Will Buy-To-Let Investments Continue to be Popular in 2022/23?

Updated: May 6



At the start of the year, various news articles predicted that there would be a high demand for buy-to-let loans in 2022.


But have the predictions turned into reality?


Will the popularity of buy-to-let investments will continue into the new financial year?


Impact on House and Rent Prices


In January, based on current and past data landlords could have had growth in both house and rent prices. Recent statistics have certainly proved this has been the case! There was a 1.7% month-on-month increase in house prices.


Over the past 12 months, prices rose by 9.6%. That is the fastest pace of growth since 2004. It’s clear the success of the property market in 2021 has not yet been stifled by the cost-of-living crisis we’re watching unfold this year.


On top of this, rent prices grew by 2.3% in the year leading up to February 2022, reflecting the continuing health of the buy to let market.


Sources: UK House Price Index


Annual House Price Change
Annual House Price Change

Encouragingly, there’s still a high demand for rental housing. In fact, according to Capital Economics, privately rented property supply will need to increase by 227,000 homes a year over the next decade to meet demand. Further, 42% of landlords reported seeing a higher demand for their properties within the last year.


Source: The GuardianMortgage Strategy


In light of the price growth and rental demand, it’s likely that buy-to-let investments will continue to increase in popularity in the 2022/23 financial year.


What are the Interest rate and Stamp Duty Changes?


It was predicted that rising interest rates and stamp duty changes were some potential trends to be wary of in 2022.


As expected, The Bank of England increased interest rates to 1% on the 5th of May 2022, the third hike since last December. This has had implications on the cost of borrowing despite mounting concern that the economy is weakening amid the cost of living crisis.


Source: Mortgage Solutions


It was also rumoured that stamp duty for second homes could be subject to reform ahead of the Spring Statement in March. Some experts suggested the government would increase rates from 3% to 4%. While these reforms did not materialise, the government may still yet consider this as part of its post-pandemic tax agenda.


Landlords might look to fast track their purchases before any reforms come into effect. This could result in a higher demand for buy-to-let mortgages and bridging loans later this year.


Source: Simply Business


Rishi Sunak Financing green renovations


In his Spring Statement, the Chancellor cut VAT on clean technology to tackle the energy bills crisis.


Energy-saving materials and technologies can increase a property’s sustainability and marketability.


Many renters say they would pay more for an energy-efficient home, sustainable features are becoming a much more attractive investment for landlords. You can find more information on energy efficiency for buy-to-let properties.


As such, 2022/23 could see an increase in property refurbishment bridging loans as landlords look to capitalise on the reduced cost of sustainable features. We are able to arrange permitted and light development finance is available for borrowers who are looking to renovate, refurbish or convert their assets, whether they’re looking to:

  • Meet EPC regulation changes

  • Increasing their property’s value

  • Change the nature of building

Source: Evening StandardEastern Daily Press


Current Inflation concerns

The ONS recently put the rate of inflation at 6.2%, a 30-year high. It also predicts that inflation could hit 9% at the end of 2022.



CPI Annual Inflation Rate
CPI Annual Inflation Rate

Historically, the property market has been used as a hedge against inflation, which warrants higher wages and higher rents. Consequently, the yields on a rented property could increase. Therefore, landlords might seek out bridging buy-to-let loans to expand or start developing their buy to let portfolios.

Source: ReutersMortgage Strategy, ONS GOV


Financing buy-to-let investments

Whether buying a property or looking to renovate one, it seems likely that buy-to-let investments will remain in high demand in 2022/23.


It’s vital, therefore, that brokers and investors find the right loans to finance these investments. So, what qualities should they look for in a buy-to-let loan provider?

  1. Speed and flexibility are key

  2. Investors who can act quickly

  3. Access products tailored to their unique needs

If you need assistance in sourcing a buy to let mortgage you can get started here




Disclaimer


The articles are intended to provide a general understanding of the topic. The contents should not be treated as advice. Please note Accelerated Finance only considers applications for commercial or investment properties.


Your property may be repossessed if you do not keep up repayments on the finance secured against it.