Blog

What may impact BTL and Resi markets in 2025?

Paul Huxter

Guest Blog Writer: Paul Huxter, Head of Intermediary Sales & Distribution, at West One

7 October 2024
Are the green shoots that appeared in 2024 ready to blossom in 2025 for specialist lenders?

Many predicting BoE rate cuts in Q4 and early 2025, and with Bank of England Governor Andrew Bailey speculating on being a “bit more aggressive” with cutting rates. Has the Buy-to-Let and Residential market evolved away from the ‘traditional’ lenders to more specialist lenders?
 

Drivers for the Residential Mortgage Market

In the last two years, many have felt the impact of higher mortgage and inflation rates that have impacted the affordability for buyers along with potential credit complications that many have or are experiencing.

Expectations on what is 'affordable' can be impacted by various factors which may fall outside societal norms of dual household incomes, stable 9-5 employment, good credit, with a track record of mortgage payments without any credit blips.


Saying "Yes" to impaired credit and adverse

West One approaches Residential mortgages with real life in mind. The lending criteria and products are designed to reflect this, meaning adverse credit does not need to be an obstacle to homeownership.

A key to this is not operating credit scoring but assessing each case on its own merits. Particularly, when specialist lenders aim to provide flexibility within product ranges, including product options for those with:
  • Unsatisfied defaults & CCJs
  • Utility & comms accounts ignored even if defaulted (all products)
  • Unsatisfied defaults & CCJs of more than £500 each accepted
  • Mortgage arrears accepted, even if within the last 12 months
  • Missed/late unsecured credit payments accepted
  • Are first-time buyers coming back into the market


Has wage inflation seen the rise of First-time buyers?

First-time buyers, arguably the most impacted and reactive group in the market can be key to the housing market growth.

Despite wage inflation slowing in 2024, the preceding years saw substantial growth providing higher incomes. This did impact the rate at which house prices rise but with house prices levelling off due to the higher BoE rates.

The higher prices and lower LTVs offered by lenders made it a challenge for first-time buyers to enter the market unless they had substantial deposits. To alleviate this challenge West One recently introduced a limited-edition 95%LTV product for first-time buyers.

As speculation around cuts to BoE base rate for Q4 and 2025, house prices and buyer demand have already begun to see an upward tick, with demand at 26% vs Housing stock at 12% y-o-y, according to Zoopla.
 

Drivers for the Buy-to-Let market

Property prices, higher borrowing rates, and an increased cost of living are all factors where a strategic approach is essential for investors when looking at higher-yielding Buy-to-Let investments. Regardless of whether it is a primary or secondary form of income, the profit margin and re-evaluating the type or property must be considered.
 

Professionalisation of the market

There has been plenty of scaremongering in the mainstream media around the ‘death of Buy-to-Let.’ But for those who take a well-thought-out approach, assess all options and think in the longer-term Buy-to-Lets can be a sound investment.

The professionalisation of the sector may see the long-proposed EPC regulations, renters' reform bill, and the need to diversify into different property types. The British Landlord Association reported that a House of Multiple Occupancy (HMO) averages a yield of 7.5%, almost 4% more than a single-let property, which averages 3.63%.

The professional landlord could also adopt a more structured set-up in the form of Limited companies, leaving landlords paying corporation tax, and not income tax on their earnings, which could result in more effective tax planning.
 

Capitalise on funding options

From bridging loans to fee options, should landlords consider that the lowest rate, may not be the best rate when it comes to financing property purchases and renovations? Utilising equity release or short-term funding to boost deposits or how property purchases or renovations are funded.

We are still in a relatively high BoE interest rate environment, and to support borrowers West One has provided fee options to lower the overall monthly payment. An increased fee attached to a product has seen West One offer Buy-to-Let rates starting from 2.34%.

A complex market needs a lender who understands the complexities. The experienced team at West One are poised to provide tailored solutions, recognising that not all opportunities are straightforward. The manual and reason-to-lend approach taken can be the difference in securing funding for a first home, next home, or Buy-to-Let opportunities.
 

Reading this blog counts towards your CPD!

Click here to add this session to your Paradigm CPD log.


7 October 2024

What may impact BTL and Resi markets in 2025?


1 October 2024

Why Gen Z could be the perfect match for protection


30 September 2024

Self-employed mortgages can be easy, if you choose the right lender


26 September 2024

Lenders and regulators must be careful not to add to adviser disillusion


19 September 2024

There may be trouble ahead…


2 September 2024

Source Go: The Modern Answer to the GI Question


29 August 2024

Pre- and post-mini Budget remortgagors need guidance in transformed market


23 August 2024

Guardian's 2023 claims report: a milestone worth celebrating


14 August 2024

Rate cuts are a positive story for advisers


7 August 2024

Mind the gap (s)...


