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Buy-to-letters Make Hay While Sun Shines… But Clouds Loom On Horizon
Landlords are enjoying a period of relative prosperity, yet the mid-term prospects for the buy-to-let market are predicted to be very difficult, new research from landlords broker SimplyBusiness.co.uk reveals today.
Buoyed by low interest rates and the continued tough environment for first time buyers, buy-to-letters are enjoying strong yields on their properties, according to the study among 189 landlords.
Yet, with hikes in interest rates anticipated, and political parties pledging to assist first-time-buyers to get on the property ladder post-election, the longer term prospects for the industry are far less certain.
More than three quarters (78%) of landlords are optimistic about the buy-to-let market over the next 12 months.
Throughout the recession, barely a quarter (25%) have had to lower their rents to keep tenants.
A strong majority (70%) have seen property prices starting to increase in their areas, easing capital losses brought by the recession, and generating a higher barrier to entry for first-time-buyers – thus driving up rental demand.
Julian Watson, Landlord Product Manager at SimplyBusiness.co.uk comments:
“With high prices and low interest rates, landlords tell us they’re able to reap healthy margins at the moment. However, in our study, many expressed grave concern for the longer-term prospects of the market.
“They are realistic that interest rates can’t stay this low indefinitely, and are nervous of initiatives the next Government will introduce to assist first-time-buyers. Indeed, 86% of respondents felt the announcements made in the recent Budget would not help landlords.
“New build has also slowed in the recession, driving up rental demand for the existing housing stock, but as our landlords identify, a resurgence in this sector will increase competition for lettings.”
Throughout the last 14 months of the global credit crisis, only a quarter (26%) of landlords have purchased a new property to let.
Similarly few landlords (28%) expect to buy another property in the next year.
Julian Watson comments: “The recession appears to have dissuaded casual buy-to-letters from reinvesting, whilst the more professional investors continue to speculate.”
However, for those that are investing in new property, mortgages remain scarce, as Chantelle Bleasdale, Managing Director of mortgage advisors ClickCover explains:
“We have seen a rise in the number of buy-to-let investors re-mortgaging their existing residential property to access cheaper finance than is currently available through straight buy-to-let mortgages.”
For further information please contact:
David Mercer or Mark Doonan at Man Bites Dog
01273 716 820
About the study
The study is based on research conducted by SimplyBusiness.co.uk among its Landlord customers, their were 189 UK landlord responses.
For full graphical results of the study, please visit:
SimplyBusiness.co.uk is the UK’s leading online business insurance and landlord insurance broker.
SimplyBusiness.co.uk is one of the UK’s fastest growing commercial insurance brokers.
For further information on buy-to-let mortgages, and landlord insurance, please visit: