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Investors are spotting opportunities in the current market as more buy-to-let landlords make plans to snap up further properties in the year ahead.

Market sentiment in the buy-to-let sector has been impacted by a number of factors in recent years, from tax changes to the more recent issue of rising mortgage rates. House prices across much of the country have also slowed their pace of growth – which comes as no surprise after the rapid acceleration of 2020-2022.

However, as is often the case in the UK property market, investors continue to find the most promising assets, in terms of both location and property type, to keep activity strong in the sector. While 2023 was a year of uncertainty, investors are finding more to be positive about for 2024.

Inflation has fallen rapidly from its high point last year, despite the most recent announcement that revealed an small, unexpected rise. Interest rates have also been frozen for some time now, yet lenders have been reducing their rates and unveiling a wider array of products and incentives, including for buy-to-let landlords.

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Along with more positive house price news over the past couple of months, these factors have all combined to influence plans for landlords in the coming 12 months, and the latest research from Together Money has found that more than a third – 34% – of buy-to-let landlords will expand their portfolios this year.

More optimism for landlords

The survey by Together also found that 68% of landlords currently feel optimistic about their business outlook for 2024, despite 10% of respondents saying they they have “reservations”. A quarter of those surveyed also said they were planning to refinance their properties to “support business objectives” this year.

Since the start of 2024, some of the UK’s major banks and building societies have brought fresh, cheaper deals to the table since the start of 2024, including Co-operative Bank, First Direct, HSBC, NatWest, Halifax, Clydesdale Bank and Leeds Building Society, with a number of these lenders also offering buy-to-let mortgage deals.

There is now a growing number of sub-4% mortgage products available for landlords, which is a vast improvement on the peaks of almost 7% last summer. Borrowers are still urged to thoroughly check the details of each product though, as deals with the lowest rate aren’t always the best value for money for every customer.

Of course, some landlords with less borrowing power or those who are simply ready to cash in on their property assets are leaving the market at the moment, but this is also presenting opportunities for portfolio landlords to take on existing buy-to-let properties.

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Should you use a specialist lender?

The research from Together found that 42% of its landlord respondents said they would prioritise using a specialist lender rather than a mainstream one over the next 12 months (although this was specifically related to taking out additional financing for commercial property).

The reasons given were that specialist lenders are often prepared to take on greater risk and offer larger loans, while supporting entrepreneurial plans; an answer which was selected by 39% of respondents. 29% said they’d opt for a specialist lender because they are quicker, while 29% also said they provide the best service.

Where the purchase isn’t straightforward, such as when investing in a house in multiple occupation (HMO), or investing via a limited company, the vast majority of people will need to use a specialist lender. However, for a standard buy-to-let purchase, it is worth including mainstream lenders in your mortgage search.

According to MFS: “Specialist lenders deliver greater flexibility and speed than high street comparatives. Unlike high-street banks, they underwrite their loans manually. This allows them to approach each application on a case-by-case basis.”

The sector is reacclimatising

Chris Baguley, Group Channel Development Director at Together, said: “The short, sharp shock in interest rates since the Covid years triggered some cautiousness in the commercial market while investors were trying to predict where the peak would be. With rates settling, while there is still an overall flattening; activity is returning as the sector reacclimatises to the new environment.

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