To the outside observer, the buy-to-let sector might well look like it is on a downward trajectory of which there is no coming back from. The headlines at the moment seem to suggest that all kinds of landlords are putting their properties on the market in a mass exodus not seen since Biblical times. Over the past few months, I have seen ‘research’ which shows smaller/amateur landlords only have one plan – leave as soon as possible – and now, just recently, I’ve been told via further research that the larger, portfolio players are to tread the same, seemingly well-worn, path out of property investment.
If you’re a first-time buyer (or indeed any buyer) you might well be thinking that now is your time, with the market flooded with these ex-PRS homes. Unfortunately, as they might have gathered by now, that isn’t the case and not only do I think news of the death of buy-to-let is greatly exaggerated but the recent statistics from RICS which show a slowing down in the number of properties being listed for sale, perhaps given you an idea that not all landlords are intending to instigate their exit strategies just yet.
Indeed, look at the latest lending figures from UK Finance (formerly CML) for August and it’s possible to perceive that the great leaving of the UK buy-to-let market is not quite all it’s been cracked up to be. And, while the various regulatory and political pressures brought to bear on landlords have clearly had an impact, there is the sense that the implications have now started to be fully understood and this is not stopping serious players from maintaining their presence (and refinancing), and purchasing again.
According to UK Finance, the number of purchase buy-to-let mortgages in August hit 6,800, which was 6.3% up on the previous month, and 4.6% up on the same month in 2016. Plus, the number of remortgage loans – which has clearly been the driving force within the sector for some time – actually ticked down slightly from July with 13,100 loans being written in August, compared to 13,700 in the previous month. And as far as the value of those loans is concerned we have sure signs of solid foundations and an overall stability to the levels that are being written – in August and July this year, and August last year, both purchase and remortgage combined hit £3.1bn. Hardly a sign of a ‘dying sector’ or indicative of landlords not wanting to stay involved and secure the necessary finances to do so.
Being a lender that does nothing else but buy-to-let, I believe we are in a strong position to be able to take a view on what’s been happening and what might happen next. In that sense, it will surprise no one to say that we are incredibly positive about the sector; even when many were bemoaning the underwriting changes for portfolio landlords, we felt this was a necessary step and would support responsible lending and perhaps quicken (and heighten) the professionalisation of the landlord community.
However, even with that said, there are still many so-called ‘amateur landlords’ who have no intention at all of putting their properties up for sale in the near term, and why should they? We’ve preached the mantra of ‘make sure you’re in this for the long-term’ for so long that should we really be surprised that landlords are completely aware of this, buy it, and ultimately see the benefits of such an approach? We are a long way from those pre-Credit Crunch days, of double-digit house price growth, when speculators could jump in and jump out of the sector, and still be able to secure a very quick profit. If there are any landlords or investors out there who believe this type of activity is still viable, then I’ve certainly not met them lately.
Of course, there are always going to be landlords looking at what they might do with their properties, how they might exit the sector, and what options are best to achieve this; however I would question whether we will see a spike in the numbers of those who feel somehow forced into doing this now. Instead, advisers should get a sense that their existing clients still need them, plus there are those who wish to add to portfolios and refinance properties who will undoubtedly want the expertise of a professional adviser in order to help them navigate the current buy-to-let mortgage market.
Let’s not add to the chorus of those writing off this sector because it’s not only very far from the truth, but it’s certainly not been written off by those landlord clients who have chosen the sector and fully instead to stay the full course. The figures suggest stability and that’s exactly what they will be expecting from their advisers and lenders alike.
Bob Young is chief executive officer of Fleet Mortgages