Record-breaking numbers of new prospective tenants have fuelled a growing demand for BTL products among UK property investors, with product choice returning to closer to pre-pandemic levels.
Newly released figures from Moneyfacts have revealed that in July 2,709 products were recorded – the highest number of options on offer in the buy-to-let sector since 2,897 in March 2020, 971 products higher than this time last year when availability was limited due to product withdrawals following the start of the pandemic.
Additionally, Moneyfacts also found that the average overall two and five-year fixed buy-to-let rates have fallen when compared to July 2019. However, year-on-year both the two and five-year fixed average rates for all LTVs are up 0.37% and 0.31% respectively.
Landlords with 40% equity or deposit will find that even though their level of product choice is lower than it was this time last year, they are amongst those who might be able to secure a competitive new deal as the average two and five-year fixed rates in this bracket both remain 0.03% lower year-on-year.
Eleanor Williams, finance expert at Moneyfacts, comments: “Landlords now have the highest level of product choice that we have recorded in over a year. At 2,709 the number of products available to investors is far more than the choice they were faced with this time last year, but perhaps even more interesting is that there are 365 deals more available now than we recorded in July 2019, demonstrating the strength and resilience of this sector in the aftermath of an unprecedented 18-months.
“The demand for buy-to-let could well remain strong in the months to come as rental demand is prevalent, indicated by recent research from Propertymark’s Private Rented Sector report, May saw a record-breaking number of new prospective tenants registered. Whether now is the right time to invest in property may also come down to the desire to earn a decent income. Indeed, research from Nottingham Building Society revealed that 61% of landlords surveyed felt property was a better investment due to low-interest rates for savings – and this coupled with high demand for rental accommodation could sway new investors to dive into the buy-to-let sector.
“Due to the influence of the pandemic, interest rates for buy-to-let have climbed year-on-year with the overall two and five-year average interest rates of 2.98% and 3.28% being 0.37% and 0.31% higher respectively than a year ago, but this may be linked to the increase in availability of higher loan-to-value products. These higher LTV deals usually charge a higher rate and can therefore impact these averages. However, despite creeping up a further 0.02% month-on-month, what is positive is the fact that the overall two-year fixed rate is lower now than in June 2019 – which means those coming off a two-year fixed deal may still find a better deal, depending on how much they have in equity and their circumstances.
“There could still be some understandable hesitation from prospective landlords with some existing investors who could even be considering downsizing their portfolio depending on the pandemic’s impact. However, we are beginning to see some improvements in average rates in certain loan-to-value brackets on a month-on-month basis. As house prices rise, demand for rental accommodation is high, and savings rates remain poor, therefore, investing in property could be enticing to some.”
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