Landlords becoming more bullish as they build “war chests” for growth
The current climate in the UK housing market is proving positive for many landlords. Now more than ever, it's time to take a proactive approach to investment. With rental demand continuing to climb across the UK, buy-to-let is an appealing industry to many right now. Landlords and investors are also increasingly looking at the short-term let space, which is proving at least as lucrative. Now, according to buy-to-let broker Mortgages for Business, growing cash reserves is a top priority for landlords.
This means that many remortgaging landlords are currently building "war chests" to take advantage of current market conditions. Around a third (30%) of existing property investors are remortgaging "with a view to expanding their portfolio and growing their cash reserves", says the broker. A further 46% are increasing their loan size, a huge rise on the long-term average of 38%. Steve Olejnik, managing director of Mortgages for Business, said: “Our research suggests the number one priority of active, professional landlords is to set themselves up with a war chest so they can look for growth.
" "Smart landlords know that the time is coming to bag some bargains and start expanding portfolios. Increasingly, that is where their remortgaging priorities lie.” Changing priorities Back in 2019, conditions were slightly different. According to Mortgages for Business, the number one priority back then was managing risk. The London housing market in particular had become stagnant, with economic and political uncertainty thanks to Brexit and leadership changes playing a big part. This meant many landlords were taking action to reduce their exposure to risk.
Some opted to secure longer fixed-rate mortgages, with less appetite for variable products. While many were still seeking to add to their investment portfolios, this came with a more cautious approach. Recent changes to the buy-to-let sector, such as the reduction of mortgage interest relief, have affected many landlords. Lending requirements had also become more stringent in recent years. Landlords, as a result, have had to choose property even more wisely to ensure maximum gains. Now, though, Mortgages for Business is seeing strategies change.
Steve Olejnik said: “Twelve months ago, in 2019, a lot of the landlords we worked with were looking to guard against risk. That’s shifting now as opportunities to purchase cheap properties presents themselves." "With property prices poised to drop before the end of the year, the balance between risk and reward is shifting. It will be interesting to see how landlords’ investment strategies adjust to changing tenant demand.” A favourable mortgage market Low mortgage rates are certainly an added attraction for investors in the buy-to-let space.
Rates on higher loan-to-value products have also gone down, so many landlords can maximise their borrowing power. The amount of choice currently available for landlords looking to borrow to invest is now almost back to pre-coronavirus levels. As a result, buy-to-let landlords are being urged to remortgage and expand portfolios, if they can, now. Eleanor Williams, finance expert at Moneyfacts, said: “The Bank of England base rate currently remains at its lowest ever level of 0.10%, resulting in further despair for savers.
“However, those looking to invest their money in property now that the mortgage market has reopened may feel now is a good time to explore their options, particularly with rates becoming more competitive and product choice beginning to return this month.” BuyAssociation has a range of investment opportunities for both buy-to-let landlords and owner-occupiers. We can also put you in touch with one of our independent mortgage partners for expert advice on your options. Get in touch for further details, or sign up for free to view more of our investment options.