Buy-To-Let stable but outlook remains uncertain
By Geoff Slaughter, Small BusinessLink
Landlords are enjoying a period of relative prosperity, according to new research from SimplyBusiness.co.uk published today. While the collar-loosening seems to have abaited for now, the mid-term prospects for the buy-to-let market look to be less secure and are predicted to be very difficult.
The study of 189 landlords reveals that strong yields exists in the sector, supported by lower interest rates and tougher entry criteria for first time buyers. Indeed the tightening of mortage lending that has lead to stagnation in the housing market is widely believed to be of significant value to the rental sector.
Uncertain times ahead
Every silver lining must have it’s own cloud; and it looks to be the General Election. With politcial posturing on helping first-time buyers and widely expected increases in interest rates on the horizon, the longer term prospects for the industry are far less certain.
Julian Watson, Landlord Product Manager at SimplyBusiness.co.uk remains cautious on the market’s outlook:
“With high prices and low interest rates, landlords tell us they able to reap healthy margins at the moment. However, in our study, many expressed grave concern for the longer-term prospects of the market.
“They are realistic that interest rates can’t stay this low indefinitely, and are nervous of initiatives the next Government will introduce to assist first-time-buyers. Indeed, 86% of respondents felt the announcements made in the recent Budget would not help landlords.
“New build has also slowed in the recession, driving up rental demand for the existing housing stock, but as our landlords identify, a resurgence in this sector will increase competition for lettings.”
Throughout the last 14 months of the global credit crisis, only a quarter (26%) of landlords have purchased a new property to let. Similarly few landlords (28%) expect to buy another property in the next year.
Julian Watson concludes: “The recession appears to have dissuaded casual buy-to-letters from reinvesting, whilst the more professional investors continue to speculate.”
However, for those that are investing in new property, mortgages remain scarce, as Chantelle Bleasdale, Managing Director of mortgage advisors ClickCover explains:
“We have seen a rise in the number of buy-to-let investors re-mortgaging their existing residential property to access cheaper finance than is currently available through straight buy-to-let mortgages.”
About the study
The study is based on research conducted by SimplyBusiness.co.uk among it’s landlord customers, there were 189 UK landlord responses.
About SimplyBusiness.co.uk
SimplyBusiness.co.uk is the UK’s leading online business insurance and landlord insurance broker. Small BusinessLink has a commercial partnership with SimplyBusiness, and earns commissions from validated insurance sales and other products.
Get more information on SimplyBusiness Landlord Insurance products.
Full details of the study can be found here.
