Anyone property investment planning in Cheshire will have noted a big increase in buy-to-let mortgages across the UK.
Recent data, published by UK Finance, showed that 54,648 new buy-to-let mortgages were agreed in the final quarter of 2024, worth £9.6 billion, while the total value of such mortgages was up 47.2% on the previous year. The figures included both purchases and remortgages, and constituted a 39.2% increase over 2023-24. This would appear to contradict news stories of landlords selling up in response to stiffer regulation, and higher taxes and interest rates.
Why are landlords borrowing more now?
When considering this rise in mortgage activity, it is worth factoring in the economic situation in 2023 when mortgage rates peaked. This led property buyers and investors to hold off committing.
Moreover, the supply and demand imbalance in the private rental sector has driven rental inflation and therefore a resurgent buy-to-let market. As such, property landlords are borrowing to invest in higher-yield housing, which is an attractive proposition with rents rising faster than house prices. Offsetting increased stamp duty is the prospect of an average rent, up 40% over the last five years and now standing at £1,087 a month. In the sales market, meanwhile, asking prices were up 19% over the same period, increasing from £312,625 to £371,870.
According to Zoopla, landlords have changed too, with fewer ‘older, smaller or accidental’ letters, while the bigger fish are expanding their portfolios. The result is a period of consolidation in the buy-to-let market, with a growing percentage of properties owned by a shrinking pool of large portfolio landlords.
