Buy-to-let loan sizes jumped by 13 per cent last month, meaning the average maximum loan available to prospective and existing landlords is now £421,053.
In December, this figure stood at £401,053, pointing to a £20,000 increase. This means loans for landlords are at their highest level since August 2020, according to research published by adviser platform Mortgage Broker Tools today (February 28).
The buy-to-let sector remained buoyant last year, despite some reports of landlords exiting their portfolios. Purchase activity reached £18bn, up 83 per cent on 2020, according to UK Finance.
But while the average maximum loan size available to buy-to-let investors is approaching a two-year high, the spread between the average maximum and minimum loan sizes available to landlords has also “never been wider”, according to Tanya Toumadj, chief executive at Mortgage Broker Tools.
“For investor clients who want to maximise their leverage, it’s vital that brokers are able to easily identify those lenders that will offer larger loan sizes based on their individual circumstances,” she explained.
Legal & General Mortgage Club data also published today found searches for landlords with gifted equity grew by 82 per cent last month. This suggests that those in the buy-to-let market may be benefitting from financial support from family members to boost their borrowing power as the loan sizes available to them continue to increase.
Richard Merret, head of strategic development at mortgage club SimplyBiz, told FTAdviser the pandemic has shown people “the robustness of houses as an asset”.
In 2021, the price of a typical UK home grew to £254,822, up nearly £24,000 over the year.
Merret also said an interest in holiday letting has increased, due to the tax benefits and the “ease” of arranging it via an app. “Airbnb has made being a holiday-let landlord more accessible,” said Merrett.
A series of regulatory changes to the buy-to-let sector has, however, made it harder to enter the market. So advisers can better understand these regulatory changes - which include a 3 per cent stamp duty surcharge, more stringent affordability tests and reforms to mortgage relief - SimplyBiz has launched a series of virtual academies.
Meanwhile, some investors are now looking to make gains off cryptocurrency rather than off a housing portfolio.
One investor told FTAdviser in December that with property producing average gains anywhere between 5 and 10 per cent a year, he was drawn to the minimum advised return of around 30 per cent to be made from cryptocurrency in just three to six months on less money.
ruby.hinchliffe@ft.com
