Confusion ahead for the BTL market?

Data released by Hamptons International Mortgages and Paragon had differing forecasts, with Hamptons claiming the previous two rate rises curtailed growth in Q4 2006, while Paragon believed the increase would provide a catalyst.

Hamptons International said it saw sales fall in November and December after rises during the rest of 2006, and blamed rate rises and City bonuses for inflating prices and discouraging landlords.

Jonathan Cornell, technical director at Hamptons commented: “There is no doubt that 2006 has proven a fruitful year for the market. However, continuing rate rises have begun to make landlords anxious, and with last week’s further rate rise this anxiety can only grow.”

Meanwhile, Paragon Mortgages published a survey which said confidence among landlords over tenant demand was at its highest ever, with almost a third believing demand was growing.

The rise in rates would continue to fuel this feeling, with potential first-time buyers being put off by the cost of borrowing and choosing to rent instead.

Despite differing short-term outlooks, both Cornell and John Heron, managing director of Paragon Mortgages, said the long-term state of BTL was secure.

Heron said: “With a rapidly increasing number of households in the UK and a long term shortage of homes, demand for housing looks set to continue rising and buy-to-let can only benefit.”