Increased Confidence in Buy To Let

05/07/2011

Buy-to-let landlords are showing increased confidence about the sector and one-third are looking to buy more investment properties over the next 12 months.

The findings are in the annual Landlord Survey carried out by buy-to-let lender CHL Mortgages.

Almost seven in ten (67%) respondents said they were positive about the future of buy-to-let; this is up slightly on 12 months ago when the result was 64%. 

Landlords were particularly positive about rental demand with 43% suggesting it is now better than six months ago and that it is sufficient to cover mortgage repayments, maintenance and cost. This percentage is up from 35% last year. 

The 33% of landlords who said they hope to buy more investment properties in the next 12 months compares with 28% last year. However, a lack of finance was still cited as the biggest constraint to achieving this aim. 

The other major constraint on expansion was the high deposit requirements (28%) that now come with buy-to-let mortgage products.

The survey also found that four in five landlords do not make overpayments on their mortgages, using any surplus rental income on property maintenance.

CHL believe the growing positivity shown by its landlord borrowers is reflected in its own arrears experience. 

At the end of May, the number of accounts greater than three months in arrears had fallen to 855 from 933 at the end of last year. This represents just 1.92% of CHL’s total of 44,477 live accounts on its loan book, and the lender fully expects this downward trend to continue despite a still uncertain economic outlook.

Bob Young, managing director at CHL Mortgages, based in Fleet, Hampshire, said: “Landlords are clearly positive about the future of buy-to-let and they have good reason to feel this way with rental demand growing as a result of a number of underlying drivers.
 
“With uncertainty in the equity and bond markets we can therefore expect more investors to reconsider buy-to-let as an alternative asset class; even more so if property prices continue to fall over the next couple of years.”