2023 is set to be a positive year for the BTL market, particularly for the HMO/MUB sector and professional landlords.
The prediction was made by several industry experts during a BTL panel discussion held at Envelop’s Mortgage & Specialist Finance Expo yesterday (8th February) in Milton Keynes.
During the session — moderated by Steve Swyny, commercial director at Envelop — Beth Foryszewski, senior sales relationship manager at Landbay; Louisa Ritchie, key account manager at Fleet Mortgages; Gurpreet Chahal, corporate account manager at Accord Mortgages; and Michael Craig, sales director at Brilliant Solutions discussed the current state of the BTL market, and the future opportunities available in this space.
Overall, all the panellists were optimistic that 2023 will be a positive year for the BTL sector, as the Bank of England base rate and inflation are expected to stabilise, and swap rates are coming down.
“Although we’re still dealing with the aftermath of H2 2022 [. . .] we’ve already seen some positivity and a little bit more settlement on the affordability side of things, and that will continue as long as inflation and the market don’t throw us any other curveballs,” said Louisa.
However, both Beth and Michael predicted that we might see smaller landlords exit the BTL sector, due to the current market conditions.
“I think there's a lot more appetite and big landlords — more professional ones with ten properties plus — are seeing a lot more opportunities,” said Beth.
“Smaller landlords are exiting because they can’t hack the higher prices and it’s just not profitable for them anymore, but bigger landlords are seeing these properties pop up and are taking [advantage of] these opportunities.”
During the discussion, the panellists also predicted greater demand for HMOs and MUBs in the market in the forthcoming year.
“We're seeing a lot more HMOs inquiries coming through — whether that’s from big developer [landlords] coming in and buying office blocks and turning them into HMOs, or even some smaller landlords — as there’s less risk and better rental yields. In my perspective, it's one of the fastest growing departments that we've got now,” stated Michael.
Despite the positive outlook for BTL this year, the panellists agree that the biggest challenges for the market at the moment are the ICR calculations and stress rates.
“The difficulty with stress rates is definitely there [. . .], and that’s why we are seeing a lot of cases using top slicing at the minute for affordability purposes,” stated Gurpreet.
Pictured above (L-R): Beth Foryszewski, senior sales relationship manager at Landbay; Louisa Ritchie, key account manager at Fleet Mortgages; Gurpreet Chahal, corporate account manager at Accord Mortgages; and Michael Craig, sales director at Brilliant Solutions
