Buy-to-let mortgage market activity set to surge in 2022

 

The buy-to-let mortgage sector has continued to expand over recent years, and the up-coming 12 months could see remortgaging in the space hit new highs. 

Fierce competition across the UK’s rental sector is pushing rental prices up, as demand for homes remains higher than the amount of stock available. As a result, many landlords will be looking to maximise their existing portfolios, or expand them in the year ahead.

Paragon Bank has also pointed out another significant factor that could boost the buy-to-let mortgage market in 2022. The year marks the five-year anniversary of the Prudential Regulation Authority’s updated underwriting standards, brought in in 2017. The new rules meant that huge numbers of property investors chose to lock into longer-term deals, many of which will now be coming to the end of their terms.

A recent report from Shawbrook Bank shows that 34% of landlords plan to buy at least one more property in 2022, and many are likely to use borrowing to add to their portfolios.

A busy year ahead

According to Paragon, there were 4,167 five-year fixed rate mortgages taken out in January 2017, compared to 3,008 taken out in December 2016. Then, between January 2017 and January 2018, 10,717 of these mortgages were written.

Moray Hulme, Paragon Bank mortgage sales director, said: “Five years ago, the PRA introduced new underwriting standards that required lenders to take a more holistic approach to assessing mortgage affordability.

“This correlates with 2017 seeing a significant increase in the volume of mortgages fixed over five years. As a result, we’re anticipating strong levels of remortgage business throughout the next year.

“This presents a fantastic opportunity for brokers to generate business and, with the process often involving additional borrowing, we recommend that they do this at the earliest opportunity.”

Will buy-to-let mortgage market go green?

Another prediction for 2022 set out by Paragon Bank is the increase in green offerings for landlords. The lender itself launched a green mortgage specifically for the buy-to-let mortgage space in 2021, and hopes others will follow suit.

Commenting, director of mortgages Richard Rowntree said: “A key highlight for me during the year was the launch of our green proposition. Upgrading the energy efficiency of the private rented sector will be a difficult challenge, but one Paragon is committed to playing a role in. We will continue to innovate in this space to help our customers invest in more energy efficient homes, as well as upgrade existing stock.”

The government has already brought in minimum EPC requirements in the private rental sector, with E being the lowest acceptable EPC score in a rental home. In the coming years, the threshold will be raised to D or C, and even higher as the government strives to meet its net zero targets. Lenders and landlords alike will need to be ready for this change.

Supply and demand in 2022

While there has been huge pressure on housing supply over this past year, Paragon Bank believes the pandemic is only a contributing factor rather than the sole cause. In the private rented sector, the lender believes the government will need to step in to make the market more appealing to private investors to prevent supply falling further.

They could do this by getting rid of fiscal and regulatory barriers that are an obstacle for many. This would, of course, need to be balanced with protecting tenants.

Paragon Bank adds that the way people live and work now means people have reassessed what they need from their homes, and will continue to do so. Tenant demand will remain strong in 2022, but with more people than ever working remotely, priorities might have changed.

BuyAssociation helps property investors find the best opportunities across the UK, tailored to their needs. Browse some of our available properties here, and get in touch for more details. 

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

buy-to-let mortgage

Buy-to-let mortgage market activity set to surge in 2022

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.