The buy-to-let (BTL) market is the “most interesting market in the UK at the moment”, Together’s chief commercial officer Ryan Etchells (pictured) said.
Speaking at The Specialist Lending Event, Etchells said: “There’s been a lot of headwinds over the past few years, and there’s more headwinds that we’re facing into. There’s been a shift over the past few years in the rhetoric coming out at [a] government and media level around vilifying landlords and putting them under pressure.
“This needs to stop, because the buy-to-let market and the landlord market is a key segment of having people in good properties and living… in properties that they want to live in.”
Etchells said it was necessary to have a “vibrant landlord market” as renting is preferable for many people, adding that around 4.7 million people live in the private rented sector (PRS) and around 60% of properties in the PRS have mortgages against them.
“When you look at the buy-to-let market, it is a vital market for lending. The market saw a significant contraction in 2023, but then 2024 has seen a little bit of a revamp. Purchase activity is up about 13% compared to 2023 and remortgaging is up 7%,” he said.
Etchells said that while the environment is still challenging, he still expected to see modest growth in the BTL market.
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Landlords were ‘dragging plans forward’ to exit the market
Etchells explained that the primary reason landlords used to buy property was to put the capital towards their pension or to increase the capital wealth.
He said that over the past couple of years, for the people that were getting towards that pension age or getting ready to cash in that capital, they were “dragging the plans forward”.
Etchells said: “So, if you had a certain [number] of landlords that would exit every year, you were seeing… four and five times that amount happening in 2023 because [they were] looking forward and thinking: ‘Well, if I’m going to get taxed more and I’m going to face all these new regulations, I may just exit now three or four years quicker than I thought I was going to’.”
He said it was crucial now to “look towards the next generation of landlords”, with limited company being a growing trend in the market.
Etchells said around 60,000 landlords entered the market last year through incorporation, but this was only 7% of landlords in the UK, so there was a “long way to go to see that shift change”.
He noted that the English Private Landlord survey also found that some landlords are planning to decrease the size of their portfolios or are selling up in the next two years. The proportion rose from 16% in 2018 to 31% in 2024.
Only 7% were looking to increase the size of their portfolios in 2024, compared to 11% in 2018.
Landlord awareness needs to be boosted by lenders and brokers
Etchells said recent figures from the English Private Landlord survey found that landlords’ awareness and understanding of certain tax and legislative areas was lower than expected.
Areas with low awareness and understanding included the creation of the private rented property portal, the introduction of the Private Rented Sector Ombudsman and selective licensing regulation.
He said this was an opportunity for lenders and brokers to help them understand opportunities around tax and legislation.
Etchells said: “There’s a demand in the sector that we just need to now help landlords get through these headwinds, and support customers with adjusting to this, and support customers with navigating through the challenges that we’re facing.
“This is where we now need to help, and lenders and brokers need to support landlords through the challenges that we’re facing, because we need them. We need to stop vilifying them, but we need to help them grapple with this big, long list of headwinds.”
Read all the coverage from The Specialist Lending Event here.
