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Choice soars for first-time landlords

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Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
02/02/2022

Choice soars for first-time landlords

The choice of buy-to-let deals available to first-time landlords (FTL) has grown at a time when demand is rife for rental properties, according to the most recent research by Moneyfacts.co.uk.

 

  • As product availability has recovered in the wider buy-to-let (BTL) sector following the impact of the pandemic, so too has the number of products on offer to FTLs. The proportion of the market available to FTLs has remained relatively stable year-on-year, currently accounting for 64% of BTL deals, compared to 65% this time last year, indicating lenders are keen to continue to cater to this demographic.
  • The average two-year fixed rate for FTL has risen 0.09% over the past year and currently sits at 3.19%. This contrasts with a fall of 0.07% recorded on the overall average two-year fixed rate over the same period, which dropped from 2.97% to 2.90%.
  • FTLs looking for a five-year fixed product will see that at 3.47% the average rate on offer in this sector has fallen by 0.19% year-on-year, and 0.09% since August 2021, echoing changes in the equivalent overall market average rate which, at 3.16%, has fallen 0.16% since February 2021.
  • A recent market survey from RICS saw respondents report “solid growth” in demand from tenants across the UK.

Choice soars for first-time landlords

The choice of buy-to-let deals available to first-time landlords (FTL) has grown at a time when demand is rife for rental properties, according to the most recent research by Moneyfacts.co.uk.

 

  • As product availability has recovered in the wider buy-to-let (BTL) sector following the impact of the pandemic, so too has the number of products on offer to FTLs. The proportion of the market available to FTLs has remained relatively stable year-on-year, currently accounting for 64% of BTL deals, compared to 65% this time last year, indicating lenders are keen to continue to cater to this demographic.
  • The average two-year fixed rate for FTL has risen 0.09% over the past year and currently sits at 3.19%. This contrasts with a fall of 0.07% recorded on the overall average two-year fixed rate over the same period, which dropped from 2.97% to 2.90%.
  • FTLs looking for a five-year fixed product will see that at 3.47% the average rate on offer in this sector has fallen by 0.19% year-on-year, and 0.09% since August 2021, echoing changes in the equivalent overall market average rate which, at 3.16%, has fallen 0.16% since February 2021.
  • A recent market survey from RICS saw respondents report “solid growth” in demand from tenants across the UK.

 

First-Time Landlord BTL market analysis

 

Feb-20

Feb-21

Aug-21

Feb-22

Number of FTL products and % of market

1,635 (61%)

1,311 (65%)

1,801 (65%)

2,235 (64%)

FTL average two-year fixed rate

2.80%

3.10%

3.17%

3.19%

Overall average two-year fixed rate (all landlord types)

2.75%

2.97%

2.97%

2.90%

FTL average five-year fixed rate

3.31%

3.66%

3.56%

3.47%

Overall average five-year fixed rate (all landlord types)

3.20%

3.32%

3.29%

3.16%

Data shown is at first available day of month unless stated otherwise. Source: Moneyfacts.co.uk.

 

 

First-Time Landlord BTL market analysis

 

Feb-20

Feb-21

Aug-21

Feb-22

Number of FTL products and % of market

1,635 (61%)

1,311 (65%)

1,801 (65%)

2,235 (64%)

FTL average two-year fixed rate

2.80%

3.10%

3.17%

3.19%

Overall average two-year fixed rate (all landlord types)

2.75%

2.97%

2.97%

2.90%

FTL average five-year fixed rate

3.31%

3.66%

3.56%

3.47%

Overall average five-year fixed rate (all landlord types)

3.20%

3.32%

3.29%

3.16%

Data shown is at first available day of month unless stated otherwise. Source: Moneyfacts.co.uk.

 

Eleanor Williams, Finance Expert at Moneyfacts.co.uk, said:

“The buy-to-let sector has faced its share of upheaval and changes to regulations and requirements in recent years, so it is highly encouraging to see that providers are still keen to attract first-time landlords (FTLs). Information from the Rightmove Rental Trends Tracker indicates that rents have risen at the fastest rate on record, while tenant demand has almost doubled. Perhaps understandably, some consumers may therefore be considering investing in bricks and mortar, especially while the returns available on standard savings accounts continue to fail to beat the rate of inflation.

