High demand expected for buy to let bridging loans in 2022

Buy to let bridging loans are expected to be in high demand this year, with real estate likely to attract interest from both domestic and overseas buyers. We have explored the top three reasons why. Additionally, we have outlined the ways in which MFS can support property investors in 2022.

1)    House prices and rents expected to rise

Buy-to-let properties are popular thanks to the fact they offer two ways for investors to make money. The first is the long-term capital growth as the property increases in value. The second is the ongoing rental income an investor can receive.

In 2022, buy to let landlords can expect to see growth in both areas, experts suggest. For instance, leading real estate firm Savills has predicted that house prices will rise 3.5% over the coming year. Rightmove puts the figure even higher at 5%. Meanwhile, Zoopla says that rental prices will increase 4.5% in 2022. This follows significant growth last year.

Sources: Savills (via Mortgage Solutions)RightmoveZoopla (via Property Industry Eye)

2)    The return of overseas buyers

The fact property prices and rental costs are both forecast to rise will ensure buy to let remains in demand. Another important factor is the return of overseas buyers.

Since the start of the pandemic, strict travel restrictions have closed nations’ borders. This has meant many international buyers have been unable to invest in UK real estate.

Late last year, Knight Frank reported that overseas buyers were “gearing up” for a return to the UK property market. This is due to come to fruition in the coming months. Their attention will largely be focused on prime London real estate, the company added.

Source: Knight Frank

In 2022, there are likely to be far fewer restrictions, which should mean a return of more overseas buyers. This will increase demand for buy to let bridging loans. Our offshore loans are available for foreign nationals, UK expats and offshore companies looking to invest in UK property utilising a bridge-to-let loan.

3)    Interest rate and stamp duty changes

Buy-to-let investors will be wary of two potential trends this year: rising interest rates and stamp duty changes.

The Bank of England increased interest rates in December 2021. It surprised many in doing so. The UK was the first major central bank to raise interest rates since the Covid-19 pandemic began.

In 2022, interest rates are predicted to rise further. This will have implications on the cost of borrowing, most notably residential mortgages and buy to let mortgages.

Read more about this trend: What property investors need to know about interest rate changes

Stamp duty could also be subject to reform. There were rumours ahead of the Autumn Budget 2021 that the Chancellor was considering an increase in the stamp duty surcharge for second homes. Some sources said it would rise from 3% to 4%. This did not materialise, but there are reports the plans may resurface in 2022.

Source: The Telegraph

If a stamp duty hike is back on the table, some property investors might choose to fast-track their plans. It is likely that they would want to complete purchases before any changes came into effect. Again, this could result in higher demand for buy to let bridging loans this year.

Financing buy-to-let investments

Even with some potential challenges, buy-to-let property investments are expected to remain in high demand this year. It is important, then, that investors and their brokers find the right loans to finance these purchases.

There are several qualities to look for in a buy-to-let loan provider. Speed is one. The property market is competitive, and the ability to act fast can often prove a major advantage.

Flexibility is another. Brokers and buyers will want a lender that is able to tailor products to a person’s particular needs and circumstances.

MFS ticks both boxes. We can deliver both buy to let bridging loans and are adding buy to let mortgages to our offering in the near future. This follows the successful pilot of our new mortgages in late 2021.

Our loans can help buy to let investors overcome many challenges this year:

  • Broken chains
  • Another lender pulling out
  • Complex set of circumstances behind their purchase
  • Auction purchases

We can also support them as they expand or consolidate their portfolios:

  • Refurbishments
  • Refinancing
  • Large bridging loans

You can also download our buy-to-let guide for more information.

To find out more about how MFS can support your property investments or buy to let purchases in 2022, get in touch with our friendly team today.

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