2022 – A big year ahead

Leaving the pandemic to one side, the BTL sector is in good health. The value of the private rented sector (PRS) in England, Wales and Scotland grew by 5.8% to £1.4trn in the last year, according to research by Shawbrook Bank. 

A positive picture – but there are challenges and opportunities ahead. Among them is the need, by 2025, for all rental properties to meet stricter energy efficiency ratings for new tenancies. They must achieve an EPC certification rating of C or above, which will also apply to all existing tenancies from 2028. 

This initiative is part of the government’s green strategy and one of its strands is to improve the energy efficiency of domestic property. We were one of the first lenders to announce a range of green products to incentivise landlords in 2021 and we are expanding the range all the time. We believe that remortgage activity is going to be very strong this year and we will be supporting our introducers in all their activities this year.

The opportunity for brokers lies in recognising that whilst interest rates are currently low there is likely to be increased pressure for base rates to rise due to inflationary pressures. Therefore there is plenty of incentive to be talking to landlord clients about researching longer-term fixed rates as soon as possible in partnership with Landbay’s green mortgage proposition.

Other challenges will revolve around increases to National Insurance and to the tax on dividends. Landlords who, in the past few years, have opted to move to limited company structures to help offset the loss of tax relief will now face a 1.25% increase in dividend tax. 

However here at Landbay, we have started 2022 as we finished 2021 – on the front foot. Last year, we expanded our product range by making significant inroads into helping small portfolio landlords, HMO landlords and those aiming to be environmentally friendly.

In contrast to the Bank of England’s move to increase the base rate at the end of 2021, in the first week of January 2022 we made rate reductions. These were between 0.14% to 0.29%, with the lowest rate now set at 2.65% for a 2-year fix at 65% loan-to-value (LTV). Highlights include our standard 5 year fixed rate at 75% LTV reduced to 3.04%, with free valuation options, down from 3.24%. 

In addition, we’ve extended our green range to new build property, which can benefit from a rate reduction for properties with Energy Performance Certificate (EPC) ratings from A to C. We also simplified our green range to include A, B or C rated properties under one product, whilst reducing the whole green range by 10 basis points.

For more information or to discuss any of your BTL cases please get in touch using our BDM finder.