A significant 65.1% of respondents expected to write more Buy-to-Let business over the next three months compared to 58.1% in December. Strikingly, 16.3% of intermediaries believed they would write significantly more business over the next three months compared to the December Survey (9.7%). 23.3% of intermediaries believed that Buy-To-Let business levels would remain the same over the period. These findings suggest that the combined effect of a soft landing in the housing market, and the expectation that interest rates have reached their peak, has lead many landlords to prepare to expand their property portfolios.
Intermediaries continue to predict that the majority of this increased business volume will be generated through loans to landlords who are expanding their portfolios, with these loans accounting for a projected 45.2% of business. Canny investors seeking to re-mortgage their existing Buy-to-Let properties are anticipated to make up 37.7% of business. Intermediaries still expect first-time landlords to account for a minority (17.0%) of the market, although this figure is up from 15.3% in December, again reflecting improved confidence in the market. With a fifth (20.5%) of respondents predicting interest rate falls of 0.25% and 65.9% expecting rates to stay the same, the professional landlord will have a wide range of mortgage options available to them when it comes to investing in new property or improving their existing deals.
Intermediaries also forecast a rise in chargeable rents. 45.5% predicted that rents would increase slightly over the next three months while 43.2% believed that they would remain the same. Strong rental conditions underpin the fundamentals of the Buy-to-Let market and encourage landlords to invest. Over half (56.1%) of the respondents continued to predict static house prices which suggests that landlords investing now are continuing to view their property purchases as long-term investments based on solid yields and the prospect of long term capital appreciation.
Chris Tonkin at ABC Buy-to-Let commented: ‘At ABC we have seen applications and enquiries from professional investors, particularly those looking to re-mortgage, reach levels significantly above expectation. This uplift in current and expected business volumes is due in part to an expectation among landlords that interest rates have reached their peak and lenders will be cutting rates. There is also a quiet confidence that the pension reforms planned for April 2006 will lead to a medium term growth in capital value. Furthermore whilst there is still uncertainty among owner-occupier buyers, Buy-to-Let investors are able to take advantage of their increased bargaining power and secure a number of “good deals”.’
Nicola Severn, Marketing Manager at Mortgage Trust added: ‘Buy-to-Let clients are positive about the prospects of the market over the next three months. Business has picked up since the traditional Christmas lull and intermediaries are confident that levels will continue to rise. Stable house prices and low interest rates are attracting professional landlords, and a number of attractive mortgage products which have recently been introduced to the market are set to boost the sector further. For example Mortgage Trust has just launched a new range of Buy-to-Let products called MT Select, offering among others a 2-Year fixed Buy-to-Let mortgage at 5.39%. Landlords can expect a good rate of return on their property portfolios as intermediaries continue to predict rising rents fuelled by strong levels of tenant demand. The Buy-to-Let market, and professional landlords’ prospects, look set to bloom in the Spring.”