Is Now a Good Time to get a Buy-to-Rent Mortgage?

There have been many changes in the property market since the Covid-19 pandemic began in March 2020.

For first-time buyers, there was no Stamp Duty payable for properties under £300,000 between July 2020 and 30th June 2021. For existing property-owners who were moving, Stamp Duty was waived for any property under £125,000 during the same period.

These changes led to a massive surge in the property market in the summer of 2020, with many people moving not only to take advantage of the Stamp Duty holiday, but also to fit in with a new lifestyle.

2021 housing

© Andrii Yalanskyi /


Rural and seaside locations

During the first lockdown, beginning on 23rd March 2020, the market was slow due to the restrictions on moving. Many house moves were postponed, until the government announced its provisional plan for lifting the lockdown on 10th May 2020.

In the summer of 2020, house prices began to increase to coincide with the Stamp Duty holiday. Nobody knew when the pandemic would end, so by the time people could move again, there was an exodus away from busy cities and towns.

Urban areas lost their popularity and instead, people wanted to move to rural or seaside locations. The plan was to have pleasant surroundings if they were going to be stuck at home for months on end.

When England’s second national lockdown began on 5th November 2020, after a succession of local lockdowns, householders were mainly heading for the seaside.

The most searched-for location during the pandemic has been Cornwall, according to market research carried out by Rightmove for the BBC, with Truro and Looe top of the list. Other popular locations have included Devon and Dorset.

People have been moving out of cities such as London, Manchester, Birmingham and Bristol. The homes in highest demand are four and five-bedroom detached houses. Larger homes have seen the biggest growth in sales between 2020 and 2021.


Why are people moving?

The popularity of rural and coastal areas was linked to people’s desire to be in a pleasant location because they were spending more time at home.

The other main requirements were a garden and fast broadband. These were both due to changing lifestyles as a result of the pandemic, as people were working at home and had more time to sit outdoors.

The most popular keyword was “garage” when it came to property searches online, as householders decided to convert their garage into a home gym, or a workshop, to pass the time during lockdown.

Around 25% of people moving house during the pandemic said it was because they were afraid of catching the virus in their current location. Unfortunately, another 18% had to move because they were downsizing due to redundancy. Older people were moving to be nearer their family, or were looking for a pleasant location where they could retire.


How has it affected tenants?

Tenants also had changing needs during the pandemic. A month before the first lockdown, the most popular rented property was a two-bedroom flat in February 2020. This was followed by a one-bedroom flat and a terraced house.

Within 12 months, by the time the UK was in its third national lockdown, the most popular rented property was a two-bedroom semi-detached house, or a two-bedroom detached house. Market research by Rightmove revealed tenants too were looking for a more spacious home after a year of spending almost all their time there.

Tenants have also moved out of big cities into quieter locations, leading to an average fall in rent in the city of around 10%. However, rent outside urban centres has gone up by between 15% and 20%.

While buyers can’t always move that quickly due to the property chain, renters tend to be swifter, as they can move with less hassle and at shorter notice.

The latest statistics show renters are starting to slowly move back into city centres as the lockdown restrictions have been almost completely lifted.


Is it a good time for a buy-to-rent mortgage?

Before the pandemic, the average monthly rent was £700 in England, between 1st April 2019 and 31st March 2020. In July 2021, the average rent for a new tenancy was £1,029 per month.

As a landlord, you need to seriously consider whether this is the best time to invest in a buy-to-let mortgage. The figures suggest it could be a good investment.

Lenders are launching hundreds of deals to cope with increased rental demand. Landlords have more mortgage choices today than at any time since the start of the pandemic. In fact, more than 200 new deals for property investors were launched in June and July 2021 alone.

According to research by Which magazine, landlords in the UK now have more than 2,700 different mortgages to choose from. Average interest rates have begun to drop, due to the influx, to a lower rate than in July 2019. This means it could be a good time for a new buy-to-let mortgage, or for a landlord coming to the end of a fixed term who wants to re-mortgage at a cheaper rate.

Lenders withdrew many of the more “risky” buy-to-rent mortgage deals at the start of the pandemic, such as those at 75% or 80% loan-to-value. They have started coming back during the past couple of months, with deals at 80% LTV appearing again.

All things considered, this could be a good time to tap into the changing market, especially since tenants could be planning a move again to be nearer their workplace, as life starts to get back to normal.


What research should you do?

Before getting a buy-to-let mortgage, do your research carefully. Decide what type of tenant you want. Families, students and professionals each have different requirements. If you choose the wrong type of property or location, you may not be able to rent it out for the price you need.

Every day it’s empty, you’re losing money, so check out the area you’re considering carefully. It might help to talk to some estate agents, as they can tell you what’s in demand. Speak to more than one estate agent and get a rounded picture of the local area’s needs. You may even spot a gap in the market.

Decide whether to provide a furnished or unfurnished property. When tenants are looking to move quickly, having a furnished home, all ready for them to move in, can be a great attraction. It also means they don’t have to pay removal costs for their own furniture, or worry about having to buy new furniture before they can settle in. You can take advantage of buy-to-let landlord furniture packages that are both stylish and inexpensive.

When working out the rent, you need to cover your costs at the very least. Ideally, you need to make a profit, of course. Take into account the buy-to-let mortgage repayments, insurance costs, repairs and agent’s fees.

Once you’ve worked out what you’ll need to spend each year, estimate how it would affect you if there were any periods when your property was vacant. Investigate how much other landlords and letting agents are charging for different property types as well.


Choosing the right mortgage

A buy-to-let mortgage is different from the mortgage you have on your own home. The sum you can borrow depends on the rental income you plan to get from the property. However, some lenders may also consider other income you receive.

As a general rule of thumb, lenders will often specify your rental income needs to be between 25% and 45% higher than your mortgage payment. Lenders’ eligibility terms can vary too.

While there are definite advantages to becoming a landlord in 2021, thanks to the current buoyant market and multitude of deals available, thorough research is crucial. Contact lenders to weigh up the pros and cons of fixed rate or variable mortgages. Look into interest-only or repayment mortgages and see how they will affect your finances.

Tread tentatively; with such a wide choice of buy-to-let mortgages available, study them thoroughly before taking the plunge and don’t rush into anything. Making the right decision now will help you to reap greater rewards in the long term.

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