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Immigration to fuel 2007 BTL market

Paragon has predicted that the buy-to-let market will continue to boom in 2007 thanks to the influx of more migrant workers.

According to the HM Treasury estimates, new immigration will continue at an annual rate of between 185,000 and 190,000 over the next three years, higher than previously expected.

Paragon believes prospects for further growth in the buy-to-let market remain excellent, and government statistics provide further evidence that the private rented sector will continue to grow apace.

John Heron, managing director of Paragon Mortgages, says: Inward migration is a key driver of tenant demand.

“We know that less than 20% of migrants become home owners within five years, which means that a net influx of people, particularly from Central and Eastern Europe, will have a direct impact on the private rented sector.”

Recent research from Paragon found that almost a third of landlords believe that tenant demand is either growing or booming, with almost all the remainder saying it is stable.

In response to this demand, they expect to grow their portfolios in numerical terms by 6% over the next 12 months.

Heron says: Based on our latest buy-to-let index, the average buy-to-let investor made over 7,700 in 2006 just by owning a rental property, in capital appreciation alone.

“On top of that, he has generated almost 10,000 in rental income, an excellent total return on investment of 17,700 or 11.4% over the 12-month period.

With this combination of positive factors, the signs are that 2007 will be another bumper year for the buy-to-let sector.

“We will continue to work closely with our intermediary partners to offer the best products and solutions tailored to the needs of our customers.

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