MIp12-13_0210:MI 12 Jan 21/01/2010 17:03 Page 21
Market review | 13
First-time buyers especially are facing good return on their property investments. amateur landlord take a long hard look at
major affordability issues and are renting for House price figures for November continue to their property investments with increasing
longer rather than buying, especially in the show a small increase of 0.5%, according to numbers shying away from the current
Capital and surrounding areas. As the average figures revealed by Nationwide, while Halifax market. Many of these amateur landlords got
age of a first-time buyer has increased, young put the rise at 1.4%. For Nationwide it was cold feet about the potential of their
people now fully expect to rent for a growing the seventh consecutive price rise in as many investments and have looked to offload their
period which in turn continues to drive months and the fifth consecutive rise as properties pretty swiftly.
demand for rental accommodation. reported by Halifax. On the Nationwide
figures alone, the average house price now Buy-to-let
Rental demand stands just 12.5% away from its October 2007 There has certainly been a shift back to the
Indeed according to recent research from high. professional landlord over the 'credit crunch'
lettingsearch.co.uk The Council of Mortgage Lenders reports period and unsurprisingly the buy-to-let
<http://lettingsearch.co.uk> demand for that gross lending fell 10% in November, with market will remain a tricky place for the first-
rental property will remain strong in 2010 as just £12 billion completed compared to £13.3 time landlord in 2010. There are a number of
uncertainty lingers in the sales market. It billion in October. It says that this was also a pointers to indicate that the experienced
predicts stock levels will fall further in quarter 14% drop on the £13.9 billion in gross landlord will be as keen as ever to continue to
one 2010 as accidental landlords continue to lending seen this time last year. The trade build on his investment portfolio. We have
return to the sales market. On top of this the body says that a modest seasonal decline already outlined affordability problems and
research suggests that as a consequence, rents between October and November is typical, without delving too deeply into the
will stabilise in many areas of the country, but that the 10% fall is a little larger than fundamentals of the BTL arena we believe that
rising in areas of particularly high demand, normal. Commenting on the figures, Paul lifestyle choices, the well-documented gulf in
pushing growth back into positive figures and Samter, economist at the CML, says there is supply and demand, and relatively low interest
eventually leading to more lucrative rental no sign of a swift recovery in lending rates will all be in evidence as demand in the
yields. It indicates that professional landlords volumes, especially with remortgaging set to sector remains relatively strong.
are also likely to benefit from a gradual remain at subdued levels while low interest Of course we have seen many of the
increase in buy-to-let (BTL) lending and, with rates persist. The underlying story is one of wholesale funded BTL lenders, who accounted
investments in alternative asset classes market conditions holding steady and the for a significant proportion of pre credit crunch
continuing to underperform, those with CML does not expect this position to change lending, disappear but there was a positive
liquid cash for a deposit may look to invest in much in the coming months. move by specialist lender Tiuta late last year
further affordable lettings properties in the Looking ahead it will also be interesting to when it released its first BTL product. There has
second half of 2010. note consumer appetites for products in 2010. been wider speculation of more lenders
Surveyors are also predicting rents will Inevitably consumers will look more entering and returning to this sector but with
increase in the new year as accidental favourably on tracker deals in the first quarter funding issues still paramount I don't expect
landlords return to the sales market. The of the year with the Bank of England base rate this will amount to any massive push for the
latest lettings survey from the Royal widely expected to stay at its record low over sector. I imagine that any new entrants will
Institution of Chartered Surveyors (RICS) this period. However, as the base rate begins only be looking for a small slice of an already
found that 22% more surveyors expect rents its unavoidable move upwards, appetites will quite competitive arena and with distribution
to rise rather than fall in the next three start to increase for fixed rates and any channels having to be well policed this will
months. significant movement in the base rate will also further inhibit any real impact.
The survey also found that the supply of kick-start the remortgage market. It's fair to say that most people that are
rental homes is dwindling, with a net balance investing in BTL in the current economic
of 11% of surveyors seeing the number of Interest rates climate are slowly growing their portfolios with
new rental properties coming onto the market The Confederation of British Industry (CBI) very few investors breaching the market. The
falling rather than rising. RICS says that the predicts interest rates will start to rise as early buy-to-let market has transformed from a get
recent pick up in the housing market seems to as the spring, hitting 2% by the end of 2010 rich quick scheme for amateur speculators
have led to a fall in the number of available with no further rises in 2011. The CBI says often buying off plan to a serious long term
homes for rent. In quarter three 2009 the that interest rates will start to rise as the Bank money making venture for portfolio investors
number of rental properties fell for the first of England withdraws the monetary stimulus negotiating big discounts from builders or
time since January 2008, slumping to the it has provided in order to minimise the risk selectively purchasing pre-owned homes and
lowest level for 11 years. The survey found of inflation. Of course it remains difficult to holding properties for long term yield and
that while the supply of rental property is on predict the extent of these base rate capital appreciation.
the decline, demand is continuing to pick up, movements but as the old saying goes 'the The combination of lower building activity
which is likely to push up rent levels. Some only way is up'. and efforts to clear stocks has cleared much of
16% more surveyors saw an increase in tenant Focusing back on the buy-to-let lending the new build oversupply. These factors mean
demand over the past three months, with arena quarter three figures for 2009 showed that whilst we can't, and mustn't, expect a
London showing the highest number of that lending was £2.1 billion, up 10% from return to pre-credit crunch market conditions
people looking to rent. the previous quarter which is a positive sign. it does mean that the bedrock of the BTL
But looking at the wider picture when market is fairly stable.
Limited supply compared to the £45 billion annual lending As with the majority of mainstream
Looking at the overall mortgage market and it levels occurring prior to the credit crunch this mortgage business 2010 may well be a year of
is clear that it is still underpinned by the just illustrates the extent of the market slow but steady growth and this would certainly
limited supply of homes in the UK. People contraction. A large factor in this is the be no bad thing. A so called boring year
need somewhere to live and investors with a widespread disappearance of the casual or without any major fluctuations is just what the
long term view still have confidence that this amateur buy-to-let investor from the market. housing and BTL markets need to help them
fundamental market force will produce a The credit crunch has certainly made the get back on track.
www.mortgageintroducer.com February 2010 Mortgage Introducer
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44