Buy-to-let and Changing Markets
The Intermediary Mortgage Lenders Association reported on 6 February that buy-to-let investment has seen a reduction in mortgage lending of 80% from 2015 (£25 billion) to 2017 (£5 billion). The main reason for this fall is explained by the recent changes in tax and regulations. About 21% of landlords have indicated that they may reduce the size of their portfolios.
According to a report on the build to rent market, published by Savills in 2018, there is evidence of up to 40,000 buy-to-let investors having left the market by selling up. This trend seems to be more evident in markets where properties have a lower yield.
With more landlords exiting, there is space for the build to rent sector to ‘fill the gap’ in areas where supply of rented property has decreased. New build homes often rent out faster and prospective tenants seem to be willing to pay up to 20% more rent compared to a similar sized older property. Attractive features in a build to rent property would typically be a higher level of service and better thermal comfort. Television subscriptions, internet and utilities are often already set up and part of the ‘package’.