Why A Buy-To-Let Investment May Still Be Worthwhile In 2023

July 27, 2023

There is no denying that the peak of the buy-to-let (BTL) market is over, and there is a marked trend for landlords selling up in the face of rising costs and diminishing returns. However, there are still reasons why investing in a BTL may make good economic sense for some potential buyers in 2023.

The persistent higher rates of inflation have driven up interest rates and therefore mortgage costs in recent years, and in the last month mortgage rates have peaked at well above 6% in most cases. However, there are some more hopeful signs on the horizon as inflation fell by more than expected in June.

Some high street lenders have already cut mortgage rates in response, as the Bank of England is expected to raise interest rates at lower levels than previously forecast. For potential buyers, this is obviously good news, giving them access to a range of better deals.

The current stresses on the housing market mean that it is possible to acquire a property at below market value, and certainly below the inflated prices that were common just 12 months ago. This is a good opportunity of a BTL investor, because the demand for rental properties is exceptionally high at the moment. 

A report by Capital Economics quoted in the Financial Times stated: “Overall, we think that the financial stress faced by landlords will lead to a rise in buy-to-let arrears and forced sales, undermining the tight supply conditions which have helped support house prices of late.”

It added: “Even if some landlords cover the losses out of their own pocket or sales are spread over several years, disposals of rental properties will make a big difference to the balance of supply and demand in the housing market.”

Annual house price figures in the UK fell by the fastest annual rate since 2011, while the average monthly rents across the country have risen by 17%. As the number of council homes continues to fall and the cost of living crisis is delaying first time buyers from entering the market, demand for rentals is expected to rise.

All these market conditions may mean that lenders are prepared to look more favourably on applicants for BTL mortgages. The rules and assessment criteria are different for that of a regular domestic mortgage, so it’s worth seeking the advice of an experienced mortgage broker.

It is still possible to get a BTL mortgage with adverse credit, but it’s important to approach specialist lenders and avoid getting a rejection that could further damage your credit history.

Want some advice about a poor credit buy to let mortgage? Get in touch today to see how we can help.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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