Number of buy-to-let deals soars to record high

Current and prospective landlords now have more deals to choose from than ever before.

The number of buy-to-let mortgage products on the market rose to 3,560 at the start of February, 239 more than the previous month, according to analysis by Moneyfactscompare.co.uk.

This is now the highest count on Moneyfacts’ electronic records, which stretch back to November 2011.

Within this figure, the number of two-year fixed deals increased by 114 between January and February to reach 1,244 while the number of five-year fixes rose by 92 over the same period to stand at 1,571.

“Landlords searching for a new deal will find the choice of buy-to-let mortgages has hit a record high, which could instil a sense of optimism,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“Views are mixed on how the buy-to-let market will fare this year, but lenders are clearly working hard to attract new business, such as those launching new deals at higher loan-to-value ratios, and even deals created for a limited company,” she noted.

Boost for higher LTV deals

It’s a particularly encouraging picture for landlords with a smaller deposit or amount of equity in their buy-to-let property, as the number of deals at a higher loan-to-value (LTV) saw a considerable increase.

There are now 417 buy-to-let deals at 80% LTV, including 164 two-year fixed deals and 182 five-year fixes.

This is the highest count on record and is more than double the number that were available in 2023.

Fixed deals at 75% LTV have also increased significantly, with the number of two- and five-year fixed deals rising from 1,008 in February 2024 to 1,413 this year.

Rising costs for landlords

While the wider choice of buy-to-let products is good news for landlords, many may still question whether the cost of buying and renting out a property is worth it.

In terms of mortgage rates, the average two-year fixed buy-to-let mortgage rate increased from 5.34% to 5.40% in the month to February. Meanwhile, the average five-year rate saw an even larger increase from 5.45% to 5.56% over the same period.

Despite this monthly rise, rates are still lower than in February 2023 when the average two- and five-year fixed rates stood at 5.95% and 5.85% respectively.

But it’s not only the expense of mortgages that landlords have to deal with, with a range of other costs potentially persuading landlords to exit the buy-to-let market and deterring some individuals from entering it.

“The margin of profit from rental income may well be tighter than in previous years, due to several factors, including the cull of mortgage tax relief and the expense to cover EPC requirements,” explained Springall.

Indeed, a recent study by Hamptons estate agents found that landlords made up just 9.6% of all house purchases in Great Britain in January, the lowest proportion since at least 2009 (when its records began).

Even with the tax liabilities, the cost of maintaining and managing a property rental and higher mortgage rates, property can still be a viable long-term investment.

However, before venturing into the buy-to-let market, it’s a good idea to speak to a professional adviser to help you understand the costs and responsibilities of being a landlord and whether it’s right for you.

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