How to maximise opportunities in the buy-to-let market - Andrew Milnes
When it comes to the buy-to-let landscape, it feels like new regulations are emerging constantly, leaving landlords feeling as though the goalposts are perpetually shifting.
While volatility in the market has undoubtedly diminished the attractiveness of the sector, it’s not all doom and gloom.
Amid the challenges, opportunities and support for prospective and current landlords is widely available.
The Renter’s Rights Bill is looming ever closer, and now it has received approval from the House of Lords, the stage has effectively been set that it will become law by the end of the year.
As well as making it more challenging for landlords to evict tenants, another contentious element of the bill is the potential restriction on re-letting a property for 12 months after serving notice to sell.
This ‘one-size-fits-all’ approach risks forcing many landlords out of the market, so it’s never been more important to get your ducks in a row and prepare for the changes that lie ahead.
While 2030 might seem far away, preparation is needed for future environmental standards that are due to come into place - particularly when it comes to a rental property’s EPC rating.
Taking a proactive approach by budgeting and carrying out retrofitting works over a phased period of time will save additional costs and hassle later on down the line.
It doesn’t all have to be at an upfront cost, either. The growing number of green mortgages available offer preferential rates and cashback incentives for properties that have - or aspire to achieve - an EPC rating of A or B.
Making these changes now will not only get you ahead from a legislation perspective, but also help to make your buy-to-let property more attractive to tenants given the reduction in energy bills.
When it comes to lending, the message for landlords is far more positive. Lenders are keen to do business, with attractive buy-to-let mortgage rates readily available. Additionally, lenders are offering lower stress rates for longer-term products, making five-year fixed-rate mortgages a more favourable option for those seeking greater stability and higher borrowing capacity.
Momentum is also building to address long-standing legislative issues, particularly around cladding and fire safety in city centre properties. For one, the Building Safety Act 2022 shields most qualifying leaseholders from crippling remediation costs.
Stricter, legally-backed deadlines have also been imposed for building owners to complete fire safety works (for example, the 2029 deadline for buildings over 18m in height). This offers a faint yet perceptible light at the end of the tunnel, and will no doubt be a significant weight off many landlords’ shoulders.
In this volatile climate, talking to an expert broker is essential. It’s their responsibility to help you navigate this complex market, discuss potential funding options, and secure you a competitive rate. While we can’t hide from the fact that tough times are still ahead, the buy-to-let space offers a wealth of opportunities for those who are well prepared.
Andrew Milnes is head of the Mortgage Advice Bureau, Bingley, 01274 891312.