The Intermediary – February 2025 - Flipbook - Page 27
BUY-TO-LET
Opinion
Unlocking PRS
potential in 2025
T
he private rented sector
(PRS) continues to
play an essential role
in the UK housing
market. However,
mounting pressures
are constantly reshaping the buyto-let (BTL) landscape, making it
increasingly intricate and demanding
for landlords.
That said, this sector still presents
opportunities, such as strong yields for
certain property types and sustained
profitability for well-balanced
portfolios.
Professional landlords, in
particular, have become the driving
force behind current market
activity, relying more heavily on
mortgage intermediaries to navigate
complexities and secure suitable
lenders and products to meet
evolving demands.
One of the primary drivers of
this shi is the heightened cost of
borrowing, combined with stricter
affordability criteria. These factors
are prompting landlords of all sizes
to reassess their financial strategies
and the viability of their portfolios.
For many, this means making tough
decisions about whether to retain or
sell properties.
Despite these challenges, landlord
sentiment remains relatively
optimistic as many modify their focus,
offering a promising outlook for 2025
which is not always reflected in the
mainstream media.
cautious approach among landlords.
The data shows that applications for
refinancing without additional capital
raising have risen across all property
types, while those involving capital
raising have declined. This suggests
that landlords are prioritising debt
management in today’s higher interest
rate environment.
By securing fixed-rate mortgages
through product transfers, landlords
are focusing on optimising their
existing portfolios rather than
expanding or selling off assets. This
prudent strategy highlights the
importance of stability and long-term
planning in uncertain times.
Intermediaries
must consider all aspects
of a product ... These
are factors which can
significantly impact
borrowers”
Opportunities
For intermediaries, these trends
present significant opportunities to
connect and engage with landlords
and developers to showcase their
expertise and value, particularly to
those who may have experienced a
series of financial challenges over the
past 12 to 18 months.
A comprehensive understanding of
specialist and bespoke lending options,
along with their varied product
offerings, is crucial for navigating
these challenges in an increasingly
complex lending world, and for
delivering tailored solutions to meet
changing client needs. For instance,
landlords with impaired credit profiles
Shifting focus
Professional landlords are
increasingly turning their aention
to higher-yielding property types,
such as semi-commercial and
commercial properties. Recent
data from Shawbrook shows that
applications for semi-commercial
property purchases have risen by
31% year-on-year, and commercial
property purchases increased by
28%. Refinancing trends illustrate a
DONNA FRANCIS
is managing director at Envelop
Landlords are focusing on their existing portfolios
can still secure financing if advisers
know where to explore.
Cultivating strong relationships
with lenders and packagers allows
intermediaries to provide greater
levels of expert assistance, even for the
most intricate cases.
Beyond the headline
Success in the current BTL market
requires looking beyond headline
rates. Intermediaries must consider
all aspects of a product, including
fees, affordability, valuation types,
automated valuation models (AVMs),
and dual-solicitor options. These are
factors which can significantly impact
borrowers, depending on their unique
circumstances.
By collaborating with specialists
like Envelop, intermediaries can
enhance their expertise and provide
comprehensive support throughout
the financing and refinancing journey.
With a growing number of
specialist opportunities anticipated
in 2025, proactive and knowledgeable
intermediaries with strong
relationships will be instrumental in
shaping the future of the UK housing
market, while helping landlords
sustain, and even surpass, historic
profitability levels. ●
February 2025 | The Intermediary
27
