As we come to the end of the year, there will no doubt be a fair degree of soul-searching about the events of the last 12 months and whether they have had a positive impact on the BTL and private rental sectors.
It was a year of contrasts, of stops and starts, of pushes and pulls, which were not always the easiest to navigate as advisers to landlord borrowers, and certainly not the easiest to lend within.
While you would always like a degree of stability, particularly in pricing, that was not often possible, and we’re conscious that advisers often bore the brunt of changes as they sought to ensure clients had the most appropriate product at any given time, up until the point of completion.
The good news, however, is that the outlook for 2025 does already feel a lot more stable and certain than we had over the course of 2024.
There will always be events of course to react to and which will shape the marketplace, but for instance, we are (highly) unlikely to have another general election, or (we are told) a Budget like the one delivered at the end of October.
Talking of which, what was perhaps slightly overlooked post-Budget was the decision not to increase CGT in line with income tax for landlords selling property.
Our own research, conducted before the Budget, showed just what an impact this might have had on the sector.
Four in 10 landlords said they would not invest any further in the PRS if those changes were introduced. With that potential threat seemingly not on the table any more, it should give confidence to landlords to, at the very least, stay invested with what they currently have and, at best, to keep seeking to add to portfolios.
The same Pegasus Insight research also provides further positivity in terms of the timeline for existing landlords to stay invested.
While, as you would imagine, six in 10 have an exit timeline in mind, they say they will be staying in the sector for the next five and a half years at least.
Interestingly, nearly a fifth of those polled said they have no intention of selling up at all, with the intention being that these properties/portfolios will be left as an inheritance.
Again, this should provide advisers with a permanent client base to keep on servicing not just seemingly for this generation of landlords but, for some, the next generation who stand to inherit these properties.
At Foundation, we continue to develop tailored product solutions for specific landlord types and properties.
As these needs grow, lenders like us seek out specialist niches, ensuring advisers have the right products for the increasing number of landlord borrowers.
That is important going forward, because we see landlords themselves seeking to diversify, to branch out, to explore new areas of the PRS in order to secure the yields and capital appreciation that is going to keep them invested.
We cannot mention 2024 without noting the increase in the stamp duty surcharge, and while it is of course not welcome, we don’t envisage it stopping landlords from continuing to purchase.
The demand from tenants is still incredibly strong, and while we await the proposed 1.5 million new homes the government says it is going to build, there is no doubt there will continue to be an under-supply of both property for owner-occupation and renting.
That should mean landlords have a continued opportunity to be profitable, even if it does include a higher stamp duty cost at the outset.
Overall, 2025 should have a greater degree of stability and certainty for both landlords and advisers, and that is likely to mean the services you offer continue to be in demand.
The need for quality rental properties is not going away anytime soon and the fundamentals that underpin the PRS will continue to remain attractive to those who want to invest over a longer-term horizon.
