By: Richard Rowntree, Managing Director of Mortgages

This article was first featured on Mortgage Strategy.

The fall of the buy-to-let market has been predicted numerous times in the past, but figures released by UK Finance this week show the market is very much alive.

Buy-to-let has clearly had its challenges, but the industry body’s numbers show that overall lending in the sector is up and that the number and value of outstanding buy-to-let balances continues to rise. In addition, buy-to-let accounts for a growing proportion of the total mortgage market.

UK Finance’s figures show there are nearly two million buy-to-let loans outstanding, with a value of £260.3 billion. The total value of 2019 lending was £500 million higher than the previous year at £41 billion.

Now, clearly the split between loans for new purchases is heavily outweighed by those being written for remortgage purposes, but the rate of decline in new purchases slowed significantly in 2019 compared to the three previous years.

The number’s show 69,900 buy-to-let loans were written for new purchases in 2019. That was 2,300 less than 2018, a much smaller fall than the 7,600 and 22,300 decline seen in the two years prior.

In terms of remortgaging, 177,100 loans were written, with a value of £29.3 billion. More than nine out of ten buy-to-let loans go through intermediaries, demonstrating its importance to the broker community.

It’s too early to say whether 2019 will represent the base for new purchases and if this segment of the market will enter a growth period again, but what it does show is the buy-to-let market is still very much active, with a strong and active core of professional, portfolio landlords buying property.

Buy-to-let has always been one of the most emotive areas of the mortgage market. Nearly everyone has an opinion on the sector and it attracts sensationalist headlines, particularly in recent times as landlords have had to adapt to regulatory changes. 

The Government policies of the past five years weren’t just designed to stimulate growth in the first-time buyer market, which they seemed to have done, they were also designed to professionalise the private rented sector and increase the concentration of landlords that view their lettings business as their main source of income.

Our data shows that on average a third of landlords now make a full time living from their property business, a figure which rises dependent on portfolio size. A quarter of landlords with between four and five properties make a full-time living from their letting business, rising to 46% for those with between six and 10 properties and 60% and 66% for those with between 11-19 and 20+ properties respectively.

Buy-to-let is approximately 25 years old, it’s been through major economic cycles and weathered significant changes to how it’s regulated. It’s seasoned and many of the landlords providing homes in the private rented sector today are experienced operators who have proven able to adapt.

Whilst there’s no doubt landlord confidence and sentiment has been dented in recent years and they have had to endure challenges, we have not seen the exodus from the market that some predicted.

The fundamentals underpinning the market remain strong and that’s mainly driven by tenant demand. It’s estimated that an additional 1.2 million properties are needed in the PRS over the next three years to meet demand. What those landlords will want to see going forward is a consistent approach to regulation and Government support for a sector that provides good quality homes to millions of renters.