Preparing For The Buy To Let Boom Ahead

Three in ten (32%) ARLA letting agents reported that rents increased in April.

With Labour’s rent cap proposals no longer a prospect, eight in ten (79%) ARLA agents have predicted that rents will increase over the next five years.

ARLA also says the number of landlords selling their buy-to-let properties has increased, particularly in London. ARLA agents in London saw the number of landlords selling their buy-to-let properties double between March and April, rising from three to six properties on average per branch.

The national average increased from three to four buy-to-let properties being put up for sale on average per branch. Source Property Industry Eye :27 May 2015

RW board

Landlords enjoy £14bn tax breaks as figures reveal buy-to-let expansion

Source: Guardian

Buy-to-let mortgage rates are tumbling – which is great news for older people thinking about spending some of their newly liberated pension pot on an investment property, but less so for struggling first-time buyers competing with landlords for a home.

Two years ago, there were a total of five two-year fixed rate BTL deals priced below 3%, but today this figure has rocketed to 83. It’s a similar story for the number of five-year BTL deals priced below 5% – two years ago there were 37 such mortgages available, but now there are 143 of them on the market.

Rates as a whole have fallen dramatically, too, with the average two-year fixed rate BTL deal currently priced at 3.45% (down from 4.44% two years ago), and the average five-year deal standing at 4.25% (down from 4.67%). The table below highlights this in more detail.

Two Years Ago A Year Ago 6 Months Ago Today
Number of BTL products as a whole 476 606 758 745
Number of Two-Year Fixed Rate BTL Deals Below 3% 5 16 57 83
Number of Five-Year Fixed Rate BTL Deals Below 5% 37 55 105 143
Average Two-Year Fixed Rate BTL Deals 4.44% 3.94% 3.69% 3.45%
Average Five-Year Fixed Rate BTL Deals 4.67% 4.65% 4.39% 4.25%
Source: Moneyfacts.co.uk Compiled: 21.4.15

As you can see, there’s been a definite rise in the number of cheap BTL deals on the market, and availability on the whole has experienced a welcome boost. It’s opened the market to an increasing number of borrowers looking to start or expand their property empire, and there are even expectations that this number could increase further.

Could a BTL boom be on the horizon?

Much has been made of the recent pension reforms and the potential BTL boom that could result, as retirees take the opportunity to empty their pension pots and invest the funds in property instead. But is it likely to materialise?

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