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Buy-to-let market breaks off in two distinct directions

Mark Posniak Mark Posniak
Posted on Apr 19, 2018 | in Blog

Everyone involved in the property industry will know exactly how hard buy-to-let has been hit over the past few years. A raft of punitive tax and legislative changes have turned this once untouchable, near-imperious market on its head.

The result is an ongoing schism, or splintering in buy-to-let, and one that is picking up steam. Basically, the market is breaking up and heading off in two distinct directions.

On the one hand, many amateur landlords are reducing their exposure or exiting the sector altogether, as the numbers simply no longer stack up for them.

The sharp rise in buy-to-let remortgage activity announced by UK Finance this week reflects how landlords, especially amateur ones, are having to refinance their portfolios en masse simply to keep their heads above water.

Yields have been decimated and for more geared landlords in particular remortgaging is absolutely essential to maintaining a viable portfolio.

On the other hand, professional, and increasingly institutional landlords, are piling in to the buy-to-let sector because they have the financial strength, expertise and scaleability to make it work.

Indeed, if there's one major growth sector in the market at present, it's the Private Rented Sector, or 'build-to-rent'. A separate report issued this week found that most millennials will be renting in retirement and that in itself underlines the fundamental changes taking place in the UK property market — and the significant commercial opportunities that lie ahead.

One other clear trend we're seeing in the buy-to-let market is that landlords, amateur and professional alike, are increasingly turning to specialist or challenger lenders who are more willing to embrace the increased risk that's now ingrained in the sector.

The high street may have had enough of buy-to-let, but specialist lenders such as ourselves, are still keen to provide all-important finance — and oil the sector's wheels.

 

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