Investment Articles
Hope grows for buy-to-let market recover - www.aboutproperty.co.uk
The property crash saw buy-to-let mortgages just disappear off the market – as lenders shut their doors or just stepped away from the market.
However, hopes are growing lenders may soon be starting to offer buy-to-let loans as house prices look towards hitting bottom and demand for rental properties holds up.
Moneysupermarket.com reports the number of enquiries about buy-to-let mortgages has risen nearly 50 per cent in the last year.
However, there are now 70 per cent fewer products on the market.
Hannah-Mercedes Shenfield, at moneysupermarket, said: "New and existing buy-to-let landlords face a difficult task in finding a suitable mortgage.
"With significantly less products left on the market and high interest rates attached to those available we could potentially have a ticking buy-to-let time bomb on our hands; the need for rental housing is increasing, but there may not be enough landlords available to cater for this demand."
She added the upshot of this shortage will be first-time buyers frozen out of the mortgage market will see rents rise as the supply of rental properties increase.
Graham Kinnear, managing director at Landlord Assist, said: "The continual influx of overseas workers, increasing number of students and single person households mean that the demand for rented accommodation is likely to grow.
"This is likely to lead to rising rent levels and therefore more attractive returns for landlords."
He added: "This in conjunction with the nation’s desire to own property, the fact that property is historically a good hedge against inflation and the fact that many are looking at an alternative to their pension for retirement income, means the likelihood of a buy-to-let resurgence is high."
However, there are still problems ahead for buy-to-let borrowers.
Keshav Thukaram, managing director of Smartlandlord.co.uk, warned landlords plenty of hurdles remain, in particular recent gains in house prices which he described as "a false dawn in a mini-bubble".
"We are in the middle of a recession not a sustained recovery," he said.
"The UK's 2.6 million landlords still need to be cautious.
"They need to watch out for tenants being made redundant and not paying the rent; they should invest in rent guarantee insurance."