MFS

Appetite for BTL investment remains strong




As we begin 2019, there is a slight feeling of hesitation among some property investors.

After all, with the country preparing for its withdrawal from the European Union – in whatever form that may take – on 29th March, a number of those considering property investments are choosing to hold fire. It raises an important question: to what extent should we be letting Brexit delay or derail our investment decisions? 

While we are still no clearer about what impact Brexit will have on the property market, many investors remain drawn to bricks and mortar due to the historic resilience of real estate as an asset positioned to deliver secure and long-term returns, even during times of economic uncertainty.

As someone who has supported the interests of borrowers and brokers in pursuing real estate purchases for well over a decade, I have witnessed first-hand how the market has reacted to political shifts and economic shocks. Importantly, property has proven to be a resilient and secure asset. According to the Office for National Statistics, house prices have risen from just over £160,000 in December 2008 to £226,973 in May 2018 – this is a remarkable increase when compared to the performance of other asset classes, and particularly when you consider that this period includes the recession, multiple general elections and the fallout from the EU referendum. 

Looking to the coming 12 months, there is little indication that demand for housing will drop, especially when we consider the influx of investment into regions outside of central London. In November, Savills estimated that average UK house prices were set to rise by £32,000 by 2023, despite the impact of Brexit. 

Buy-to-let investment in 2019

For those purchasing buy-to-let (BTL) properties, tax changes and the stamp duty surcharge have undoubtedly been a deterrent. But appetite for BTL investment certainly remains, particularly among investors who are taking a long-term approach. 

After all, by purchasing and leasing out a property, landlords not only earn regular rental income, but could also experience the ongoing capital growth of the asset. And while house price growth is slowing or – in some areas – has become stagnant, market experts are still forecasting significant rises in the years ahead. This is particularly true in some BTL hotspots across the country. 

In the UK, we have seen property prices rise in most regional hubs over the last 12 months. Take the Midlands, for example. House prices in Birmingham are rising faster than the national average, spurred on by ongoing investment into the city’s infrastructure and an influx of young professionals relocating outside of London. New-build developments are now sprouting up around the city, and with demand for property in the area rising, house prices are projected to grow over the course of 2019. 

The growth of the specialist finance sector

To find attractive BTL investment opportunities, it is important to look across the UK to regions like the South East and the Midlands. However, competition is fierce. And at the risk of missing out on a sale, access to fast finance remains important for BTL investors. 

A growing number of specialist finance providers are available to assist in this regard. Indeed, in order to support those pursing BTL investments, Market Financial Solutions has expanded its bridging loan services to new regions across the UK – such as the Midlands – and is now providing loans starting from £100,000. Both initiatives ensure borrowers have access to the capital they need when pursuing potential BTL properties listed on the market.

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