Head of mortgages at Aldermore, Jon Cooper, says: “Amid a backdrop of ongoing market challenges – from high-interest rates through to regulation changes – some landlords are considering downsizing their portfolios. However, there will be plenty of larger-scale, professional landlords that will instead look to purchase more BTL properties. This should, over time, provide useful ballast to the private rental sector.
“Landlords remain absolutely vital to addressing the UK’s housing demand. Our data shows they’re generous contributors to their local economies as well. Whilst they sometimes get a bad press, there are so many good landlords out there making a really positive difference.”
It is important to note that many landlords worry about interest rates and inflation despite the UK economy’s resilient turnaround throughout 2023. The Bank of England has held interest rates at 5.25% since the summer, and forecasters predict that the MPC will reduce those rates three times by the end of the year. In addition, inflation has fallen to 4% since mid-2023. As a result, mortgage lenders are reducing rates, which has enticed buyers back to the market.
In the early months of 2024, we have seen renewed activity among buyers and more properties available in the market. This has led to sellers accurately pricing their properties – by the end of 2023, sellers were reducing their property prices by as much as £7,000 to achieve a sale.
It is also worth noting that Savills expect rental growth to reach 6% in 2024. While this is less than the rental growth of 9.7% in 2023 (as per Zoopla), forecasters do not expect prices to rise too much (if at all), meaning investors could achieve higher yields on their UK buy-to-let property.
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