It may be difficult but nothing worth getting is easy and this could very much be said about the current buy-to-let market.
To the untrained eye, buy-to-let investments may appear presently fraught with danger. Years of dwindling tax reliefs and a seemingly endless increase in regulatory and environmental duties might seem enough to deter even the most ardent investors.
But when one considers that rents are proving remarkably robust, even in this environment, and house prices in many parts are still resisting the pressure to fall – there is a lot to commend property as an investment. This is particularly true compared when you compare residential property with some other asset groups.
For first-time landlords mulling entry into the market, there is much to think about. Property on an island sustained by resilient house prices unsurprisingly remains a good bet as a capital investment over the longer-term.
A shortage of supply that will not be fixed any time soon and the good feeling that robust house prices imbue in an electorate mean that, while margins may not be what they once were, politicians are unlikely to want to be stewards of a crash in the run up to an election.
Action will be taken to support this cornerstone of the economy when push comes to shove – remember what happened in the pandemic?
Of course, that doesn’t mean prices cannot soften or deflate.
Indeed, price falls are a reality in some areas. But the backdrop is not a single narrative. Prices in most regions are still up and where growth has slowed or prices have fractionally fallen, there is plenty of opportunity.
As interest rates recede over the coming months, affordability will improve, and more transactions will support price growth – even if it is small.
Buy-to-let does have its unique dynamics – not least of which is the imminent of mandatory EPC standards.
Perversely, the loss of many rental properties that cannot possibly make the required grade C, or achieve an exemption, will serve to further restrict supply and support rental values in the mid-term. Holding the right property might again prove very helpful.
Buying the right stock in the right location could prove incredibly fruitful for a canny new-to-market landlord.
Where we live – and how much that costs us – affects our ability to work, to find suitable jobs and to access good schools – indeed to be happy. That does not change.
Not all lenders will welcome first-time landlords. We do.
We will not require income verification. Nor will we apply any uplift to Income Coverage Ratios.
For our broker partners, the opportunity remains to play an extraordinarily valuable role for new and old Buy-to-let investors.
Of course, the finance, from lenders like us, is part of the role but equally, there is a broader opportunity and role to play in understanding the clients’ ambitions, and ensuring they go into the market with their eyes wide open.
Helen Cawthra is head of intermediary relationships at Vida Homeloans
