Number of first-time landlords increasing
Paragon’s quarterly trend survey found that intermediary buy-to-let business has been growing from first-time landlords since mid-2009.
Perhaps unsurprisingly the number of buy-to-let cases from first-time landlords was at its peak in second quarter of 2002 when the buy-to-let market was experiencing its ‘boom’ period.
During 2008 demand from new landlords fell to its lowest level, largely attributed to the general financial crisis.
John Heron, director of mortgages at Paragon, said: “The dynamics of the landlord market are changing. Professional landlords were typically the backbone and driving force behind growth in the market.
“However in recent times we are seeing them becoming more constrained in terms of being able to release equity and secure new finance.
“Private investor landlords – those with between one and five properties – will be the ones to pick up the slack. These landlords have access to more flexible finance and are able to agree deals much more quickly.
“These landlords are financially astute individuals they typically have other investments such as equities and gilts or bonds, and are well-placed to cope with fluctuations in the economy and the general demands of being a landlord.”
The report found that 20% of intermediaries business has come from first-time landlords on average since the final quarter of 2010. The percentage of cases peaked at 24% in third quarter of 2012.
Latest figures for the first quarter of 2013 show that almost a quarter (22%) of intermediaries’ buy-to-let business was from first-time landlords.