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Signs of recovery in buy-to-let sector are getting clearer

Increase in consumer demand, lenders reopening product lines and freer lending criteria bode well for B2L market


At the recent Mortgage Intelligence and Mortgage Next annual conference, nearly all the keynote speakers referred to the buy-to-let market as the only likely growth area for the next year or so and the only credible area of specialist lending left.

While buy-to-let was one of the first areas to be affected by the credit crunch, over the last quarter we have experienced increased interest from advisers in obtaining new buy-to-let clients and a considerable growth in the number positive signs of recovery.

Consumer demand for buy-to-let mortgage advice has increased by a significant 32% since June this year.

The amount that people want to borrow has also increased from an average of £123,800 to £125,650 over the same period.

Perhaps this is linked to positive landlord experiences and recent reports that tenant arrears have fallen to a two-year low and void rental periods have reduced.

Over this same period more buy-to-let mortgages have become available as existing buy-to-let lenders have reopened their product lines, freed up their lending criteria and in some cases reduced their interest rates.

Even more encouragingly, several substantial new lenders together with established older ones such as Paragon Group have either entered, or have plans to enter, the buy-to-let sector.

Growing demand from clients puts advisers in perfect place to look at reopening B2L portfolios

While this freeing up of the sector is good news for landlords and advisers, it also means that there are more properties for renters.

Since the credit crisis began, willing would-be renters and reluctant ones such as thwarted first-time buyers, have had a raw deal and become victims of a shrinking buy-to-let market or a stagnant first-time buyer market.

Across most of the UK, rental demand far outweighs rental properties – with reports of a ratio of four tenants to every one rental property, along with rocketing rental prices particularly in traditional high-rent areas such as London.

If lending conditions continue to allow the supply side of buy-to-let to breathe again, with tenant demand high, it may be followed by another rise in the number of people taking out buy-to-let mortgages.

So although we remain far from the heady pre-credit crunch boom period, increased product availability and heightened demand and competition appear to have the potential to drive the sector’s recovery over the months ahead.

This, along with the increasing numbers of consumers looking for buy-to-let mortgage advice, will place advisers in the perfect position to look at reopening their buy-to-let portfolios to guide consumers and boost revenue.



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