely, and you are able to secure the competitively-priced finance you need, then you’re putting yourself in a very positive place to do well out of the investments you make.
For active landlord participants in the PRS, there are plenty of positives currently. As we know there is effectively no social housing policy to talk about, which means the UK housing gap has to be filled by the private sector.
Tenant demand is strong. Again, for all the talk about the opportunities for new owner-occupiers there are still some major obstacles to overcome to get on the property ladder, not least saving for a deposit, meeting mortgage affordability assessment criteria, being deemed a credit risk worth taking, and within all of that, you have to find a property that you can afford and want to buy when the supply of new homes coming to market is not great.
Where do you live? The same question could be asked of the hundreds of thousands of students starting or continuing, University this month. It could be asked of the people coming into the country who have the right to be here and work. It could be asked of those people who need to move away from where they were born to find work. It could be asked of those who no longer want to live in the same homes as they were in during the pandemic. It could be asked of those who no longer have to live close to their places of work because they can now move elsewhere.
Social mobility is so important within the UK, and I’ve said this many times before if landlords follow the employment trail, the likelihood is they will find rental properties in demand.
For us, the important part of the whole equation is financing and funding. And, again, there is good news for both landlord borrowers and the advisers who service them.
Recent figures from Moneyfacts suggested that, for the first time since March 2020 when the first lockdown began, there are now more buy-to-let products available – up to 2,968 from 2,887 back last year. Indeed, you would have to go back to October 2007 – pre-Credit Crunch – to find a month when there were more options available (3,305).
Now, of course, product numbers do not necessarily translate into lending activity, but it certainly points to a strong appetite to be active in the buy-to-let market, and with greater competition comes a more compelling product offering for borrowers.
Lenders have money to lend and, although we’re not seeing the rate drops we’re seeing in the first-charge market, we are seeing healthy competition across all buy-to-let product niches and highly competitive pricing as a result. Plus, all signs point to this not changing anytime soon.
Read many investment analysts’ appraisals of the buy-to-let market in the UK and they are very positive, because of all those fundamentals listed and the unique nature of our country’s housing setup. Add in access to cheaper costs of funds, either through a prominent deposit-taking shareholder like Fleet has, or to a lesser extent, via the capital markets, then you can see what lenders are able to do and the business they are intent on making their own.
To that end, advisers with existing buy-to-let borrower clients have a strong opportunity here. To review their back books and ascertain whether existing rates/products can’t be superseded by what is currently available – even by adding in ERCs it could still work for certain landlords - plus the number of maturities coming up should also present plenty of rebooking opportunities.
By working with lenders who know the market such as Fleet, who have a strong service quality, and an ability to help on even the most complex of cases, advisers should be able to develop a very strong buy-to-let proposition themselves. At the moment, there are many parts of the sector in their favour – make sure you make the most of them.