"Landlord borrowers appear to be in a better position now than they have ever been. Not just in terms of what we can offer but also the wider lender community. "
Over two months into the new year, we can start to get a true feel for how 2025 is unfolding, especially in the buy-to-let space, which certainly feels like it has begun the year in fine fettle.
One of the areas which I think tends to signal whether we are in a good space or not is around product options, numbers, availability and spread, and whether advisers are able to access a wealth – or dearth – of opportunity in this area.
From my perspective, and certainly that of Fleet’s, it is much more a case of the former over the latter, and we have already introduced a number of new products to our range this year - notably two-year trackers - which we believe will be appealing for those who want shorter-term options.
Interestingly, for all the talk about landlords leaving the sector, of buy-to-let becoming less of an attractive investment option, all the fundamentals we see – and it would appear the wider market sees – appear to be pointing in a more positive direction.
For a start, as mentioned, when it comes to financing – and at least in terms of product options – landlord borrowers appear to be in a better position now than they have ever been. Not just in terms of what we can offer but also the wider lender community.
Recent research out of Moneyfacts revealed that product availability had reached an all-time high in February, up to 3,560 deals, clearly showing that lenders believe there is a strong level of business to be secured, and that demand for finance remains at improving levels, both purchase and remortgaging.
Two-year product numbers had gone from 1,130 in January to 1,244 in February, while the numbers were 1,479 to 1,571 for five-year deals.
This, of course, is something of a counter-narrative to those who believe the buy-to-let market is nowhere near what it used to be, but fails to acknowledge not just the appetite of existing landlords, but also the increasing number of first-time landlords who continue to see property investment as a worthwhile option.
Falling interest rates clearly play a role here, which is perhaps why we have seen a greater appetite for short-term two-year options. There remains of course a volatility in pricing that is probably unlikely to go away any time soon.
For all the focus on Bank Base Rate (BBR) and what cuts the Bank of England’s MPC might be willing to make through 2025, swaps continue to fluctuate often quite significantly, and this of course plays through into the pricing available to advisers and their landlord clients at any given time.
The two-year trackers we launched in February clearly appeal to those who believe rates are potentially going to fall over the course of 2025 and 2026, but we also have two-year fixes which provide strong pricing/good affordability now, plus they provide the certainty that many landlord’s crave, but over a shorter time period.
The big point here is the options that are available, whether fix or tracker, two- or five-year, fixed or percentage or zero fee, EPC A-C or below, plus of course products that will help landlords to get their properties up to the necessary EPC level by 2030. What we all want, and need, is a market in which the individual needs and circumstances can be met by a flurry of products.
At the moment, touch wood, that appears to be what we have, and looking at the short to medium term, I don’t see that changing anytime soon. This, of course, also has to be matched by criteria and the specialist knowledge of advisers and lenders, in order to support, what has become, an increasingly complex area.
Landlords – particularly portfolio players – come with complex wants and needs, plus complex ‘back stories’, particularly in terms of their portfolios, how they are set-up, financed, geared, etc, and not only do they want an experienced and knowledgeable adviser who can help with all of this, they want to know that the lenders they are using are also of the calibre.
Overall, with a strong headwind delivered at the start of the year, and what appears to be a growing landlord appetite and demand, we believe advisers who specialise in the buy-to-let market will find plenty to keep them occupied business-wise throughout the rest of 2025.
