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Lockdown And The Buy To Let Housing Market


Lockdown And The Buy To Let Housing Market
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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin15 May 2020
    

UK lockdown began in March, and although we hear a lot of uncertainty about how this will impact the buy-to-let housing market, the future is looking up!

Here is why, and how to strategise to take full advantage of the changes taking place.

 

Buy-To-Let Interest Rates 

The Bank of England reduced the Base Rate (BBR) for the second time on 19th March to just 0.1%. This cut in interest is excellent news for investors.

We saw significant changes in mortgages offered when lockdown began on 23rd March. At the time, nobody knew how the virus pandemic would impact us.

Very few lenders were accepting buy-to-let mortgage applications, and there were only a few options at 75% LTV and very few providers with remote valuation systems in place. This hesitancy led to widespread concern about how severe the impact would be on the market as a whole.

 

Mortgage Market Evolution

As with many industries, mortgage providers have evolved to create more flexible services in the post-pandemic climate. Currently, Revolution Finance Brokers are working with a pool of 21 different lenders, all now offering 75% LTV ratios and having developed desktop valuation processes to streamline their systems.

These changes show how in a short time the mortgage market has leveraged technology to be able to better deal with remote transactions. This fast change is partly due to the volumes of borrowers requesting mortgage holidays, with around one in seven homeowners currently in this payment free period. Lenders are now looking at what they can offer to attract new customers.

 

Back To Business As Usual

While in a period of transition, we are seeing expanding communication with brokers and lenders working together to find the most beneficial ways to change the way we work.

Buy-to-let mortgages are now available at competitive rates, and so the dip in transactions has proven to be short-lived.

With announcements recently about new RICS guidelines for physical valuations, these will resume shortly. In the meantime, desktop valuations are available to avoid delays.

 

Physical Property Valuations - Guidelines

To comply with safety measures, valuers will:

- Ensure that properties are empty
- Wear suitable PPE
- Make arrangements for contact-free key handovers
 

While valuers are figuring out how to comply with these requirements, we anticipate that these new measures will be actioned swiftly.

 

How Has Covid-19 Impacted Buy-To-Let Property?

The good news is that the buy-to-let property market appears to have avoided any significant impacts. The National Landlord Association (NLA) report that only 2% of tenants have missed rent payments. Mortgage Payment Holidays have helped many buy-to-let investors weather the storm.

Earlier in the period, we saw increases in rent values of 4% year on year over the last five years. It seems very likely that these prices will continue to rise steadily.

House prices reported by Halifax show that the average UK house price currently stands at £238,511, which is a 2.7% growth on last year.

Zoopla reported a decrease in rental property demand of 57% back in March, but have now confirmed that the bounce back in the first two weeks of April has reached 30%, restoring much of the pre-lockdown demand.

 

The Future of the UK Property Market

Property sales are now resuming at pace, and Coadjute reported an impressive 182% rise in bookings for property viewings in the last four weeks. They also report increased estate agent registrations up by 45% as potential buyers look to take quick advantage of the incredible offers currently on the mortgage market.

It seems clear that the market remains strong, and is fast returning to previous trading levels.

House prices may have dropped slightly in the short-term, which makes it an excellent time to buy or invest, particularly with low-interest rates available.

Now is an opportune time to buy, and if you are considering investing in buy-to-let, we recommend acting quickly while lucrative lending offers are still available!

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.

If you would like professional advice about the most competitive deals on the market and access to outstanding offers, give Revolution Finance Brokers a call today on 0330 304 3040

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.