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01 Dec, 2023

BTL Investors Ready to Trust in the UK Housing Market

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    Research Shows Landlords Have a Positive Outlook on Property Investment in Q3 2023

    In another sure-fire sign that the housing market is past the worst of the current economic climate, a Paragon Bank survey has shown that buy-to-let landlords have regained their confidence in the private rented sector.

    With inflation falling and mortgage lenders dropping their rates, buyer activity is primed to go up, particularly with low property price growth and rents at record-breaking levels.

    Let’s look at the research in greater detail.


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    What Did the Survey Say About Buy-to-Let Investors in the 2023 UK Housing Market?

    In a survey conducted by BVA BDRC for Paragon Banks, Q3 2023 showed improved confidence in the UK property market compared to G2 2023 – the uptick is partly thanks to a more promising economic outlook for 2024.

    According to the survey, 49% of landlords viewed the rental yield outlook as good or very good for Q3. This was 16% better than in Q2. In addition, there was an 11% increase in landlords’ confidence in their lettings business moving forward.

    The research revealed an 8% increase in confidence in the private rented sector and a 6% increase in capital gains expectations.

    Whether you are looking for a buy to let in Stoke or a property investment in Birkenhead, landlords do need to research the market influences like the above.

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    Why Do BTL Landlords Have New Confidence in the Market?

    The study surveyed 800 landlords, though their optimism in the UK economy is less than their confidence in the housing market – increasing by 2% from Q2 to Q3.

    The survey results show landlords are willing to remain in the lettings market, though expectations for capital gains are understandably muted. After all, property prices are expected to decline further in 2024 before increasing in 2025 as the market enjoys an extended period of stability. We recommend reading our guide on investing in real estate in the UK which offers a good overview of some of the things to look out for.

    Inflation has fallen to 4.6%, and interest rates remain at 5.25%. Therefore, mortgage lenders have enough confidence to reduce their rates to stay competitive against other lenders. Thus, mortgages are much more affordable than at the start of 2023.

    In addition, rental growth is at an all-time high, with the average UK rent rising to £1,279 in November, according to the Homelet Rental Index – an 8.9% year-on-year increase. With higher gross rental yields available, particularly in areas like Liverpool (which has historically good-value property prices compared to the rest of the country), it’s no wonder landlords are feeling more optimistic about the state of the property market. Whether you are looking for the best way to invest 50K or the best London property investment it is always worth researching the market place.

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      How Did Paragon Bank React to BTL Landlord Confidence in the UK Housing Market?

      Paragon Bank managing director of mortgages Richard Rowntree had the following to say about the survey results: 

      ‘It’s great to see a lift in optimism amongst landlords, reflecting some of the stability that we’ve seen return to the market and economy more broadly. 

      Landlords play a vital role in the UK’s housing provision, so it is important that they feel confident in the investment environment, particularly at a time when demand continues to outstrip supply. Although there is still work to be done on all sides as we work to improve the PRS for both tenants and landlords, we’re encouraged by signs that the value of private investment is being recognised by the government. I imagine that recent policy announcements will have had a positive influence on how landlords see the prospects for the sector and their businesses.’

      He continued: ‘It’s also worth noting that this research was undertaken before it was announced that the removal of Section 21 would be delayed until court reforms and a new ground for possession for student investment property landlords was created. These are both significant changes to the Renter’s Reform Bill that will likely be welcomed by landlords so could add to the more positive outlook.’

      Why not take a look at some of the available Buy to let properties in Liverpool or read more about off plan property investments.

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      Dale Barham

      Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

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