Buy-to-let remains attractive investment option to most landlords

 

A new report sheds more light on how UK landlords have fared over the past 18 months. While many markets have struggled, this sector once again shows itself as an enticing investment option.

The rental market in the UK continues to grow, and investors are “still gravitating towards buy-to-let properties in huge numbers”. This is according to a study carried out by Market Financial Solutions looking at landlord behaviour during the pandemic, as well as future plans.

MFS found that landlords were extremely adaptable to market conditions and needs. Almost two thirds (65%) of landlords in the study had been flexible with tenants’ rent payments since early 2020. This would have helped thousands of tenants who may have been struggling due to Covid-related reasons.

To meet rising costs, just over half of  BTL owners said they will increase rents over the next year. However, 80% said they would accept lower rent to keep good, long-term tenants in their properties. MFS comments: “It is an insight into the demand for trustworthy tenants, rather than the highest possible price.”

How attractive is property investment now?

Interestingly, many property investors were not in favour of the stamp duty holiday. Around 60% said it made the market “too chaotic”. With the tax break about to end on 30th September, this should bring some stability back to the sector.

Right now, more than two thirds (68%) of investors think buy-to-let is an attractive investment option.

Paresh Raja, CEO of MFS, comments: “The pandemic has caused huge financial disruption to consumers, businesses and investors. So, it is positive to see that a healthy majority of UK landlords have allowed their tenants flexibility in making payments during this period. It is also telling that while rent increases invariably lie ahead, there is a clear appetite among landlords to secure reliable, long-term tenants – they are willing to drop rents in order to do so.

“Our research underlines that, despite some speculation to the contrary, the BTL market has lasting appeal. Tax reforms and new regulations introduced over the past five years have affected landlords as the government has sought to gain better control over the private rental sector, but as an asset class, UK investors are evidently still gravitating towards BTL  properties in huge numbers.”

Growing market

According to HMRC data, there are now a huge 2.65 million landlords in the UK. This includes everyone who earns an income from property, not including furnished holiday lets.

The highest concentration of landlords is in Birmingham, with 27,060. The rental market in the city has been booming in recent years, and continues to do so thanks to regeneration in the area. Leeds follows with 24,450, as the northern city continues to attract huge rental demand.

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Buy-to-let remains attractive investment option to most landlords

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