"That market seems to have disappeared because of the tax implications of owning property now"
The mortgage landscape in Nottingham is in supercharge, shaped by shifting economic realities and evolving housing demands. James Carpenter (pictured), a seasoned mortgage advisor with BB Mortgages, told Mortgage Introducer that a lot of this change is being spurred on by younger generational interest.
“The first-time buyer market has improved greatly in the last 12 to 18 months,” Carpenter explained. “And although interest rates have got more expensive, I think that because rents have gone up so much, first-time buyers are looking at it and saying, ‘well, I can buy the same house, and the rent’s actually more expensive than the mortgage payment, provided I can get a 5% deposit from the Bank of Mum and Dad’.
“As such, even slightly higher interest rates haven't really impacted that marketplace as much, because the alternative is renting.”
According to the ONS, the average monthly rent in Nottingham reached £937, marking a 9.1% increase from £859 in October 2023. For one-bedroom properties, the average rent is £675, a 10.0% annual increase, two-bedroom properties it’s £843, three-bedroom properties have a rent of £967, and for four or more bedrooms, it’s a rent of £1,366.
But it’s not just rental flux that’s changing the Nottingham landscape - the buy-to-let sector is also evolving, with investors moving away from traditional approaches.
‘A lot more people want to live in the city’
“There’s a diversification away from single letting. People are looking for more HMOs or holiday lettings,” Carpenter added. “The buyer market has become a little bit more professional as opposed to just the average couple buying a couple of terraced houses to rent out – that market seems to have disappeared because of the tax implications of owning property now. Those properties are then coming to the market and feeding the first-time buyer market – and they often get called ‘dinner party landlords’ - middle class people that [buy a couple of places because] their friends and their colleagues have got a couple of buy to lets. But they’re not quite sure why they're doing it or what the end game is.”
The urban-suburban dichotomy in Nottingham presents its own set of challenges and opportunities. As Carpenter told Mortgage Introducer, people are drawn to a more metropolitan life – even if it means paying more for less.
“From a first-time buyer perspective, a lot more people want to live in the city,” Carpenter added, attributing this to the preferences of younger buyers who often prioritize accessibility over parking spaces. “In the big boom in Nottingham in the early 2000s, a lot of the old factories were converted into apartments – so now there's a lot more new build apartments available.”
On the other hand, student rentals and holiday lets remain strong too. According to the BBC, Nottingham's student population has grown significantly, with approximately 61,000 students attending both the University of Nottingham and Nottingham Trent University. As such, Nottingham City Council developed a substantial number of Purpose-Built Student Accommodation (PBSA) units. In 2023, there were approximately 11,084 PBSA units available.
A problem-oriented approach
“Occupation and the student market is still really still really strong,” added Carpenter. “One of my biggest landlords has just bought 50 rooms, so there's definitely still big demand from landlords for student property.”
And, in a volatile economic climate, adapting to these shifting client needs has become critical for mortgage advisors, as Carpenter cited the necessity of tracking and reviewing applications more rigorously.
“What we’re finding is that we have to reserve a product for you today, but that might not [work]. We’re constantly reviewing those products all the way through to completion,” he told Mortgage Introducer. This evolving approach reflects the heightened complexity of the current market.
Carpenter candidly describes today’s mortgage broking environment as the hardest he’s experienced in his 17-year career.
“In 2008/9, when the economy crashed, it was easy because there was just no money,” he added. “Whereas this market, there’s still money available, lenders still have money to lend, and there are still borrowers out there. But it is harder to find a solution for them. You’re trying to find a box to put that into. Every customer you speak to will say, ‘I want to buy a house, but these are my circumstances. Can you help me find a solution?’”
Challenges in the buy-to-let sector
As Nottingham grapples with a burgeoning student population and a growing business sector, the local mortgage market faces both challenges and opportunities. Landlords are now pursuing higher yields, often through unconventional investments.
“They’re looking for quirkier opportunities than they used to, which was ‘I buy a two-bed terraced house, I’ll rent it for £700 a month and the mortgage is £200 – therefore I’m making a decent profit’. But because interest rates have gone up, that profit has diminished. Although the rents have gone up a little bit so everything is just a bit more challenging and a bit more individual.”
Despite these challenges, Carpenter’s optimistic about what 2025 holds for Nottingham’s bustling property market. As he aptly summarised “it’s all about adapting and finding the right fit for each client in a constantly changing environment.”
