Buy-to-let Options Rise


Amid the news that buy-to let is now 25 years old, it appears that the number of buy-to-let products on the market is higher today than the number available in March 2020 according to Moneyfacts.

Buy-to-let is 25 years old

In the 1990s when house prices were low, homeowners were reluctant to sell and instead turned to renting out their properties and essentially becoming an accidental landlord. At the time mortgage agreements prevented them letting their property and so ARLA worked with a small number of lenders to develop buy-to-let mortgages to support the private rented sector.

When prices went up, these accidental landlords sold their homes creating a void for tenants and more buy-to-let mortgages were made available.

Now, according to Savills, the UK’s private rental sector is worth around £1.338 trilion and the number of homes in the sector classed as ‘decent’ has gone from 53.2% in 2006 to 76.7% as of 2020, and the sector has almost doubled since 1996 with almost 13 million private renters in UK the market.

Buy-to-let options

According to Moneyfacts, the number of buy-to-let product options has risen above pre-pandemic levels. The number is currently higher today than available in March 2020 – 2,968 today compared to 2,897 before the pandemic. This is also the largest number recorded since October 2007 when there were 3,350 products available to landlords.

However, whilst the number of products is increasing, lenders are less likely to provide products to those with a low level of equity in their property. In March 2020 there were 32 products at 85% LTV, today there are 19. In addition, for this type of mortgage, the two-year fixed rate has increased from 4.7% to 5.61%.