Blog post
November 28, 2023

A New Year; a new plan for landlords? What the market is telling us

See our Buy-to-Let products here.

By Sophie Mitchell-Charman, Commercial Director

We’re here again, that part of the year where we all try and predict what’s going to happen in the months to come, and attempt to make plans to fit it. 

After the last few years, we could all be forgiven for feeling a bit tired of planning for the unpredictable. 

Indeed, 2023 carried on – in the most part – exactly where 2022 left off; high interest rates, high uncertainty and low morale from the rental sector. 

Varying levels of the press were reporting somewhat gleefully how landlord confidence had plummeted, that there was going to be an exodus from the market, and how high interest rates were punishing both renters and landlords alike. 

However, as we see the back of 2023 and look ahead to 2024, is the window of opportunity opening back up? 

The fundamentals

I feel like I say it in everything I write, but it bears repeating until it isn’t the case; the UK is in the middle of a chronic housing shortage, which has pushed up house prices and rents as demand far outstrips supply. 

What does this mean for landlords? Firstly, there is always going to be demand for their properties, which is something that can be said about few products. 

Also there is a desperate need for high-quality, flexible accommodation as a new generation of renters and would-be home buyers plan their next steps. 

Furthermore, in the aftermath of the Autumn Statement, it was predicted that house prices would continue to fall up to 4.7% until 2025, where they would begin rising again? 

Where does this leave the landlords who did maybe want to shrink their portfolio, or sell it completely? Potentially out-of-pocket.

A new plan

With high demand still remaining, the push factor for landlords has been the risk of rising interest rates and their effect on rental yields. 

However, with property prices falling, is now really the right time to get out, when instead they can manage their portfolios differently? 

We, like other lenders, have taken steps post-Autumn Statement to reduce our rates and expand our Buy-to-Let range. 

Combined with lower inflation easing the burden a little on tenants, falling interest rates should give landlords the confidence to carry on in the New Year, remortgaging off of trackers or expanding their portfolios again on lower rates. 

Better managing the risks of a still volatile market can be done through diversification, hence why we expanded our Large HMO and MUFB ranges. 

Combined with Bridge-to-Let and Refurbishment loans, there is real opportunity to acquire, renovate, expand and then rent older housing stock as large HMOs, with the risk split across the rental income of more tenants. 

As I said, looking forward is a bit of a fool’s game these days, but if we can indulge in it, 2024 already looks a bit brighter than 2023. So let’s grasp it. 

See our Buy-to-Let products here.