Is Buy to Let still a worthwhile investment strategy?

Buy to Let is proving a popular method of investment considering the current low savings rates and the ever-changing stock market. Thanks to the stamp duty holiday, investors only need to pay the 3% surcharge. This is drawing more and more individuals to the property sector.

According to the Financial Conduct Authority lending for Buy to Let properties between April 2020 and July 2020 are up 14.4%. This is up 1.2% from the same period last year.

With the increase in interest for BTL properties, will they still prove a worthwhile investment?

Are Buy to Let’s a viable investment for first time landlords?

Just as mortgage lenders are cautious when lending to first time buyers, deals aimed at first time landlords are also few and between.

The number of BTL fixed deals for 2 years for first time landlords with 75% loan to value has fallen by 88 since March. 60% LTV have also fallen by 13 in the same period. The number of deals for first time landlords are also down for the two and five year fixed 75% sector, down 45 and 20, respectively. The only deals that have seen an increase are a 5-year LTV fixed at 60% which have seen an increase of 7 year on year.

Prospective first-time landlords will also have to face rising property prices, although this may be an initial inconvenience, it will prove beneficial in the long run. This is because when you look to sell your investment property it will provide a larger lump sum pay-out.

The Nationwide House Price Index have suggested that property prices are increasing 2% month on month. It is important to bear in mind that this increase is likely due to pend up demand due to lockdown. Following the release of this pend up demand it is likely that house prices will fall back to pre-lockdown levels soon.

Are Buy to Let’s still a viable investment for experienced Landlords?

Established landlords are not in the same climate as first-time landlords. As stated above since March the amount of available deals has fallen, but rates have also decreased. Two-year fixed deals at 75% LTV have fallen from 371 to 228. 60% LTV have fallen from 124 to 119. Within the 5-year fixed BTL Chart ,75% LTV have fallen from 451 to 248. However, at 60% LTV there has been an increase of deals available from 133 to 138.

As well as this, property values have increased which will have benefitted experienced landlords. Coupled with the insight that rent prices are rising in most areas’, landlords are likely to continue benefitting from significant capital gains through their property portfolio over the coming months.

So yes, Buy to Let property investment will still prove beneficial. The climate is ripe for significant returns on your investment. Just be mindful that property prices are likely to dip soon once pent up demand is released. So, ensure if you are purchasing a property you aren’t paying more than it is worth.

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