Shorter days and smaller BTL properties
By Adrian Moloney, Group Intermediary Director, InterBay
There’s now a noticeable winter chill in the air, along with an abundance mulled drinks and festive cheer. Many may be reaching for their favourite cable-knit jumpers but our wardrobes aren’t the only things getting cozier.
The most recent analysis in Resolution Foundation’s Housing Outlook Q3 2022, finds that the average floor space per private renter in England has declined by almost one-fifth over 20 years, from 43m² in 1996-2001, to 36m² in 2017-19. If private renters enjoyed homes as spacious as they did two decades ago, in order to accommodate them all, we’d need to find additional floor space equivalent to the size of Nottingham.
According to Zoopla’s quarterly Rental Market Report, as renters feel the cost-of-living squeeze, there’s also been a rise in demand for one and two-bed flats, and there are fewer renters looking for two and three-bed houses. These renters are being pushed towards smaller properties and lower running costs due to higher rents as well as rising living costs including energy prices. 
They go on to say, although rental growth may be showing the beginnings of peaking at current levels, it has accelerated over the last 12 months – from less than 2% in July 2021 to 12.3% today. In particular contrast to circumstances surrounding the pandemic, strong employment growth has driven demand in the cities and there’s been a 10.5% rental growth in urban markets ahead of 8.5% in rural markets.
As well as growth in cities, the latest research from the Stripe Property Group indicates buy to let landlords can find strong rental yields in locations close to a university. Properties in close proximity are on average 1.3% higher than rental yields in the nearby area, which could boost a landlord’s annual returns by almost £6,000.
Whatever size rental property or location you’re looking to invest in, it’s important to make sure you find a lender who understands your changing needs and has experience with a wide-range of buy to let scenarios.
How InterBay could help
InterBay is ideally placed to help your clients find the right BTL mortgage. Their range could support a variety of property types, including converted and purpose-built houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs).
If you’ve got a complex case, InterBay could support your clients with more than just standard buy to lets. Their determined team could partner you through the process and provide their expertise in high-value cases, complex ownership structures such as large portfolio cases where properties are on either a single freehold or in multiple locations. InterBay can accept multiple properties on a single loan and student lets are considered.
- Individuals (UK and EU nationals residing in the UK)
- Limited liability partnerships (LLPs)
- Limited companies (UK incorporated)
- They can also lend to holders of SIPPs (Self-Invested Personal Pensions) and SSAS (Small Self-Administered Schemes) to a maximum 50% LTV.