Is the buy-to-let market shrinking?

You only need to type ‘buy-to-let’ and see that one of the first news articles online is questioning whether the market is ‘dead.’ ‘Decline’, ‘is it worth it?’ or ‘doom and gloom’ are other phrases that probably spring to mind. While there is no denying buy-to-let (BTL) has had its fair share of bumps, but it is not doing as badly as people think.

Last week, UK Finance figures showed that, even with Covid-19, BTL purchases had risen every month for the past five months. In August this year, BTL activity was up by 23% compared to February. And that’s just last year alone. Additionally, the number of BTL products increased substantially.

Figures like these show the market is adjusting and moving back to where it once was before the string of regulatory changes. It most certainly hasn’t taken five steps back.

While many sensational headlines have implied a significant drop, in reality, since 2018, gross BTL mortgage lending has decreased by approximately 7%, according to UK Finance figures.

Looking underneath gross total lending, there is no denying there has been a decline in standard purchase activity, which is what most headlines focus on. This is in part due to the layering of regulatory changes and, consequently, ‘dinner party’ landlords exiting the market.

However, with change comes opportunity. More experienced and professional landlords have stayed and upped their game, looking to expand their portfolios. For example, we have seen a significant increase in limited company landlords and HMOs, as they search for higher yields and good growth at higher LTVs.

If you would like to know more about a new or re-mortgage please do make contact and one of our independent advisers will be happy to assist.