1 August 2024

The mortgage market is set for a teeming H2


29 July 2024

Aldermore are backing more of your clients to go for it


22 July 2024

YOU SAID, WE DID!


12 July 2024

A surge of optimism for the market


9 July 2024

Distribution of Wealth


3 July 2024

Consumer Duty one year on – what might happen next?


24 June 2024

How to increase your protection business


17 June 2024

Consumer Duty will mark new era of continuously changing advice


6 June 2024

Mental Health Matters: Workplace Wellbeing


21 May 2024

Advise or refer? Ensuring the best possible outcomes for your clients


15 May 2024

Darlington Criteria Updates


14 May 2024

And The Wait Goes On


10 May 2024

Cap on broker fees sparks industry debate


1 May 2024

Expect the unexpected


15 April 2024

Ready, set, remortgage!


12 April 2024

How the mortgage market is failing new arrivals to the UK


11 April 2024

A compliance refresh will lighten unavoidable market stress


4 April 2024

What is driving the Specialist Residential and Buy-to-Let markets this year?


4 April 2024

A Government that prioritises owner occupiers at the expense of the PRS


28 March 2024

What is your website for?


19 March 2024

Exploring the value of value added benefits


4 March 2024

Artificial intelligence – friend or foe to advisers?


21 February 2024

RESTRICTIONS LIFTED?


9 February 2024

Trust your own gut when listening to market predictions


7 February 2024

Strategic thinking - Is this time for a new look at how we work as a business?


8 January 2024

The Name's Bond...


21 December 2023

PTs remain a big part of the marketplace


21 December 2023

Not all wine and roses but outlook is better


15 December 2023

Artificial Intelligence: A vision for the future


12 December 2023

Reflecting on 2023


11 December 2023

Mental Health Matters: Menopause


8 December 2023

Looking ahead: Reasons to be cheerful about the market in 2023


17 November 2023

Why TikTok could be a winning tactic for brokers


30 October 2023

How advisers can improve the quality metrics with insurers


27 October 2023

The Aggregator Market - Friend or Foe?


25 October 2023

Don’t let Charter support remove advice from the mortgage process


3 October 2023

How to strengthen your defences against cyber threats


29 September 2023

White Dragon Communications


8 September 2023

Advisers deserve recognition for keeping borrowers on lender books


8 September 2023

Claims history of an insurance should form core part of assessing true value of insurance and advic


23 August 2023

The good, the bad & the ugly of using Artificial Intelligence (AI)


14 August 2023

Accessibility in your marketing


14 August 2023

Choosing the right social media platform for you


7 August 2023

Staying safe online


4 August 2023

The blasé attitude towards sudden mortgage withdrawals is not good enough


1 August 2023

Is your content compliant?


10 July 2023

The argument for higher proc fees for better quality business is undeniable


22 June 2023

Product withdrawal timescales and how brokers can adapt


1 June 2023

We're not in mini-Budget territory yet!


24 May 2023

Skipton’s 100 per cent mortgage should be replicated, not feared


30 April 2023

Protection And Mortgage Fair Value Assessments – What Is My Actual Responsibility?


6 April 2023

Lenders will compete on mortgage rates, but don’t expect a price war


27 March 2023

Vulnerable Customers and Economic Abuse


10 March 2023

Tell borrowers to stop waiting for mortgage rates to fall


7 March 2023

Mixed messages from Bank of England boss ahead of MPC meeting


6 March 2023

Take the Consumer Duty seriously when it comes to protection


17 February 2023

Mortgage Market Update


10 February 2023

Let’s not be hasty and write off this year’s property purchase appetite


6 February 2023

Implementing Consumer Duty


9 January 2023

Income Drawdown – moving with the times


9 January 2023

Why it’s so important you tell us about your vulnerable customers


5 January 2023

Why advisers are so vital in the mortgage market


Paradigm

THIS SITE IS FOR PROFESSIONAL INTERMEDIARY USE ONLY AND NOT FOR USE BY THE GENERAL PUBLIC.

APCC MemberConsumer Duty Alliance

Paradigm Consulting is a Member of the Association of Professional Compliance Consultants and also the Consumer Duty Alliance.

Paradigm Consulting is a trading name of Paradigm Partners Ltd
Office address: Paradigm Partners Ltd, Paradigm House, Brooke Court, Wilmslow, Cheshire, SK9 3ND
Paradigm Partners Ltd is registered in England and Wales. No.09902499. Registered Office: As above

Paradigm Mortgage Services LLP
Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.

Paradigm Protect is a trading name of Paradigm Mortgage Services LLP
Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.