An outlook for 2023
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An outlook for 2023's buy-to let market

The end of an unsteady financial year is in sight, and at this pivotal moment, many landlords will be assessing their position in the market and the options awaiting them in 2023. If you’re debating whether or not to remain in the buy-to-let market, we can take a look at what’s happening in the sector right now and conclude whether or not the buy-to-let market will continue to be a reliable investment into 2023.

Are there any new regulations being introduced?

Hot on the radar for landlords going into 2023, is the government pledge to further introduce the Renters Reform Bill. The Bill will include measures to protect tenants from rent increases and no-fault evictions – although this is subject to change. Rental homes will also be required to meet minimum standards established by the government.

The new measures aim to improve the quality of homes in the private rental sector and will target homes that are unfit for living in – this is known as the Decent Homes Standard (DHS). The DHS currently only applies to the social housing sector but will be extended to the private sector. It requires homes to be free from serious health and safety hazards and kept in a good state of repair by landlords. 

For landlords who already maintain high standards, the new bill is not expected to lead to any significant extra costs.

What is happening to buy-to-let mortgages?

Chancellor Kwasi Kwarteng’s original mini-budget plans can be criticised for the domino effect on today’s property market, with issues trickling into every sector.

Buy-to-let loans initially took a hit following the announcement, with the number of available products falling to just 988* different deals, compared with 1,942 before the mini-budget, according to Zoopla*.

This can be pinned down to interest rates growing significantly since the beginning of the year due to the Bank of England’s hiked-up base rate.

However, the mortgage market is currently in a state of fluctuation, and rates have slightly dropped since the appointment of Jeremy Hunt as the new Chancellor. It appears that the alterations to the original mini-budget have restored some market confidence, and interest rates may fall even further as the cost of government borrowing continues to lessen.

What about rent?

Currently, rental rates are rising in line with mortgage rates, and it’s reasonable to expect that this trend will carry through to 2023. Data from Zoopla’s recent Rental Market Report found that new rental rates in the UK have seen an increase of £115 during the past year to an average of £1,051.*

The steep incline is due to the long-established imbalance between supply and demand within the sector. Too many landlords are abandoning the market due to uncertainty for the future, and this has resulted in too few properties available in the private rental sector to meet the demand.

The report also goes on to say that the number of rental homes on the market has now reduced to around half the level recorded during the past five years. * Meanwhile, the rate of demand has skyrocketed to around 142% higher than it was five years prior, according to Zoopla.*

If this trend continues into next year as expected, the lack of supply will only put further upward pressure on rents.

Should I invest in a buy-to-let property?

It’s understandable that some may have reservations about entering the market at such a pivotal moment, but with rental demand far outstripping supply and rents reaching new highs, you are likely to be in a strong position if you choose to invest now.


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