Buy-to-let in 2024 – what's on the horizon?

Expert on his expectations for the market next year

Buy-to-let in 2024 – what's on the horizon?

Landlords and the buy-to-let market in general have had a tough time of it over the last few years, with numerous rules and regulations being implemented, alongside wider, difficult market conditions.

In recent years the government has introduced new standards for landlords - such as the need to have an accurate record of the condition of their housing stock, and requiring landlords to give tenants opportunities to influence and scrutinise their landlord’s strategies, policies and services.

The government has also made progress over the last decade on increasing protection for tenants, including giving councils stronger powers to drive criminal landlords out of the market by introducing Banning Orders through the Housing and Planning Act 2016; and shielding tenants from excessive deposits and fees through the Tenant Fees Act 2019.

So, how is 2024 shaping up for landlords and the wider buy-to-let market?

How is the buy-to-let market shaping up for 2024?

Chris Daly (pictured), managing director of specialist mortgages at Hampshire Trust Bank, said landlords need all the support they can get and more lenders must step up.

“It did not come as any surprise to me to read reports that some landlords have made a loss this year, as this has been clear from our regular conversations with brokers and buy-to-let landlords,” he said.

As a consequence, Daly said a few landlords have decided to exit the market, however the majority look committed to the sector.

“They are taking a long-term view of their investment and have committed both time and money to stay in the market,” he said.

Looking towards next year, despite the testing conditions, Daly is expecting the specialist lending market to thrive.

“This stands in stark contrast to the latest forecasts from UK Finance, which suggest the buy-to-let sector will contract again in 2024, but our optimism is based on deep relationships within the sector and boots on the ground insight,” he said.

Daly said that the rental market remains robust, and while there are landlords who have exited the market, there is no indication that the number of rental properties across the country has reduced.

Instead, he said less leveraged property investors have been taking advantage of opportunities, such as lower house prices, and this is likely to continue over the next 12 months. 

Indeed with stability slowing seeping back through the economy and property market, Daly said he is confident the buy-to-let market will thrive in 2024.

What about the impact of rates?

“Regarding rates, while there is a widespread expectation that rates will fall next year, I do not foresee them returning to anything like the historical low levels we were used to three years ago,” Daly said.

Instead of waiting for the government to improve the plight of landlords, Daly said the industry itself should be looking at ways it can help them tackle affordability issues, as well as assisting property professionals to invest in higher-yielding properties.

“For example, lenders could consider moving into the Purpose-Built Student Accommodation (PBSA) investment market, as well as improving lending criteria for semi-commercial properties or removing holiday-let unit limits,” he said.

On the regulatory front, Daly added that it looks as though the Renters Reform Bill will come into law at some point during the second half of 2024.

“The bill is still working its way through the House of Commons and has yet to be passed to the Lords, so we do not know what the final law will look like, but investors will need to stay abreast of the bill and its ramifications,” Daly said.

Last but by no means least, there is a General Election on the horizon, and Daly said whoever wins should be urged to provide some long-term future guidance on the regulatory environment for the rented sector and their plans for planning, and housebuilding.

“Certainty is key to any sustained growth, whether in the buy-to-let market or the UK economy as a whole,” he added.

What are your expectations for the buy-to-let market in 2024? Let us know in the comment section below.