Further opportunities emerging for landlords in the current climate

The 1990s were renowned for many things from Britpop to the introduction of ‘football’s coming home’, from Harry Potter to Gladiators – the TV show, not the film. That was released in the year 2000 for all those historians out there. This was also the decade that saw the introduction of the buy-to-let mortgage. Launched at London’s RAC Club on 24 September 1996 by the Association of Residential Letting Agents (ARLA), the term buy-to-let gave a consumer-friendly label to an investment many had never before considered.

This might have gone a little under the radar for many at the time, but it’s a product which has had a significant impact on the UK’s housing provision, quickly establishing itself as a mature investment vehicle and proving to be the driving force behind an increasingly vibrant private rented sector (PRS). A sector which is now the cornerstone of a robust housing market.
In the past 26 years since its inception, a variety of questions have constantly been asked of lenders, advisers, investors, landlords, developers and in terms of the viability of the sector as a whole. It’s a sector and a product type which has shown remarkable resilience over this time and is still demonstrating its value in the current economic climate where rising interest and mortgage rates, plus cost of living expenditure dominate the thoughts and aspirations of potential buyers and existing homeowners.

Not that the buy-to-let marketplace is immune to the current economic challenges, far from it. Ever-shifting dynamics are impacting lending volumes and landlords are having to carefully evaluate the performance of their individual properties and overall portfolios. On the back of significant regulatory and tax changes, we’ve also seen the numbers of amateur or accidental landlords leaving the market increase and a marked rise in activity levels amongst portfolio landlords who, on a far more positive note, are still experiencing growth and seeing opportunities emerge. And this is a trend which is likely to continue.

A webinar poll recently undertaken by Countrywide Surveying Services (CSS) highlighted that larger portfolio landlords/property investors are most likely to experience growth/maximise opportunities going forward. 66% of respondents outlined that they expect growth and opportunities across the buy-to-let sector to be experienced by landlords/property investors with a portfolio of 10+ properties. 22% opted for those with 4-10 properties and 12% selected those with 1-3 properties to be the most likely to experience growth/maximise opportunities going forward.

A further poll taken during the webinar found that only 5% were ‘very pessimistic’ when it came to confidence levels around the buy-to-let sector for 2023. 41% said they were ‘very’ or ‘somewhat confident’, 29% indicated that they were ‘neither confident nor pessimistic’, with 25% suggesting that they were ‘slightly pessimistic’. In addition, 45% of respondents suggested that the greatest challenge currently facing the buy-to-let sector is rising interest rates. This was followed by cost of living increases and EPC regulations with both recording 18%, greater regulation (13%) and escalating taxation (6%).

These ongoing levels of confidence are reassuring and, looking forward, tenant demand is likely to rise and yields remain strong in many parts of the country. This combination, amongst other factors, will lead to further opportunities emerging for landlords, especially at the more professional end of the landlord spectrum, and the advice process will continue to play a vital role in landlords being able to maximise these.