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Doom laden warnings about house prices dominated the news cycle in 2023, there would be an exodus of landlords, prices would drop 20% and buy to let was finished. So what actually happened and why and what does that mean for 2024 and beyond?

Well for us 2024 appears to mark the comeback of buy-to-let investments, not that it really went away, lets dig into why.

Last summer, inflation and the disastrous Truss premiership caused buy-to-let mortgage rates to spike to nearly 7 percent, pushing many small-scale, highly leveraged landlords into financial difficulty. However, the landscape has shifted. In the past year, rents have outpaced house prices. Due to a demand/supply imbalance, private rents in the UK rose in double digits all through 2023 according to Rightmove.

Aneisha Beveridge, the head of research at estate agency Hamptons, states, “We anticipate that rents will increase more than four times faster than house prices from 2023 to 2026.”

This month, some of the UK’s major lenders, including Halifax, Leeds Building Society, HSBC, and Nationwide, have seemingly decided that now is the time to cut  mortgage rates as they vie for market share. With interest rates widely expected to start declining this summer due to a significant decrease in inflation, mortgage rates were always likely to follow suit.

After a year of consistent but small price declines in 2023, the global property consultancy Knight Frank has revised its forecast for UK house prices, now predicting a 3% increase in 2024, up from an earlier estimate of a 4% drop. Similarly, Savills has adjusted its five-year predictions, anticipating a 20% rise instead of the previously projected 12%.

Against a backdrop of diminishing inflation and growing expectations of interest rate cuts, Knight Frank anticipates that the increase in mortgage approvals witnessed in recent months will result in at least a 10% rise in transactions this year.

The online property website Rightmove reports that asking prices for new sellers have risen by an average of 1.3%, or £4,571, between December and January—the most significant increase for this time of year since before the pandemic.

With rising rental yields, increasing house prices, falling interest rates, and a substantial uptick in transactions, it appears that now is an opportune time to re-enter the buy-to-let market. Rumours of its death it seems had been greatly exaggerated.

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