Recession postpones landlord expansion plans

Yuan Phoon

May 10, 2012

The tenant eviction and rent collection firm said that many investors may put off their expansion plans for the time being until the economy showed signs of recovery.

He said: “Current market conditions may appear perfect for landlords with record tenant demand and a shortage of accommodation available. However if the last recession taught landlords anything it is that economic uncertainty also increases the likelihood of rent arrears and tenants defaulting on payments.

“As a result whilst some landlords will look at the long term picture and won’t want to miss out on the opportunity to secure property purchases that represent real value for money, we expect others to be mindful of the possibility of rent arrears and bide their time until there are genuine signs of economic growth.”

BoE figures – robust October for mortgage approvals

Meanwhile Graham Kinnear, managing director at Landlord Assist, said property investors were also looking for more stability from their mortgage lenders until they committed to their expansion plans.

He said: “Although a double-dip recession may fuel further growth in the buy-to-let sector as prospective home owners choose to rent instead of buy, at the moment some landlords are nervous about extending their portfolios as they are getting very mixed messages from their banks.

“Some of the banks appear to be increasing their standard variable rates even though the Bank of England base rate remains at 0.5%.

“Landlords want economic stability and clarity of lending criteria before they will expand their portfolios further.”

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