In recent years, the UK property market has undergone significant transformation. From a buy-to-let standpoint, while regulatory changes, rising costs, and evolving tenant preferences have prompted some landlords to rethink their strategies, these shifts also present exciting opportunities to optimise portfolios and enhance long-term profitability in such a dynamic environment.
By embracing new energy efficiency standards, exploring innovative financing options, and aligning with tenant demands, landlords can position themselves for success. This evolving landscape also creates valuable opportunities for intermediaries and lenders to work even closer with landlords, providing strategic insights and solutions that unlock potential and drive sustainable growth in the private rental sector.
Data from the National Residential Landlords Association (NRLA) highlights the importance of proactive strategies in this changing market. Between April and June 2024, 7,130 households in England’s private rented sector qualified for council support to prevent homelessness after their landlord decided to sell the property, a rise from 5,400 reported between October and December 2023. Additionally, 31% of landlords plan to sell properties within the next two years, up from 22%, while only 7% say they are planning to provide new homes to rent in the next two years, compared with 11% in 2021. Dynamics which are contributing to increased tenant demand, with an average 21 renters suggested to be competing for every available home to rent.
In this environment, intermediaries play a pivotal role in empowering landlords to navigate both divestment and retention strategies effectively. Providing tailored guidance is crucial – whether helping landlords maximise returns when exiting the market or supporting those who wish to remain through bespoke refinancing options, portfolio restructuring advice, and innovative mortgage products. By addressing these needs, the intermediary market can help sustain landlord confidence and contribute to stabilising the private rental sector, ensuring it remains resilient and responsive to market demands.
With this in mind, it’s no surprise to see heightened landlord reliance on this advice process. The Q3 2024 Landlord Trends report by Pegasus Insight for Foundation Home Loans revealed that seven in 10 landlords sought broker assistance for their latest financing arrangements. This reliance highlights the intermediary market’s crucial role in simplifying an increasingly complex mortgage landscape. With affordability concerns rising and interest rates fluctuating, landlords are also shifting their preferences for fixed-rate mortgages. While two-year fixed-rate products were once popular, their share has dropped to 22%, with five-year fixed-rate options now preferred by 33% of landlords to align with their longer-term strategies.
Remortgaging has emerged as another growth area for intermediaries. According to the Landlord Trends report, 37% of leveraged landlords plan to remortgage or complete product transfers within the next 12 months, with portfolio landlords leading this activity. On average, landlords intend to rearrange 2.4 loans, highlighting the need for expert guidance to secure competitive rates and maintain portfolio profitability.
Despite a decline in overall expansion intentions, opportunities exist in specific property types and regions. For example, the data also showed that interest in individual flats rose by 14% in Q3, while the South East remains a hotspot for investment. By helping landlords identify these opportunities, intermediaries can provide valuable insights and drive strategic decision-making.
With many landlords planning divestment within 5-6 years, there is also a window to build lasting relationships. Offering services like inheritance planning, tax-efficient structuring, and long-term portfolio management can add value and solidify brokers as trusted advisers. Whether through direct expertise or a strong referral network, intermediaries must position themselves as indispensable allies in navigating the market’s evolving challenges.
As the buy-to-let sector continues to transform, brokers have a vital role in ensuring landlords adapt successfully. By staying attuned to landlord needs, market trends, and regulatory developments, intermediaries can foster long-term partnerships and reinforce the resilience of the private rental sector. For landlords, the value of expert mortgage advice has never been greater.
Grant Hendry is director of sales at Foundation Home Loans
