Buy-to-let mortgage market to grow
A majority of buy-to-let property owners, developers and intermediaries have said they are confident in the buy-to-let market and plan to take on more properties.
Confidence remains high due to the combination of increasing numbers of tenants looking to rent, the potential for a fall in interest rates, and the capital appreciation that is expected on buy-to-let properties.
Research carried out by the Association of Residential Letting Agents (ARLA) shows that returns on buy-to-let commercial mortgages stand at 22.4 per cent, while Mortgage Trust has found that most buy-to-let intermediaries expect the market to grow.
However, ARLA has reported revenue falls throughout the sector including seven per cent for houses and five per cent for flats.
Robert Jordan, president of the ARLA, said: "A large proportion of experienced buy-to-let landlords are clearly at odds with some of the commentators.
"These real investors in the rental market understand both the long term nature of the investment and its resilience in the face of house price movements."
Mortgage Trust's monthly buy-to-let intermediary forecast found that 69 per cent of intermediaries expect to do more buy-to-let business in the next three months than they have in the last three, with just one in eight expecting to do less.
Close to half (48 per cent) of this new business is set to come from existing landlords increasing their property portfolios, Mortgage Trust found. A third of the new business is predicted to come from remortgaging existing properties.
Only one in six intermediaries expected the new business to come from new landlords.
"We have seen a significant amount of activity from professional landlords either adding to their portfolios or remortgaging them. I would expect this to continue next year," said Jonathan Cornell at Hamptons Mortgages.
These figures back up an earlier report by the Council of Mortgage Lenders which found that few private landlords show concern about falling house prices, concentrating on interest rates instead.
Mortgage Trust found that one in three (31 per cent) of buy-to-let intermediaries believed interest rates would fall in the next three months, with fewer than one in eight predicting a rise. As such, conditions are good for investment by existing landlords.
Halifax has backed up these predictions today, saying it expects interest rates to be lowered twice over the next 12 months.
Nicola Severn, marketing manager at Mortgage Trust added: "Intermediaries are positive about the buy-to-let market in the New Year.
"Lending is always slower in the approach to Christmas and advisers are now looking ahead to spring and an anticipated increase in business.
"Growing confidence may also reflect increasing expectations that interest rates may now have reached their peak and be headed downwards.
"The fundamentals of the buy-to-let market remain sound; tenant demand is strong and rental levels are on the increase. Rumours of the death of the buy-to-let market are completely unfounded."
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