As we step into 2024, buy-to-let is firmly under the spotlight. With rising interest rates and uncertainty over new legislation, you might be thinking the current climate isn’t ideal for investing. And while only you and only you can make the decision as to whether 2024 is a good time to invest, we’re focusing on five positive reasons for why buy-to-let is still an attractive proposition for many.
1) Higher rents
Interest rates are up, which is likely to be bad news if you’re used to historically low rates. But there is a silver lining for landlords in the form of higher rents. According to HomeLet, rents across the UK have seen an increase of 10.9%, a trend that is expected to continue owing to the imbalance between demand and supply.
HomeLet also notes that average rent now stands at £1,276. This ongoing trend suggests that landlords can expect to receive a higher rental income, making buy-to-let investments increasingly attractive when you focus on the shorter term, passive income provided by monthly rental returns.
2) Lower purchase prices
Property prices are falling. While that might not be what homeowners and investors want to hear, it does provide opportunities for anyone looking to take advantage of cheaper house prices. In its simplest form, rents are higher and house prices are lower – a combination bound to appeal to investors looking to purchase a buy-to-let property.
According to Nationwide, house prices have fallen by 5.3% over the past year, which can present a favourable condition for potential investors to enter the market at a lower cost. This decrease in purchase prices could translate to higher yields for buy-to-let investors, especially when paired with the rising rental income.
Check out your property rental yields across England and Wales
75 LTV mortgages
- Borrow up to 75% of the property’s value
- Get a mortgage as an individual or limited company
- An online mortgage application that takes place entirely online.
3) Sustainable investment
Investing in buy-to-let property amidst the current high-interest rates is akin to a rigorous stress test. It’s a challenging climate, yet, if your investment can yield profits during a time when interest rates are at their highest in 15 years, it potentially indicates a robust potential for sustainability.
This resilience bodes well against varied economic backdrops. Should the interest rates fall as they have been predicted to over the next five years from 2024, the scenario becomes even more favourable, enhancing the profitability of your buy-to-let investment.
The current tough climate, therefore, can serve as a potential litmus test, separating fleeting opportunities from sustainable investments. By venturing into BTL now and succeeding, you not only prove the viability of your investment but also set a solid foundation for enduring financial growth regardless of the economic weather.
4) Relaxed EPC requirements
Plans were in place that required landlords to ensure their buy-to-let property had an EPC rating of C or higher by 2025. However, recent shifts in legislation have seemingly delayed the scheme until 2028.
Easing of these regulations could mean less immediate financial outlay for landlords or would-be property investors. That’s not to say investors and landlords shouldn’t invest in eco-friendly homes. Not only is doing so in alignment with global sustainability goals, but they also promise long-term cost savings through reduced energy bills.
Furthermore, as the demand for environmentally friendly living spaces grows, properties with higher EPC ratings that are more energy efficient could enjoy higher rental values and potentially a more secure and appreciative market value.
5) Options aplenty
The landscape of buy-to-let investment has always provided a variety of options to investors, each with its unique benefits and challenges. The traditional route has typically been individual buy-to-let, where investors purchase a property to rent it out to individual tenants or families.
But other popular options include houses of multiple occupation (HMO) and holiday lets. With lenders like Molo, it’s now easier than ever to find the right type of buy-to-let mortgage for your needs. Not only that, but the entire mortgage application process takes place online for a faster and more seamless process.
Whether you’re looking to invest in buy-to-let as an individual or a business, find an HMO property or purchase an entire block with multiple units, get a holiday let or expand your portfolio, there’s a mortgage option with Molo as investors look to realise their 2024 property ambitions.
Final thoughts: 2024 and beyond
The best time to invest is always when it’s most relevant to your needs, and there are certainly some positives surrounding buy-to-let as we enter 2024. From higher rents to lower property prices, will 2024 be the year when you invest in property?
75 LTV mortgages
- Borrow up to 75% of the property’s value
- Get a mortgage as an individual or limited company
- An online mortgage application that takes place entirely online.
