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Why buy-to-let is the ‘one to watch’ in 2019

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It has been reported that the number of buy-to-let products currently available reached its highest level since the financial crisis. Landlords now have the choice of 2,162 products. The largest number available prior to this was in October 2007, when there were 3,305 products on the market.

However, this heightened competition has not resulted in a fall in interest rates within the buy-to-let sector. The data showed that the average two-year fixed buy-to-let mortgage rate has increased by 0.20% to 3.12% since September 2018, and the average five-year fixed rate has increased by 0.15% over the same period. This slight rate rise is inevitable considering market and general economic conditions.

Short-term lets have been around for a while, but this is an area which has been energised in recent times – mainly through the rapid growth of online platforms such as Airbnb. Automation of the short-term letting process has really shaken up this marketplace, opening up access for a variety of homeowners and landlords to utilise their properties in ways which weren’t possible even a few years ago. Having said this, only 3% of landlords are currently engaged in the short-term lettings market. That is according to research by the National Landlords Association's Quarterly Landlord Panel Survey Q4 2018.

Landlords and certain lenders do remain cautious. Although some will continue to reap the rewards, some may dip their toes further into the water and some will steer clear as this is not the market for them. All of which are very reasonable. Although it’s fair to say that a growing number of specialist lenders are looking closely at this area with a view to launching dedicated product offerings. If this continues to be the case, more innovative offerings will emerge and rates will become keener, meaning this sector could be ‘one to watch’ for intermediaries over the course of 2019.

Posted by MMB Finance Swindon and Gloucester on 4 March 2019