Nearly half of buy-to-let landlords are optimistic about 2021


Despite challenges surrounding COVID-19 and potential tax hikes, buy-to-let landlords are remaining positive about the year ahead.

A survey from online mortgage broker Property Master revealed 45% of buy-to-let landlords feel optimistic about the state of the market this year. Additionally, only 10% of the landlords surveyed plan to exit the sector. And nearly 70% said they are not planning to sell any of their properties in 2021.

In recent years, buy-to-let landlords have faced many challenges. Angus Stewart, chief executive of Property Master, says the COVID-19 pandemic and economic uncertainty, in addition to regulatory and tax changes in the past few years, have brought difficulties, especially for smaller landlords.

“However, our survey shows the buy-to-let sector as a whole is a resilient one. Those landlords that have survived may well be stronger and our survey shows them as giving buy to let the thumbs up as we move into 2021.”

Buy-to-let investment remains appealing

In the UK, the number of buy-to-let landlords recently hit an all-time high of 2.7m. This shows this form of investment remains appealing. During 2020, there was even a significant increase in demand from first-time investors and landlords.

While stocks and shares have been volatile, property has remained a more stable form of investment. And the buy-to-let market will likely remain strong even through upcoming challenges and uncertainty.

Potential tax changes

In recent years, many buy-to-let landlords have adapted to a range of tax and legislative changes. For instance, there have been major changes to Section 24. If additional property tax changes come forward, the industry will likely continue to find ways to adapt.

As COVID-19 is putting a toll on public finances, many feel tax rises may have to be made. There has been talk about an overhaul on capital gains tax. There are rumours that capital gains tax rates will be increased in line with income tax rates and annual allowance exemptions lowered.

If additional property tax changes come into play, buy-to-let landlords will likely change the way they do business. And if capital gains taxes are changed drastically, landlords will hang on to property investments for longer periods of time.

Competitive mortgage rates

Across the board, mortgage interest rates have been on the rise, including rates for buy-to-lets. However, rates at are still at competitive levels after hitting record lows in 2020.

In the year ahead, more lenders will likely to return to the market, bringing more competition to the sector. This could lead to interest rates dropping or at least remaining relatively low. Property Master’s survey revealed almost 54% of landlords think buy-to-let mortgage interest rates will stay the same in 2021.

However, Eleanor Williams from Moneyfacts recommends buy-to-let landlords looking to purchase another property or to remortgage should “explore their options soon”.

She comments: “While average rates have risen recently, competitive deals are still available and therefore seeking support and guidance from a qualified professional may be invaluable in securing the best product for individual circumstances.”

Strong demand for rental properties

The rental market has performed particularly strongly, especially during the final half of 2020. And throughout 2021, renting will likely continue to be on the rise. Job uncertainty is expected to lead to people renting for longer.

Additionally, many are struggling to save up for deposits. Saving account interest rates are at record lows. In addition to that, there is a lack of mortgage availability for buyers with smaller deposits. This will cause many to push back homebuying plans and continue renting.

Angus Stewart comments: “We see the year as being one of two halves. There is clearly continued turbulence forecast for the first half of the year as Coronavirus and Brexit play out.

“But the fundamentals of the private rented sector remain and now more than ever an increased number of people need a good quality roof over their heads, and this will create plenty of opportunity for landlords to do well.”

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Nearly half of buy-to-let landlords are optimistic about 2021


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