Buy-to-let mini-boom tipped to continue, with new investors snapping up a quarter of properties

Published 13th Apr 2012

Buy-to-let is forecast to continue its mini-boom, despite the dark clouds hanging over the property market, according mortgage brokers.

Landlords are predicted to buy more properties and a growing number of first-time investors make up 23 per cent of all buy-to-let business, a report has revealed.

It highlights that while first-time buyers are struggling and homeowners are experiencing a squeeze from lenders raising mortgage rates and cracking down on cut-price interest only loans, buy-to-let is resurgent.

Mortgages for landlords made up a fifth (21 per cent) of brokers’ total business in the first three months of the year, according to the FACT Survey from buy-to-let specialist Paragon.

And it said that 79 per cent of brokers expect the buy-to-let market to continue to grow in 2012 – with 35 per cent describing landlord demand as strong and 46 per cent saying it was stable.

Demand for buy-to-let has strengthened despite an owner-occupier freeze in the property market, with Council of Mortgage Lenders figures showing homebuyers hit the lowest level for 27 years in 2011.

The organisation’s figures showed buy-to-let mortgages up 20 per cent last year, while homebuyer loans fell six per cent. There were just 700 more first-time buyers recorded than in the depths of the property slump in 2008 - delivering the second lowest number on record.

John Heron, director of Paragon Mortgages, said: ‘Whilst we are not back to post credit crunch business levels, and will not be for some time, there has been a steady improvement in buy-to-let business.’

Paragon highlighted that it was not just existing buy-to-let landlords expanding their portfolios, but new investors were also entering the market.

Many of them will be lured by the prospect of rental yields beating the poor returns on cash savings and put off by the volatility of the stock market.

The Paragon survey showed that first-time landlords made up 23 per cent of broker’s buy-to-let business, compared to 39 per cent being existing landlords snapping up more properties and 31 per cent remortgages.

Heron said: ‘It is particularly interesting to see the increase in first-time landlords entering the market, this not only demonstrates confidence in the market but also that buy-to-let remains an attractive business.’

Source: ' ThisIsMoney '

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