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Buy-to-Let Landlords Express Confidence in the Market in 2024

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    2024: The Year of the Buy-to-Let Investor?

    Despite 2024 still being in its infancy, more buy-to-let investors feel confident in their prospects over the next 12 months.

    This is thanks to a solid final quarter of 2023, in which the Halifax and Nationwide House Price Indices revealed monthly property price rises in October and November. In addition, inflation fell further than expected, prompting lenders to lower their mortgage rates and encouraging buyers to take a chance on the market.

    Let’s look at the latest developments in more detail. And if you want to know more about buy-to-let houses, consider reading our article on buying a house to rent out.

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      What Do Buy-to-Let Landlords Think About the Housing Market?

      According to a study from The Mortgage Lender (TML), an overwhelming majority of landlords were optimistic about the property market over the next 12 months, with 74% feeling confident and 27% feeling very confident.

      Interestingly, the most confident landlords owned homes of multiple occupancy (HMOs), while student accommodations landlords and investors with portfolios of five properties or more also expressed confidence in the market.

      When landlords were asked to rate the potential performance of their current properties, 71% said they were confident, while portfolio landlords were the most optimistic at 78%.

      Buy-to-let landlords who have been in the market for more than five years were more confident than those renting out properties for less time, amounting to 73% compared to 69%. This could be because those landlords have gone through more economic cycles than their less experienced counterparts.

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        How Has Tenant Demand Affected Buy-to-Let Landlords?

        The buy-to-let market plays a huge part in housing the UK people. While 2023 was relatively subdued, tenant demand remained high, helping landlords find their confidence in the private rental sector. In fact, 73% of landlords saw a tenant demand increase in the last half of 2023.

        Consequently, tenant demand also contributed to higher rental prices. Indeed, 73% of respondents said they had increased their rental prices over the last year. On average, those prices went up by 34%.

        52% of landlords said they had to raise rents to keep up with rising buy-to-let costs, while only 28% said they raised rents to match similar asking rents in their area.

         

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        How Did the Experts React to Buy-to-Let Landlord Confidence?

        Chris Kirby, Head of Key Accounts & Specialist Distribution at TML:, said the following about The Mortgage Lender’s research:

        “Given the pivotal role that the BTL industry plays in supporting the residential market and ensuring the maintenance of the much-needed supply of homes, it’s encouraging to see these levels of confidence.

        “Despite the fact that many landlords are facing higher operating costs, and additional to the inflationary pressures that are impacting everyone, the continued supply of good quality, well maintained rental properties is a must.

        “For landlords who are looking to expand their existing portfolio or remortgage their properties, it’s important to seek broker advice to ensure they are accessing the best possible opportunities in the coming year.”

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          What Does Increased Confidence Mean for the UK Property Market?

          Increased confidence in the UK’s private rental sector is only a good thing.

          2023 was marred by inactivity due to high-interest rates and inflation. However, declining mortgage rates are typically signs of a market poised to kick into gear.

          With tenant demand still high but properties slowly becoming more affordable, buy-to-let investors stand to make a more significant ROI than they would have last year. In addition, forecasters expect year-on-year property prices to drop further, meaning investors could see gross yields increase before the housing sector eventually levels out. Why not take a look at the latest investment property for sale in 2024.

          In the meantime, declining prices and high rental costs may also tempt new buyers into the market.

          Want to find out more about property investment? Check out some of our buy-to-let city guides, including:

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          Author

          Dale Barham

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          Dale is a property news and onsite content writer at RWinvest.

          Landlord News, UK