First-time landlord demand continues to grow

Posted on Monday, April 25, 2022

"The buy-to-let sector continues to gain interest and lenders are launching new buy-to-let products frequently."

The buy-to-let market is dominated by searches from brokers working with inexperienced landlords, according to the latest research from criteria search platform Knowledge Bank.

Interest in the rental market from both ‘first-time landlords’ and ‘first-time buyers’ resulted in both terms landing in the five most-searched terms by brokers in March.

Research by Zoopla shows that average rental growth reached a thirteen-year high at the end of 2021, therefore interest in the buy-to-let market from both new-comers and experienced landlords looks set to continue.

The cost-of-living crisis is also impacting borrowers as brokers are searching for ‘defaults’ and ‘missed and late payments’.

In March both terms featured prominently in the most-searched criteria on Knowledge Bank’s platform. With energy costs increasing significantly in April, searches for terms related to financial woes are likely to increase in the future.

Some borrowers were looking to use second charge loans to consolidate debts, with brokers searching for ‘mortgage or secured loan arrears or defaults’ in March.

Another parallel between the residential and second charge markets is the trend for older borrowers. With a combination of an ageing population and increasing house-prices, ‘maximum age at end of term’ was the most-searched term in the residential market and second-most searched in the second charge market.

Brokers are also working with borrowers who have recently moved jobs, as ‘time in current employment’ is amongst the most-searched terms in the residential market. The term has featured in the five most-searched terms every month since December 2021 as confidence has built in the economy and borrowers change roles.

‘Regulated bridging’ featured prominently in brokers’ searches in March, marking the fifth consecutive month as the most-searched term. The popularity may be partly driven by competition in the housing market as buyers use bridging loans to either avoid a chain collapsing when a seller pulls out or to buy a property before their own sells.

Alongside bridging loans for residential properties, brokers are also searching for ‘commercial property’ finance. These loans may be for those looking to repurpose existing commercial spaces, either refitting an office to accommodate hybrid working or adapting a retail space.

Matthew Corker, operations director at Knowledge Bank, commented: “The volume of searches for both defaults and missed payments sadly looks like it will continue to build. Increasing energy prices and inflation outstripping wage growth will hit some hard and in the following months we may see more and more struggling to pay bills.

“On the positive side, the jobs market is back in full-swing and those that perhaps put off moving roles during the pandemic are now looking to switch careers which explains the interest from brokers.

“The buy-to-let sector continues to gain interest and lenders are launching new buy-to-let products frequently. Those that are open to working with inexperienced landlords are capitalising on a growing niche in the sector and more and more lenders may follow suit.

“Although regulated bridging continues to dominate searches, the growing number of loans connected to commercial properties is an interesting part of the market. With the changing face of the high-street, some businesses are adapting their premises to accommodate the new way consumers both shop and work.”



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