Is the squeeze easing? Andrea Kirkby finds that demand for finance still outstrips supply. T
he lettings business is booming. Rents are soaring as first time buyers, priced out of the homebuying market, compete for scarce rental property and buy to let landlords – last year’s endangered species – are flourishing.
Figures from LSL Property Services show that London rents
rose 6.6 per cent in the last year, to £1,025 a month; outside London, the quantum is smaller (£713 a month) but the trend’s the same. No wonder that according to Paragon’s Q2 Private Rental Sector Trends, 23 per cent of landlords feel more optimistic – hoping to expand their portfolios, with average portfolio size expected to increase from 12.6 properties now to 13.1 next year. The buy to let mortgage market has recovered from its troughs,
too; Andy Young, MD of The Business Mortgage Company, expects to see total gross lending of £13-14bn this year, (£10bn last year) and believes the market will grow to £25bn by 2015. However, recovery is only partial – only 22 per cent of the
landlords that Paragon surveyed said BTL finance was reasonably available. Though recent figures from the Council of Mortgage Lenders show gross buy-to-let mortgage lending increasing 29 per cent by volume and 40 per cent by value in Q2, the buy to let mortgage market is still tricky to navigate. Paul Rockett, MD of Leaders Mortgages, says his firm saw a
9.4 per cent increase in buy to let mortgage applications in the second quarter of 2011. But, he admits, “the demand for buy-to-let mortgages still far outweighs the supply.” New lenders have come into the market over recent months, and some existing lenders have expanded their buy-to-let product
54 NOVEMBER 2011 PROPERTYdrum
ANDY YOUNG THE BUSINESS MORTGAGE COMPANY
ranges. The number of products available via Leaders Mortgages has increased by almost 25 per cent since the beginning of April. Paul says, “regional building societies have demonstrated an increased appetite to lend in the buy-to-let market, launching a good choice of competitively priced mortgages.” David Whittaker, MD of Mortgages for Business, says the
market has grown rapidly. “You’ve gone from 11 to 24 lenders, under 100 products to over 450 products from 24 lenders, and 6 lenders doing HMO loans,” he says. New lenders have not changed the relatively tough criteria for lending. Andy Young says new building societies entering the
We expect to see total gross lending this year of £13-14bn with growth to £25bn by 2015.’
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