The number of UK buy-to-let landlords has risen 49% in the last five years to an all-time high of 2.7 million, research from ludlowthompson estate agents found.
The residential market has stayed relatively strong during the coronavirus pandemic, though the commercial property market has fared poorly, as 54% of tenants have held discussions with their landlords about taking a rent holiday.
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Stephen Ludlow, chairman of ludlowthompson, said: “The buy-to-let market has continued to provide a reliable return on investment for landlords, even during the worst of the pandemic when other forms of investments went through a period of intense volatility.”
“The historic resilience of residential property means many private investors are still looking to add to their holdings, particularly before March 2021 when the stamp duty holiday ends.”
“We would advise existing and prospective landlords to consider re-purposing their properties to meet the changing needs of tenants.
“With people spending more time at home, having extra space both in and outdoors has become more important than ever. Outdoor areas and home offices are both in very high in demand, as is accessibility to high-speed WiFi.”
Mortgage for Business says there are still 42 lenders in the buy-to-let remortgage market, a fall of seven (14%) since the Covid-19 epidemic took hold.
Steve Olejnik, managing director of Mortgages for Business, said: “While HSBC has recently announced it is no longer able to accept applications for buy-to-let mortgages, other lenders are out there.
“We’ve seen lenders like Together Money and Vida Homeloans temporarily pull out of the market – but more than 85% of the lenders that landlords rely on are still trying to do their bit – as are we.
“Four of the lenders that initially withdrew their BTL mortgages – Santander, Clydesdale, Precise Mortgages and Kent Reliance – are now lending again.
“There is no need for landlords to panic. Yes, landlords looking to remortgage have fewer options. But they still have plenty.”
Saffron Building Society withdrew from the market before the outbreak in March – for non-Covid-19 reasons – and has indicated its intention to return ‘later in the year’.
Lenders that stopped lending to landlords since the outbreak, and remain withdrawn from the BTL market, include HSBC, Foundation Home Loans, Together Money, Vida Home Loans, Platform Home Loans, State Bank of India and Furness Building Society.
Olejnik commented: “Lots of lenders have cut down the sorts of landlords that they will lend to. They’re pulling product ranges, tightening lending criteria and increasing margins.
“But different lenders are derisking against different kinds of landlord borrowers. So, while some lenders are no longer lending to first time landlords, there are still lenders who are.
“A huge number of 80% LTV five-year fixed rate BTL products have been pulled from the market – about 90% of them. But not all.”
Number of lenders in BTL remortgage market
Type of BTL Remortgage
March 2020
April 2020
Change
First-time landlords
47
35
-26%
Portfolio landlords
40
33
-18%
Ltd company landlords
30
24
-20%
Student lettings
30
21
-30%
HMOs
27
15
-44%
BTL tracker loans
28
16
-43%
85% LTV BTL loans
3
0
-100%
Active BTL lenders
49
42
-14%
Valuations
Olejnik added: “With valuers banned from visiting homes, landlords are finding remortgaging harder than it was. But there are lenders offering mortgages using automated valuations, rather than physical valuations, and a lot of our landlord clients are taking advantage of this.
“The landlord community is benefitting from Shawbrook and Paragon, in particular, who are using virtual valuations for loans against standard properties up to 75% of loan to value. They’re being very helpful.
“Even lenders who require a physical valuation at a higher LTV are generally processing landlords’ remortgage applications as normal – but moving the valuation part of the application to the very end. A significant percentage of our landlord clients are happy to do this. They’re content to sit back and wait out the lockdown and get a physical valuation done.”
Product numbers
While the number of lenders operating in the market has fallen only marginally, there has been a significant fall in buy-to-let mortgage deals since the start of March 2020– with the number of BTL products dropping by almost 50%.
Olejnik concluded: “The number of products has dropped but the only section of the market that’s genuinely gummed up is 85% LTV lending – and that’s pretty niche. There were only three lenders doing business at that end of the market when the Boris Bounce was in full swing.”
