Buy-to-let boom – exploring the rental market’s past, present, and future

buy to let boom

Arguably, the UK has been experiencing a buy-to-let boom for decades. There has always been demand from investors looking to expand into the buy-to-let market. But this demand really ramped up in more recent years.

The private rental sector (PRS) has reached unprecedented levels. By the end of 2022, around 5.4 million homes in Great Britain were privately rented. The number of privately rented homes grew by 126% between 2001 and 2020.

Much of this demand reached a fever pitch in 2022. Over 211,000 buy-to-let mortgages were approved by UK lenders last year, occupying 13.6% of total mortgage lending, and double the amount seen in 2012.

And while approval numbers peaked in 2016, they started rebounding in 2021/22. Much of this was likely driven by tenants themselves. Some 73% of agents reported a rise in the number of tenants renewing their rental contracts over the year.

Source:, Uswitch,  Buy Association

A successful past calming down?

But, while it was a solid buy-to-let boom year overall, 2022 was very much a year of two halves. Much of the momentum was built during the first half of the year. Before we experienced skyrocketing inflation, hiked interest rates, and an infamous mini-Budget.

In March, analysis of the UK’s stock levels revealed the UK’s buy-to-let market had an estimated total value of around £1.7trn. An increase of £239bn over the prior five years. What’s more, in April, it was revealed that buy-to-let investors were snapping up one in every 10 houses sold in the UK in Q1 2022. Much of this demand and optimism continued into the summer months.

But as we moved into the 2nd half of 2022, the market did a complete 180. The economy started to struggle with a cost-of-living crisis, fuelled by rising energy bills. Eventually, everything became more expensive, and lenders deemed the landscape too risky.

Criteria tightened, and any notion of a buy-to-let boom was brought to an abrupt halt. In early September, there were 2,075 buy-to-let products available on the market. By October 4, this dropped to 1,057.

The situation worsened as we moved into the winter months. Buy-to-let investors weren’t convinced by the government’s plans to support the market and in November, one in five landlords planned to reduce their portfolio. By December, landlords were “rushing for the exit” in the face of changing legislation, and eroding tax perks.

Source: Yahoo Finance, Daily Mail, FT Adviser, Property Industry Eye, LandlordZone

buy to let boom in the past

How is the current market looking?

It’s clear for most to see – we’re not in a buy-to-let boom at the moment. Only 46% of landlords currently feel positive about their prospects. But it’s these landlords who may be vindicated over the long-term. While we have a long road ahead of us, we are seeing the early signs of a recovery.

Despite the current pessimism, just over half of existing property investors are planning to invest more into housing in 2023. Meanwhile, 68% of those with more than five property assets in their portfolios plan to capitalise on “increased opportunities in 2023”, according to Finbri.

Indeed, demand in the rental market is outpacing supply, with many pundits expecting 2023 to be a solid year for landlords. Now may also be a great time for new entrants.

Many buy-to-let investors are turning to auction houses to offload their stock quickly and exit the market. In some instances, they’re willing to sell their auction properties at a 25-30% discount.

You may be able to bag a buy-to-let bargain at the moment, and generate healthier yields as a result. But, this opportunity may not stick around for much longer. A new buy-to-let boom could be on the way.

Source: Property Industry Eye, Buy Association, Property Reporter, Evening Standard, Property Reporter, Property Reporter

present of rental market

What about the future?

Despite the dire headlines out there, relative normality is returning. The economy is starting to bounce back and should the situation calm down in the buy-to-let market, we may see investors rush back to get involved.

Several of our economic indicators have allowed for some cautious optimism in recent months. Inflation has started to slow, and GDP is on the rise. If we keep this up, we may even see borrowing costs slide over the coming years.

Many experts expect the base rate will peak at around the 4.25% mark this year, before falling in 2024. From 2025 onwards, both Savills and the Office for Budget Responsibility predict that house prices will rise consistently once again.

In the more immediate future, buy-to-let investors could see a complete reversal in their fortunes. Much of commentary out there at the moment suggests landlords are struggling to generate a decent income from their properties due to rising costs. But this may not be the reality for much longer.

Rents are set to continue to rise this year, peaking at 5.3% growth in the middle of 2023, according to Capital Economics. At the same time, it forecasts a 12% peak-to-trough decline in house prices, meaning gross rental yields will rise from the 4.3% seen in mid-2022, to 4.6% in Q1 2023.

Andrew Wishart, a senior economist at the organisation, expects yields will rise to 5.3% in 2024 – the highest level seen in 9 years. Some investors appear to be taking notice of all this. Property Investments UK saw inquiries from buy-to-let investors rise 20% compared to last year, and are sitting at the highest level seen for five years.

Source: Financial Times, Financial Times, FT Adviser, The Times, Property Reporter, The Telegraph

future of buy to let

How can the specialist finance industry help you?

The market may be struggling at the moment, but a buy-to-let boom could be just around the corner. Should we see property investors embrace the market as they did in 2021/22, it’s unclear if mainstream lenders will be able to meet the demand.

Stricter criteria has made it difficult for property investors to get ahead on the high street. Overall mortgage approvals fell to the lowest level seen since 2009 in January, and while the number of buy-to-let mortgage products has been rising recently, availability is still nowhere near the peaks seen in mid-2021.

But where mainstream lending falls short, the specialist finance industry will be there to support buy-to-let investors. At MFS, we have a range of products available for landlords. All of which, can be issued in mere days.

Our basic residential and buy-to-let bridging loans can help you expand your portfolio, while our overseas loans can help foreign investors break into the UK landlord scene. We have permitted and light development bridging loans that can help you attract higher rents, and our auction loans can allow you to lock-in an underappreciated asset quickly.

We also have buy-to-let mortgages available which bring bridging-like speed and flexibility to the mortgage market. Regardless of what option you go for, your case will be underwritten from day one.

It doesn’t matter if you’re a first-time landlord, or an experienced investor, we’ll never leave you in the dark. If you want to take advantage of the next potential buy-to-let boom, we’re here for you.

Source: Financial Reporter, Moneyfacts


MFS are a bridging loan and buy-to-let mortgage provider, not financial advisors. Therefore, Investors are encouraged to seek professional advice.

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