The buy-to-let boom

Gemma Harle is managing director at TenetLime

So we are in for another year or two of low interest rates, more QE and moderate infation. The direction is set, the weather anything but fair, and we should expect collateral damage. Not least among the assets to suffer are people's pensions. Pension funds are calling for an urgent meeting with The Pensions Regulator to discuss ways of protecting UK schemes from the negative effects of quantitative easing, after the Bank of England expanded the programme by £75bn.

But for those with money to invest, and those of us involved in buy-to-Let, the game has moved on. Buy-to-Let contintues to attract borrowers and lenders and this shows no signs of abating. While all asset classes are volatile and deleveraging to some extent, housing still looks a good bet, and an even better one for brokers dealing in buy-to-Let.

Looking forward there are good reasons on the demand and supply side for broker confidence in this market. The government's plans for new builds are insufficient to meet the demand of new buyers. Equally, constrained residential mortgage finance, and squeezed incomes will encourage renting. Low interest rates should result in lower payments on landlord mortgages which in turn will keep rents relatively attractive as an option and stable though with undoubted upwards pressure through demand.

Tenants that are happy are also going to be less likely to move than ever, with costs of switching properties being a greater concern in 2012 than it has been in some time - again due to the squeeze on real income and continued rise in fees associated with switching. Quality tenants looking to stay in the property for the long term will increase in numbers giving everyone more confidence.

There will be more lenders in the industry and more products owing to more buy-to-let funding, cheaper rates and more flexible criteria.  Loan to values will improve though lenders will continue to differentiate between experienced landlords and new entrants.  The best products are likely to sit in the small portfolio sector where exposure is reduced and the market competitive. 

There are many reasons to be gloomy about the economy but buy-to-let is not one of them.