Buy-to-Let Purchase Shows Signs of Recovery

After flatlining throughout much of the coronavirus crisis, the UK’s buy-to-let market is showing reassuring signs of a strong recovery. Property purchases and portfolio expansion plans put on hold during lockdown are now being unleashed on the sector, spurred in part by the current stamp duty holiday recently introduced by the Chancellor.

According to the results of an industry survey conducted by Cherry, upwards of 30% of brokers have reported a spike in individual buy-to-let purchase activity and interest. Likewise, almost the same amount (27%) reported growing interest in buy-to-let property acquisitions from limited companies.

In total, buy-to-let market activity in terms of planned purchases or purchase enquiries is on the up at around 57% of brokers across the UK. At the same time, brokers are also seeing an upturn in the number of clients applying for short-term financial products like bridging loans. Most of which are being used by landlords and investors for property refurbishments and improvements.

“It’s clear there has been a spike in buy-to-let activity in recent weeks. Whereas the BTL market has been dominated by remortgage business in recent years, it is purchase inquiries that are currently keeping brokers busy,” said Donna Hopton, director at Cherry.

“This window of opportunity for reduced stamp duty land tax will certainly be helping to drive this demand, but we are seeing that the market is generally buoyant, which is a positive sign for advisers and the economy.”

A golden opportunity for landlords and investors?

Traditionally, Buy to Let has been seen as something of a safe haven for investors in the UK. To some extent, an investment opportunity that more or less guaranteed generous and ongoing returns with little to no risk involved

More recently, the government announced a temporary stamp duty adjustment. By significantly increasing the threshold at which stamp duty is payable on property purchases, from £125,000 to £500,000, the Chancellor effectively shaved thousands of pounds off the purchase prices of properties for buy-to-let investors.

Coupled with rock-bottom mortgage calculator UK rates over the past few months, it was seen by many as a potential golden opportunity for landlords and investors.

A leading source stated, “In the right hands, buy-to-let can still be a useful and profitable investment vehicle.

Landlords will rush to buy homes before the stamp duty holiday ends in March next year, after which I think there may be a natural drop in activity.”