Your Business and Industry
The Q3 BTL Barometer
Maintaining any kind of barometer across the mortgage market over the past few weeks has been neigh on impossible due to the high levels of volatility and turbulence experienced across all sectors.
However, from a Foundation Home Loans lending perspective, landlord demand has remained strong during this time. A large component within this stems from our consistent service levels, transparency, good communications and ongoing commitment to our intermediary partners.
The level of resilience on show throughout the BTL sector in the first half of 2022 and into Q3 has also provided a robust platform for landlords to navigate some, hopefully short-lived, economic turbulence.
So, let’s use the latest BVA BDRC Landlord Panel research for Q3 2022 to highlight some of the more positive trends being experienced by landlords and the intermediary market to help them navigate these tough economic headwinds.
86% of landlords were suggested to be making a profit from their letting activity, up 3% from Q2 ’22. The proportion of all landlords making a profitable full time living from their letting business remained unchanged at 3 in 10, with this increasing in line with portfolio size.
The landlord profitability index edged up slightly in Q3, rising above +80 once more. Unleveraged landlords continued to be more likely to make a profit than those who borrow (86% vs. 79%), as did those who let property to students (90%) and migrant workers (89%).
In summary, the typical portfolio in Q3 was worth around £1.49 million and generated an annual gross rental income of £64,000. The typical property value was £185,625 (based on an average portfolio size of 8.0 properties in Q3), with an average income of £8,000 per property or £667 per calendar month.
The vast majority of landlords (72%) with a BTL mortgage arranged their most recent loan via a mortgage broker or intermediary. A much smaller proportion went direct to the lender without lender advice (15%) and with lender advice (8%). Those with larger portfolios (11+) were suggested to be more likely to go direct to the lender without advice (20%).
This final point should smack of opportunity for intermediaries. Whilst 72% represents a large number, which is obviously an encouraging sign for the intermediary market, 28% remain who are likely to be able to benefit from a good, professional advice process, especially in the current market conditions. And specialist lenders will continue to play a key role in helping a range of intermediaries and landlords to access the kind of solutions they need now, and in the future.
FOR INTERMEDIARIES ONLY
