Global uncertainties could be pushing investors to look for opportunities in the property market, it has been suggested.
The number of buy-to-let loans being handed out jumped by two-fifths in the final quarter of 2024 compared with a year earlier, according to UK Finance figures.
Across the UK, 52,648 new buy-to-let loans were advanced, worth £9.6 billion.
This was an increase of around two-fifths or 39.2% in terms of the volume of loans and a 47.2% rise in terms of the value of loans compared with the same quarter in the previous year.
Interest rates on new buy-to-let loans were slightly less expensive typically than a year earlier.
The average interest rate across all new buy-to-let loans in the UK was 5.09% in the fourth quarter of 2024, which was 0.61 points lower than in the same quarter of 2023.
Richard Donnell, executive director at Zoopla, said tax changes in previous years had “shifted the business model” for landlords, with smaller landlords “who didn’t see buy-to-let as a business” selling up and bigger landlords consolidating their portfolios.
He continued: “House prices have underperformed in recent years, but higher rents have helped cover rising costs and pushed yields higher.”
Rising property and repair costs have had impact in squeezing landlords’ profits, he added.
Mr Donnell said: “Increased borrowing in (the fourth quarter of 2024) is down to global uncertainty and weaker equity markets, with residential coming back into the thinking of cashflow-focused landlords …
“Canny investors will be seeing opportunities in the market, with more homes for sale than over the last seven years, which explains why we have seen an increase in borrowing.”
Lucian Cook, head of residential research at property firm Savills, said of the rise in buy-to-let borrowing: “It does reflect a slight improvement in the cost of mortgage debt and the knock-on ability for private landlords to make a profit with a moderate level of gearing.
“I suspect it also reflects some restructuring in the buy-to-let market with larger, wealthier landlords, who often hold their property in a corporate structure, taking a bigger slice of the pie. Typically, they are better placed to deal with some of the challenges that landlords currently face.”
