Plenty of options for buy-to-let

There are now 3,528 buy-to-let products on offer to landlords, the highest number recorded by Moneyfacts since 2007.

The financial information provider said products rose by 222 in the last month alone and are up by 945 since the start of the pandemic.

There has also been a rise in the number of products on offer to landlords with smaller deposits or levels of equity, indicating a level of confidence in the sector.

After falling to only four deals on offer in November 2021, there are now 28 products available at 85% of the property’s value, the highest this number has been since March 2020 and a vast improvement on last year, when January 2021 saw no options available in this bracket.

2022 will be the year for buy-to-let and the limited company

Research shows lenders are expanding their product range for buy-to-let limited company mortgages.

The cost of a limited company mortgage is on average 0.7% higher than the normal product, plus some set-up fees are higher as well. Most of the fees payable are on a percentage basis and range from 0.5% to 1.5% and an investor should be very careful of their choice.

Around 50% of the products currently on offer are available at 75% loan to value and as always better deals are on offer at lower loan to values.

Record incorporations

2021 saw a record number of companies set up to hold buy-to-let (BTL) property, with 47,400 incorporated in 2021 across the UK, according to Companies House data.

This is nearly twice the number set up in 2017, when it was announced that investors with properties in their personal names would no longer be able to claim mortgage interest as an expense.

However, the rate of growth in new incorporations fell compared to previous years, with a 14% increase recorded between 2020 and 2021, down from a 30% increase recorded between 2019 and 2020.

While the number of BTL companies running in the UK passed through the 200,000 mark as the country emerged from the first lockdown, by 2021 this figure rose to a new total of 269,300. 61% of these companies were set up since the withdrawal of mortgage interest relief in April 2017.

The average BTL company has been operating for 9.2 years, a figure which has fallen amid the rising number of new incorporations over the last five years.

Landlords look to expand in 2022

A third of landlords are looking to expand their portfolios in the next year, as rising house prices and improved rental yields lead to higher levels of confidence in the market.

Research found that 34% of landlords said they were planning to buy at least one property within the next 12 months, while 14% said they were planning on buying more properties than they had initially planned.

Despite the challenges of the pandemic, and property prices being at unprecedented levels, this report found there two thirds of respondents (67%) were confident house prices would continue to grow in 2022.

This is reflected in the fact that 13% of landlords said they were planning to buy in new locations. Of these, 36% said they were planning to buy in urban locations, while 30% are considering more rural locations.