"We shouldn’t overlook the fact that the private rental sector is the second largest housing tenure in England, providing a home for some 4.7 million households. "
It’s been a turbulent few years in the buy-to-let sector for a long list of reasons that have been extensively reported on and discussed.
Like most borrowers, landlords have suffered the impact of rising interest rates and cost of living challenges, but they’ve also had a whole host of regulatory changes to contend with.
While the squeeze on landlords really started with that first Section 24 announcement back in 2016, which prevented mortgage interest from being offset against tax, it didn’t end there.
Since then there has been a whole raft of implemented and ongoing reforms such as stamp duty changes, renters reform, EPC reform, changes to furnished holiday let tax rules, new tax accounting requirements, and so on.
As a result, we’ve seen many landlords reviewing their investments, grappling with options such as restructuring finance, changing their business models, forming limited companies, holding back on further purchases or selling their properties.
And while they continue to find their feet in the new buy-to-let landscape, we’ve been looking at what we can do as a lender to support them.
We’re always listening to brokers, as well as monitoring key market trends and data, to understand any barriers to growth, and will always help address those where we can.
For example, we entered a new area of lending last year to introduce a non-standard credit buy-to-let product to help landlords who were experiencing relatively minor credit blips and struggling to find mortgage option as a result.
New limited company buy-to-let range
This year we’ve launched a brand new dedicated limited company buy-to-let range designed to support landlords, including expatriate investors and those with holiday let properties, as they navigate the evolving property landscape.
Available for those with up to three properties, the range includes options for day 1 SPVs, first-time buyers and first-time landlords in a bid to help borrowers at different stages of their investment journey.
It sits alongside our standard buy-to-let products for individual landlords.
We’ve observed first-hand the growing trend of landlords turning to special purpose vehicles in response to changes in tax regulations, and therefore felt the time was right to answer that with a dedicated product range.
The trend started following the Section 24 announcement, and in the years since, more companies have been set up to hold property than in the previous 50 years combined.
And it shows no signs of slowing. Latest research from Hamptons found that more than 5,000 buy-to-let limited companies were set up in September last year, which was 28% more than in any September prior.
The year was on track to end with more than 60,000 new buy-to-let limited companies, which would smash the previous year’s total of 50,000.
Activity wise, 70% of 2024’s new buy-to-let purchases were made in a company structure, with 54% of those by companies making only their first, second or third purchase, suggesting even the smallest of landlord operations are opting for incorporation.
We therefore need to ensure there are competitive and affordable mortgage products available to landlords who are making this change.
A clear and compelling proposition for brokers
By introducing a limited company range, we are also giving brokers a clear and compelling proposition to put to landlords as they continue to work out how they can weather the ongoing storm.
Because despite whatever new rules and regulations come along, we shouldn’t overlook the fact that the private rental sector is the second largest housing tenure in England, providing a home for some 4.7 million households.
According to the 2024 English Private Landlord Survey, released at the end of last year, the vast majority of landlords are at the smaller end of the scale, with 45% owning one rental property, 38% owning two to four, and the remaining 17% owning five or more.
Together with brokers, we want to make sure those landlords with smaller operations have as many viable options available to them as possible when looking for the buy-to-let mortgage solutions that will help them to not only survive, but thrive.
