26 April 2023

Will we see rain or shine in the BTL market?

By Tim Newman, Head of Marketing, Zephyr Homeloans

After what feels like the longest winter ever, it is great to see spring arriving. As I write mid-March, we have had some decent weather recently, the daffodils have appeared and, with the evenings getting longer, it really lifts the mood. My twin boys did get a bit carried away though during half term week, when they asked for a BBQ. It is not that warm yet, so I did not fancy making their burgers wearing thermals!

For everyone working in the mortgage market, this winter will be remembered as being particularly challenging, but it has been great to see so much resilience and the industry pulling together to get through it. Whilst the financial market turmoil is now largely behind us, the landscape is clearly different, and we are faced with a ‘new normal’ meaning the green shoots of recovery may take longer to appear. The era of unprecedented low interest rates, which were once so common, may not return soon, if at all, so BTL lenders, brokers and landlords will need to continue to adapt, particularly on the issue of affordability.

At Zephyr, we continually keep a keen eye on the latest trends in the market so that we can adapt, so the latest Rent Index report from our friends at The Deposit Protection Service (The DPS) is of great interest to us, and it should also make useful reading for you and your landlord clients.

A robust rental market

Despite the challenges facing the market, strong demand for rental properties remains. According to the Q4 2022 Rent Index from The DPS, rents are continuing to go up: reaching a UK average of £903 during Q4 and increasing by 8.27% (£69) between Q4 2021 and Q4 2022.

The average annual UK rent is now £1,332 higher than the same time two years ago, and over the past year both London (11.59%) and Scotland (12.02%) rental growth has been ahead of inflation (10.4% in February 2023).

Rents in Yorkshire saw the slowest annual growth, up 5.50%, with the South East a close second at 5.52%.

If you would like to see more details of rent trends in your area, read the full Q4 2022 Rent Index report. 

Come rain or shine, Zephyr is here to help

At Zephyr, our broad lending criteria covers a range of property types, including HMOs, MUFBs and flats above commercial, for individuals and limited companies. We can also lend on large portfolios, such as in this example from last year.  

And, with manual underwriting, provided by underwriters you can speak with, and an expert BDM to provide a helping hand, you will have peace of mind knowing you are in safe hands.

If you have a BTL case, we would love to help you. In the meantime, to keep up to date on the latest news from Zephyr, including future changes in rent prices, please follow us on LinkedIn and register for emails via our website. Also, check out our new series of ‘Let’s talk…’ videos covering a range of subjects from limited companies to top slicing.

Whatever happens in the BTL market over the next few months, our friendly and approachable team is ready to spring into action to help you and your landlord clients.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.