The pandemic frenzy abates – buy-to-let loans returns to the fore

buy-to-let loans return

The UK’s buy-to-let (BTL) industry has become a critical component when investing in bricks and mortar. Especially in the bridging loan sector. But has the pandemic affected this trend?

As we begin to emerge from the pandemic, it’s clear that market dynamics across the real estate sector have seen some impressive changes. The buy-to-let sector is no different. In fact, it has seemingly benefited greatly, particularly from the stamp duty land tax (SDLT) holiday. The tax relief provided a unique opportunity for investors. The top rate tax saving of £15,000 encouraged many property investors, particularly landlords looking to build up their property portfolio to invest in the current market. In addition, buy-to-let investors saved on the 3% surcharge of multiple residential properties.


The post-pandemic buy-to-let investment landscape

BTL landlords will need to assess the impact of recent market shifts and consider new opportunities. For instance, in August 2021, data by HomeLet showed that the average rental price among new tenants had increased by 6.9% on the August prior.

However, the impressive growth of the industry differed across the UK. For instance, average rents in Prime Central London (PCL) declined by 14.3% in the 12 months following the first national lockdown. This pattern has held through much of the pandemic. Thus, reflecting on the challenging period for buy-to-let investment in prime London areas.

Source: HomeLet Rental Index – Knight Frank

This is particularly true of those rural areas which saw a rush of demand after lockdown required most urban-dwelling office workers to go remote, allowing greater flexibility in where they could let. With demand for rural properties still seemingly in high demand, we investigated the top London commuter towns. Interested to see what we labelled as our top 5? You can find out more by reading our London commuter town article.

Buy-to-let is back

We’ve seen first-hand the appeal of buy-to-let investments is here to stay. We recently conducted our own research, to see how landlords have responded to the pandemic, and whether their opinion of buy-to-let has changed over the past 15 months. We uncovered:

  • 38% have bought a property since July 2020
  • A further third (32%) tried and failed to buy a property during the stamp duty holiday
  • 44% of property investors are now more likely to invest in rural areas
  • A majority (60%) feel the stamp duty holiday made the market ‘too chaotic’
  • 65% allowed greater flexibility on tenants’ payments due to financial problems caused by the pandemic

Our research also echoed the rural rise, as mentioned above. Therefore, highlighting that experienced BTL investors intend to capitalise on emerging investment opportunities. Among those with portfolios of six or more properties, 58% reported being more likely to invest in rural areas, compared to just 41% of those with smaller portfolios.

So, it appears despite the rocky road, buy-to-let property is showing a remarkable stability as a vehicle for investment. Even in the face of economic uncertainty.
Download our buy-to-let in focus report.

If you’re looking to read more about how we could help with your next property investment, read our case studies.

Staying ahead of the curve

UK investors are still gravitating towards buy-to-let properties. In response to this, we’ve expanded our range of products, to better support the needs of a broader range of landlords. After 15 years of developing our reputation as a specialist lender in bridging loans, we are pleased to announce that we are working with several brokers to launch a pilot for our new buy-to-let product.

When building property portfolios, we understand that flexibility is fundamental. There are plenty of emerging opportunities coming to light, as the market adjusts to a post-pandemic reality for the buy-to-let investor. Our buy-to-let mortgages will be suitable for clients with complicated financial arrangements. It will also be available for corporate and overseas structures, thanks to our bespoke proposition. In addition, it will provide optionality and breathing space between bridge exits or initial purchases and future long-term financing.

The benefits of our BTL offering on the client side are clear:

  • Speed and flexibility in delivering a financial facility
  • Help in repairing breaks in property chains
  • Providing assurance of completion within the expected timeframe and budget

Find out more information about our buy-to-let mortgage.

Are you looking for a bridging lender who specialises in the complex? Contact us today.

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