“Our data shows that there are currently 2,235 products on offer to FTLs, up from 1,311 deals this time last year. Echoing the recovery of the wider BTL sector, where product availability has returned to levels in excess of those seen pre-pandemic, would-be new landlords may be pleased to note that, at 64%, the proportion of the market catering to their demographic has remained relatively stable year-on-year. In fact, provision for FTLs currently remains 3% above that recorded in February 2020 (61%), indicating that lenders remain committed to supporting prospective landlords.

“FTLs concerned about potential future rate rises may wish to consider locking into the mid-term stability that a five-year fixed rate product provides. There has been a 0.16% year-on-year rate drop experienced by the overall average five-year fixed rate for all landlord types, which may be encouraging news, and the equivalent rate for FTLs has fallen by 0.19% over the same time period to 3.47%. However, those who might prefer the shorter commitment of a two-year fixed rate could be disappointed to see that at 3.19% there has been a 0.09% increase in the average two-year fixed rate for FTLs since February 2021, even though the equivalent overall average rate has fallen by 0.07% year-on-year.

“While providers seem to be working hard to cater deals for prospective landlords, those deciding whether this is the right time for them to join the BTL arena might be wise to secure the support of a qualified adviser in assessing their choices and to ensure they are informed regarding upcoming changes to the market and associated risks. Careful planning and seeking independent advice could be vital in establishing whether BTL is a viable investment opportunity for them.”

Eleanor Williams, Finance Expert at Moneyfacts.co.uk, said:

“The buy-to-let sector has faced its share of upheaval and changes to regulations and requirements in recent years, so it is highly encouraging to see that providers are still keen to attract first-time landlords (FTLs). Information from the Rightmove Rental Trends Tracker indicates that rents have risen at the fastest rate on record, while tenant demand has almost doubled. Perhaps understandably, some consumers may therefore be considering investing in bricks and mortar, especially while the returns available on standard savings accounts continue to fail to beat the rate of inflation.

“Our data shows that there are currently 2,235 products on offer to FTLs, up from 1,311 deals this time last year. Echoing the recovery of the wider BTL sector, where product availability has returned to levels in excess of those seen pre-pandemic, would-be new landlords may be pleased to note that, at 64%, the proportion of the market catering to their demographic has remained relatively stable year-on-year. In fact, provision for FTLs currently remains 3% above that recorded in February 2020 (61%), indicating that lenders remain committed to supporting prospective landlords.

“FTLs concerned about potential future rate rises may wish to consider locking into the mid-term stability that a five-year fixed rate product provides. There has been a 0.16% year-on-year rate drop experienced by the overall average five-year fixed rate for all landlord types, which may be encouraging news, and the equivalent rate for FTLs has fallen by 0.19% over the same time period to 3.47%. However, those who might prefer the shorter commitment of a two-year fixed rate could be disappointed to see that at 3.19% there has been a 0.09% increase in the average two-year fixed rate for FTLs since February 2021, even though the equivalent overall average rate has fallen by 0.07% year-on-year.

“While providers seem to be working hard to cater deals for prospective landlords, those deciding whether this is the right time for them to join the BTL arena might be wise to secure the support of a qualified adviser in assessing their choices and to ensure they are informed regarding upcoming changes to the market and associated risks. Careful planning and seeking independent advice could be vital in establishing whether BTL is a viable investment opportunity for them.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts.co.uk is a financial product price comparison site, launched in 2000, which helps consumers compare thousands of financial products, including credit cards, savings, mortgages and many more. Unlike other comparison sites, Moneyfacts.co.uk shows whole of market data regardless of commercial bias, showing consumers a true picture of the best products based on the criteria they select.

We hope you find this press release insightful. We would appreciate a link back to Moneyfacts.co.uk if you decide to source this information.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room.

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert