GROWTH MARKET

Increased demand from investors and tenants is fuelling rapid growth in the buy-to-let market. Henry Mills , of Burlingtons Real Estate, explains more

The UK buy-to-let market has experienced signi cant growth in recent years, mainly because of the increase in living costs, as well as growing demand for properties – from tenants as well as investors. As the market becomes more competitive, however, prices continue to rise, making it more challenging for landlords to make a pro t from their investments.

A er the Bank of England’s (BoE’s) increase in interest rates, landlords are facing rising interest costs. Legislation changes have also made it less tax e cient for individual landlords to own properties in their name, rather than as corporate entities, with signi cant tax deterrents being imposed to move from private to corporate ownership. As a result, landlords have had a harder time keeping up with evolving legislation, maintaining safety standards, and bearing the costs resulting from them.

Additionally, they may su er signi cant losses if tenants default on rent payments. Despite these challenges, buy-to-let remains an attractive investment option for those willing to navigate the changing market environment and take calculated risks.

Economies Of Scale

Some landlords may be able to use economies of scale to reduce rents for their tenants. Furthermore, the increased demand for rental properties could lead to more investment in that market, which may o set the increased costs of maintenance and regulation. e recent rise in interest rates by the BoE has highlighted the need for landlords to have a strong understanding of the legal implications of their investment strategy. Speci cally, with the changes in legislation a ecting the tax e ciency of owning properties as individuals, many landlords may want to explore the bene ts of holding properties in corporate structures. is requires careful consideration of the legal implications and regulations involved, as well as the associated costs and bene ts.

For instance, B oE data shows that the number of xed-rate mortgages agreed in the UK has increased from 51 per cent in Quarter 1 (Jan-Mar) 2016 to 86 per cent in Quarter 3 (July-Sept) 2022. is suggests that UK homeowners are increasingly looking for security in a time of economic uncertainty. As the BoE increased its base rate from 4 per cent to 4.25 per cent on ursday, 23 March 2023, the trend is likely to continue for the foreseeable future.

As for lenders, it’s unclear whether they have become more willing to lend, and more attractive mortgage products aren’t always readily available for buy-to-let investors – although data shows that lenders are putting forward competitive mortgage products despite the BoE interest increases.

Demand for rental properties continues to increase, however, re ecting a shi in the housing market towards a preference for renting over buying. e most recent English Housing Market Survey reported that around 19 per cent of all households in England live in the private rented sector.

As the cost of living continues to rise, purchasing a property has become more di cult for many, making renting a more attractive option. However, navigating the buy-to-let market can be challenging, and it’s important to consider the risks and opportunities involved carefully before making any investment decisions.

At Burlingtons Legal, we have expertise in advising clients on the legal aspects of buy-to-let investment strategies, including the use of corporate structures.

If you require more information on these services, please contact Deborah Mills at deborah.mills@ burlingtons.legal

Economic Growth

Burlingtons Real Estate has invested in residential rental markets in the expanding cities of Liverpool, Manchester, She eld and Leicester, recognising the unique investment opportunities presented in these areas and, indeed, government investment that is going into them.

Liverpool’s buy-to-let rental market has been booming in recent years because of the in ux of young professionals and students looking for a ordable housing. Burlingtons Real Estate has focused on providing modern, high-quality and a ordable homes for tenants in the city, tapping into the growing demand for housing in the area and providing an attractive investment opportunity because of the potential for capital appreciation.

Meanwhile, a rise in construction and investment has contributed to the strong economic growth of the East Midlands region. e result is Leicester, Nottingham and Derby becoming the region’s newest buy-to-let hotspots, attracting tenants, developers and investors.

For example, Leicester’s 2023 development of the King Power Stadium and Highcross shopping centre are expected to bring £1.3bn in economic bene ts. is is likely to further increase the region’s economic growth, attracting more investment opportunities in the near future.

Demand for buy-to-let homes in the region is at an all-time high, with Leicester leading the way. is trend is expected to continue as more people move to the city because of increased job opportunities and improved infrastructure. Leicester is also poised to bene t from new transportation links; plans for the development of a new high-speed rail line linking Leicester with Birmingham and other nearby cities is already under way, which will undoubtedly further increase the demand for buy-to-let homes in the area.

Burlingtons Real Estate has, to date, acquired seven available units in Leicester, Liverpool and Croydon.

Investment Solutions

As the UK’s rental market continues to evolve, Burlingtons Real Estate remains committed to providing innovative and forward-thinking investment solutions. e company’s team of experienced professionals is well-equipped to navigate the complexities of the market, including the challenges posed by changing regulations and economic conditions.

If you are interested in learning more about Burlingtons Real Estate’s investment opportunities, or wish to discuss potential investment opportunities in the UK market, please contact me at henry.mills@ burlingtons.realestate