The buy-to-let sector should be nurtured

28 June 2010

Recent research from Paragon provides some indicators about the state of the buy-to-let sector, particularly regarding mortgage availability.

It also gives an insight into the decisions landlords are making in terms of financial arrangements and the rise in ’one in, one out’ property substitution transactions.

The decline in buy-to-let remortgaging is likely to continue for some time. Of course, remortgaging is difficult at the moment, and for those on reversion rates it’s unappetising because of rate differentials and the fact they will lose their current SVR should they remortgage.

Also, for those on higher LTVs there are few deals available over 80% LTV.

But we are seeing an increase in the number of first-time landlords. Some may be surprised by this but demand for investment property has not gone away since the credit crunch and there are still bargains to be had.

The difficulty has been the lack of finance but for first-timers who can put together the 25%-plus deposit and choose investments wisely there are profitable opportunities.

It is to be hoped that this growing demand will be partly met by more lenders entering the buy-to-let fray as Aldermore and Precise Mortgages have done.

While the environment is tough it’s clear that investors are seeing the strength of the buy-to-let market and we anticipate further forays from lenders soon.

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