The percentage of deals available to first-time landlords in the buy-to-let (BTL) market has increased over the last 12 months, suggesting that, despite the economic uncertainty caused by the pandemic, many mortgage providers are still willing to lend to new property investors.
Research from Moneyfacts.co.uk has found that despite the number of BTL deals for first-time landlords falling year-on-year, the percentage of the market available to new landlords has actually risen. The research showed that on the 1 February 2020 there were 1,635 deals available to first-time landlords, while a year later this had fallen to 1,311. Despite this, a fall in BTL deals overall resulted in the percentage of the market available to first-time landlords increasing from 61% to 65% during this same period.
“Overall availability contracted sharply last year, which makes it even more positive to note that at 65%, the proportion of the market that is available to first-time landlords has grown by 4% year-on-year, meaning that would-be investors have plenty of choice, and is also an indication that providers are committed to servicing this demographic of borrowers,” explained Eleanor Williams, finance expert at Moneyfacts.co.uk.
Although this is good news for first-time landlords, as it demonstrates lender’s willingness to lend to new landlords, average rates over this period show that the market has not remained unscathed from the current economic uncertainty. For example, the average first-time landlord two year fixed rate on 1 February 2020 was 2.80%, which increased to 3.10% on the 1 February 2021. Meanwhile, the average first-time landlord five year fixed rate increased from 3.31% to 3.66% during this same period.
First-time landlords should, however, keep in mind that there are rates available in the first-time landlord chart significantly lower than average rates. For example, the lowest rate currently available in the first-time landlord chart currently stands at 1.64% fixed to 31 March 2023. To find the best deal available for their circumstances, new landlords may want to consider speaking to a mortgage broker who will be able to provide advice on the best deals available.
“Those who are considering whether this is the right time to invest would be wise to secure professional, qualified advice to help support and navigate through their choices,” Williams added.
“There may be benefits to setting up as a limited company, some products may require forethought regarding the number of properties they can have in their portfolio, and of course, whether the timing is appropriate for their own circumstances. Careful planning and ensuring that they protect any investments will be vital in these uncertain times.”
With saving rates at record lows and a volatile stock market, some may be considering investing in property as a long-term investment alternative. Although, traditionally, investing in BTL has been one of the most popular ways for consumers to invest in property, there are alternative options such as investing in real estate investment trusts (REIT) available.
To find out more about investing in BTL and the other property investment options available, read our guide on how to invest in property.