Despite the difficult economic environment, many of the fundamentals for a positive rental sector for Landlords still remain, when you consider the following three statements…
Enough new homes are being built: there aren’t.
A deposit for first-time buyers is easy to secure: it isn’t.
Mortgage interest rates are sky-high: they aren’t.
Were those factors true, then the private rental sector would be less appealing to landlords. As it happens, demand remains high and if landlords want to remortgage, then property price increases over recent years (combined with low-interest rates) are working in their favour.
Of course, it’s not all plain sailing, as landlords still face sizeable regulatory and tax issues to navigate and many will have suffered from the recent support afforded to defaulting renters.
As said, demand remains high but the hotspots have changed throughout the UK compared to pre-pandemic times. Some renters (As with house purchasers) have moved away from the cities. Overall, the UK average monthly rent figure is at an all-time high of £1,053, up 6.9% on the year prior. Regionally, the biggest annual growth has occurred in Wales (12.8%), South West (11.9%), East Midlands (10.7% and Scotland (9.5%). In fact, all regions have shown an annual uplift, including Greater London (3.6%)
(Source: Homelet Rental Index, August 2021 data, released September 2021).
Hose Price Growth
Over recent years, many landlords will have benefitted from house price rises. If this is the case, then it should deliver more options for those nearing, or coming off 2 and 5-year mortgage deals. In some cases, that may mean access to lower LTV rates which should open up the better deals and for others will present opportunities to raise further funds to renovate the existing property or help to access money to purchase additional properties.
Buy to Let interest rates
This information may be relevant should landlords be nearing the end of their deal period or are simply looking to remortgage. The comparative ‘average rates across all LTVs are even lower than the 2 and 5-year ones that could be coming to an end and if the landlord falls into the lower LTV arena then they could have access to even better rates:
1 Sept 2016+ 3.89% (Historical 5 year deal rate)
1 Sept 2019 = 2.97%(Historical 2 year rate deal)
1 Sept 2021 = 2.94% (2 year deal)
(source: Moneyfacts, Buy to Let Average Fixed Rate deals, 1 Sept 2021)
For more information on Buy to Let mortgages talk to the Mortgage team at Asset Harbour on 01276 986333