Property Investor & Buy to Let Uncertainty?

There is a lot, and I mean a lot, of activity in the property market at the moment. I refer to investors and buy to let owners seeking to refinance and acquire new stock.

One question is always about uncertainty. A lot of property investors seem to have conflicting views on what the future holds for the investment property sector.

The big boys may offer little in the way of clarity either. Taylor Wimpey bought 22,600 plots worth £1.3bn during the second half of 2020. In 2019 it bought just 7,268 plots. Persimmon only bought 6,827 new plots in 2020 – nearly half of what it bought in 2019*.

Two of the biggest players in the ‘average house’ market seeming to see the sector very differently.

It can be no surprise that your smaller landlord and portfolio landlord are experiencing equally conflicting views.

The outlook for property investors is covered in our latest ‘focus on’ article available for download here.

So what may influence the rental market?

Demand appears to be high in good areas. This may be due to a number of reasons;

• 50% of those who lost employment in 2020 were 35 or under
• The freezing of tax brackets means as wages rise then so will taxation
• House prices rose 10% in 2020, wages didn’t

All in all, the ease at which first time buyers can enter the housing market is deteriorating with home ownership becoming harder.

The Government mortgage guarantee scheme for 95% loans may alleviate some of this, but it doesn’t make an unaffordable loan affordable. That may take loosening of regulation around stress testing affordability which doesn’t appear to be any new horizon.

It tends to point toward an increasing demand in the rental market, which should mean activity in the buy to let market continues to grow. An ONS survey in January 2021 showed 88% of landlords reporting a profit, the numbers appear to support the investor over the first time buyer.

For those property investors looking to expand or raise capital to expand then the options exist even for the more challenging properties and those with some history of voids.

Whatever happens, it looks like the outlook favours the buy to let investor over the first time buyer.

If you want to look at your mortgage options for buying investment property then add your details below and we can chat it through.

By Dave Farmer

Ref: *HL March 2021