Clouds loom on the hori­zon

The Peterborough Evening Telegraph - - Property Today -

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 Sim­plyBusi­ has re­vealed.

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 per cent) of land­lords are op­ti­mistic about the buyto-let mar­ket over the next 12 months.

Through­out the re­ces­sion, barely a quar­ter (25 per cent) have had to lower their rents to keep ten­ants.

A strong ma­jor­ity (70 per cent) 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.

“With high prices and low in­ter­est rates, land­lords tell us they’re able to reap healthy mar­gins at the moment,” said Ju­lian Wat­son, land­lord prod­uct man­ager at Sim­plyBusi-

“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 per cent of re­spon­dents felt the an­nounce­ments made in the re­cent Bud­get would not help land­lords,” he said.

“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 per cent) of land­lords have pur­chased a new prop­erty to let.

Sim­i­larly, few land­lords (28 per cent) ex­pect to buy an­other prop­erty in the next year.

“The re­ces­sion ap­pears to have dis­suaded ca­sual buyto-letters from rein­vest­ing, while the more pro­fes­sional in­vestors con­tinue to spec­u­late,” he added.

How­ever, for those who are in­vest­ing in new prop­erty, mort­gages re­main scarce.

“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,” said Chantelle Bleas­dale, man­ag­ing di­rec­tor of mort­gage ad­vi­sors Click­Cover.

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