What has the first quarter of 2024 taught us about the Buy-to-Let market?

To learn more about our Buy-to-Let mortgage products, get a quote here. 

By Sophie Mitchell-Charman, Commercial Director

In some ways, 2024 so far has been a rushed example of Buy-to-Let over the last few years. 

January – Boom time, with lots of buyer activity as lenders across the board put out cheaper rates to encourage landlords back into the market. 

February/March – A slow down and course correction as volatile swap rates force lenders to increase their rates. 

However, unlike in the last few years when swap rates caused landlords to basically withdraw from the market, we’ve seen activity remain steady. 

For starters, the volatility we’ve seen so far this year is nothing compared to the 2022/2023 period. 

But aside from that, landlords are displaying new found confidence in the market. They sat out and watched it move throughout the last 18 months, but seem to have now decided this year is the one to get back into it or – in a growing number of cases – start new careers in the space. 

What’s driving activity? 

Much like last year, we’re seeing lots of remortgage activity in Buy-to-Let. This is understandable as landlords continue to move off the variable rates they suffered during the rate increases, now the market has come down and achieved greater stability. 

Something we might not have expected however is the numbers of first-time landlords entering the market. 

Despite the policy headwinds landlords have faced in the last few years, more and more brokers are speaking to us and searching sourcing systems for products designed for this group. 

Zoopla’s March 2024 Rental Market Report said there are 15 enquiries for every home to rent, despite falling mortgage rates supporting more first-time buyers. So the demand for rental properties is there, and it also cited increased build-to-rent schemes driving new properties. 

A somewhat cheaper purchase market may be stimulating this demand as well, with Land Registry data pointing to a 0.6% YoY drop in house prices in January 2024 compared with the year previous. 

As ever, property is king in the UK, and experienced and new landlords both want to grow their share of it as they look to deliver high-quality homes for people crying out for it. 

What could the rest of the year look like? 

Generally, people talk about looming elections as making everything ‘uncertain’, and that can either drive activity or cause people to pause. 

The possibility of a new government who may bring in changes to the rental market may have some landlords pausing for thought. However, they’ve had to do that far too regularly for the last couple of years, so indeed the opposite might be the case. We could see new landlords enter the market and experienced landlords grow before any potential policy changes are drafted. 

Stimulating the market can’t just be about the rate drops we saw in January, however. It needs to involve property types, income requirements and refreshed criteria all around, that can support more landlords to provide high-quality homes.

To learn more about our Buy-to-Let mortgage products, get a quote here.