Buy-to-let brokers optimistic for 2005

Amanda Jarvis

January 7, 2005

69% of respondents expect to write more Buy-to-Let business in the next three months than they have in the preceding three. 19% expect to write the same amount and only 12% expect to write less.

When asked which areas of Buy-to-Let are expected to generate this business, the intermediaries questioned expected a hefty 48% to come from experienced landlords growing their portfolios. This was followed by an anticipated 36% from Buy-to-Let borrowers re-mortgaging current properties. These findings clearly demonstrate that intermediaries operating in this sector have professional landlord clients who view their property investments with a hard business head, and who are not generally distracted by short-term fluctuations in the housing market. A minority (16%) of business is expected from borrowers who are new to Buy-to-Let, confirming that rather than being encouraged by market conditions, many speculative property investors are deterred by less attractive short-term returns.

When asked about interest rates a significant minority of the respondents (31%) believe that they will be cut by 0.25% in the next three months while 56% believe that they will remain the same. This will lead to better deals for landlords looking to invest in more property and may encourage them to expand their portfolios. 38% of intermediaries think that chargeable rents will increase over the next three months and 44% think they will remain the same. Rising rents will further underpin the fundamentals of the Buy-to-Let market and encourage landlords to invest. Buy-to-let intermediaries expect the housing market to remain stable with 50% predicting flat house prices over the next three months. There are no concerns that the market will crash in 2005.

Jonathan Cornell at Hamptons Mortgages commented: ‘We have seen a significant amount of activity from professional landlords either adding to their portfolios or re-mortgaging them. I would expect this to continue next year.’

Nicola Severn, Marketing Manager at Mortgage Trust added: ‘Intermediaries are positive about the Buy-to-Let market in the New Year. Lending is always slower in the approach to Christmas and advisers are now looking ahead to Spring, and an anticipated increase in business. Growing confidence may also reflect increasing expectations that interest rates may now have reached their peak and be headed downwards. The MPC indicated that it had discussed dropping rates in December, and this has led to speculation that they may be reduced 0.25% in the coming months. The fundamentals of the Buy-to-Let market remain sound; tenant demand is strong and rental levels are on the increase. Rumours of the death of the Buy-to-Let market are completely unfounded.’

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