News Review: Buy-to-let
Buy-to-let market remains resilient
2007 there was a massive £44 tial homeowners grapple with els of mortgage lending, but
by billion pounds of BtL ad- the difficulty of arranging a will likely lead to a sustainable
Alan Cleary
vances, so comparing that to mortgage and/or saving up a growth path for house prices
managing
director
the 2009 figure of £8.5 billion sizable deposit, instead stay- over the medium term. in ad-
nullact
shows that there is a massive ing in the rental market for dition, cebr’s central forecast
nullrtgage pent up demand that is being longer. in addition the lack for interest rates is that rates
nullperts
held back by the lack of li- of jobs is forcing students to will remain on hold at 0.5 %
reports on the BtL sector quidity in the market. average stay in the education system until mid-to-late 2011.
over the last month have been margins on BtL lending are longer. the FSa in its mortgage
inconsistent to say the least. at an all time high and with the centre for economics market review has indicated
on the one hand, cmL sta- arrears rates falling the risk and Business research (cebr) that it is likely to bring BtL
tistics published this month adjusted returns are excellent issued a paper that stated mortgages into its scope and
show that the number of compared to other asset class- house prices will grow by 6% this will no doubt have an
new BtLs increased in Q4 es. these facts are likely to see in 2010 and will be around impact on how the market
2009 for the second con- the return of investors in 2010 20% higher than today’s val- evolves. many commentators
secutive quarter with 25,800 either by the injection of cash argue that people who take
news loans advanced. How- into lenders funding lines or Products are still pretty BtL mortgages are entering
ever, on the other hand this some signs of a normalising thin on the ground and into a commercial transaction
is significantly down year on securitisation market. there is not much to and therefore can be classed
year as in Q4 2008 38,000 new LSL Property Services say in terms of nenull as professionals who do not
loans were advanced. So this should have a pretty accurate productsnullBmnulland nullnull require protection. i do not
is telling us what we already view of the market given the still dominate nullth nulldinull concur with this argument.
probably knew in that the diverse nature of the com- thronullng its hat in the i agree there needs to be
BtL market, along with the panies it controls. it’s view ring nullth a nenullproduct plenty of debate as to what
overall mortgage market end- is that the 2010 BtL market range mid monthnullnulle parts of the process you
ed 2009 in better shape than has started in a very posi- nullder mortgage market regulate and how the objec-
it started. tive way. Between summer did ennully a signinullant lift tives are achieved but leav-
arrears rates on BtL loans 2008 and autumn 2009 land- in the numnullr of products ing BtL unregulated will
are showing some good signs, lords made negative annual anullilanulle this month and at inevitably lead to it becoming
year on year arrears rates returns, taking into account the nullry least that suggests the wild west of the mortgage
were 37% down, although re- rental income and capital some increase in lendersnull market.
possessions were up year on values. this has, in their view, appetite to lendnull if i sum up all of the advice
year by 9%. the short term swung dramatically since oc- and comment in the press
trend on repossessions looks tober 2009 where landlords ues by the end of 2013. the this month it is mainly about
healthier with a 25% decline are now enjoying positive forecasts are based upon an whether now is a good time
in the number of reposses- returns of 7.6% on an annu- improved mortgage lending to get into BtL. the general
sions when comparing Q4 alised basis. this supports a outlook with mortgage ap- consensus appears to be that
2009 with Q3 2009. BtL ar- lot of anecdotal evidence that provals predicted to reach it depends on the motive
rears performance is now suggests landlords would in- around 72,000 per month by of the investor. if the inves-
better than owner occupied crease their portfolios if there the end of 2010 from today’s tor is looking for an invest-
mortgage performance show- was availability of mortgage level of around 60,000 per ment that can be turned
ing that the sector appears to products. month, and will increase to around quickly and is reliant
have strong resilience against on a macro level, rental around 90,000 per month by on property price increases,
market shocks. demand is likely to stay rela- 2013. this is still some way BtL is not the best option.
at the peak of the market in tively strong as many poten- short of pre-credit crunch lev- if however BtL is being
viewed as a long term invest-
A report from
findaproperty.com shows that rents. They go on to state that there is some ment that is going to be a
rents fell in January by 2.9% on top of a fall in correlation with landlords rushing to beat the hands-on commitment then
December of 2%. This may well have something stamp duty deadline in December but nulldon’t now is potentially a good time
to do with the fact that many landlord’s mortgage buy that nullthere are simply too few buynullonullet to invest due to the relative
payments will be very low at present and transactions to have forced rents down in this property bargains that are on
may manull them more linullly to negotiate on period. offer.
8 mortgage introducer march 2010
MI p6-10.indd 4 23/02/2010 10:56
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