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Buy-to-let mortgages to rise?

7th September 2009 | back to article listings BACK    print this article PRINT

During the credit crunch it has become pretty plain that buy-to-let has not died out as some have predicted, even if some unwise investors have seen their errors exposed by falling values and the inability to make a quick return.

At the same time, however, many investors have found the recent property slump to be advantageous, offering cash buyers the chance to pick up comparative bargains. Moreover, the inability of would-be first-time buyers to get on the housing ladder has also had an impact.

This was explained by marketing manager at Mortgages for Business Michael Aglony, who noted: "A landlord who has invested wisely will just hold onto their property and basically ride it out because people still need somewhere to live. It is even harder for a normal person, who is a first-time buyer, to buy a house."

While this may be the experience for some investors, however, there are also those who would like to make investments but are unable to start their portfolios - or add to existing ones - due to the state of the buy-to-let mortgage market. A recent survey by moneysupermarket.com found that in the past year the number of enquiries about such products rose by nearly 50 per cent, but the total actually agreed declined by more than 70 per cent.

Mr Aglony remarked that what has happened is that only a small number of players remain in the market and this has restricted competition. He noted rep that there was some hope that the arrival of the Bank of China in the field would change this, but "so far this hasn't really happened".

But Mr Aglony sounded an optimistic note in his analysis, stating: "Unfortunately, it is not amazing at the moment, but we are hoping to see a bit of a shift perhaps in the next month or two as they try to meet lending targets before the year ends. There might be a change there."

Whether this happens before the year is out remains to be seen. But some good indicators about the future health of the market may be gleaned from surveys of landlords. For instance, the recent BDRC poll of the sector found that 17 per cent of landlords said their letting prospects were "very good" for the next quarter, compared with ten per cent in the first quarter of this year.

So while that number may constitute a minority, it is one that could grow over the coming quarters as the economy starts to emerge from the recession and the credit crunch eases. If the buy-to-let mortgage market does pick up, there might be many investors keen to take advantage of such an upturn.

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