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Buy-to-let is a ray of light in dark times

I recently spent an excellent couple of days at Mortgage Strategy’s Buy-to-let Summit.

This conference had a slightly more optimistic tone than some I’ve attended recently, although inevitably there was much talk about the effects of the liquidity crisis and its impact on the mortgage market. The consensus of opinion was that the crisis will rumble on until the end of 2008 and probably well into 2009.

This is a sobering thought and made everyone realise that battening down the hatches and hoping the storm will blow over will not be en-ough. Surviving this crisis will require strategic thinking.

But there were also glimmers of hope at the conference, including the prospects for the buy-to-let market. Despite predictions that its bubble would burst, buy-to-let remains in rude health and there are reasons to believe it will continue to perform well in the tough year that lies ahead.

Nobody at the conference was pretending that the buy-to-let sector is immune to the liquidity crisis and there will in-evitably be business casualties, but as Michael Ball, prof- essor of urban and property economics at Reading University, pointed out, rental demand tends to fare well in a housing market slowdown.

Ironically, potential purchasers’ reluctance to buy property drives up demand for rented accommodation. And when this factor is combined with increased levels of immigration and a shortage of housing supply, it bodes well for landlords.

Landlords also appreciate that now is not the time to dispose of their investments because by doing so they will only crystallise their losses. Indeed, for the brave this is a good time to buy property.

Ball points out that only 52% of people aged between 30 and 34 living in London can afford to buy property. There’s a need for good quality rented accommodation and the buy-to-let sector is meeting a requirement the government is unable to satisfy.

Given that this is such an important sector, it was surprising to see only three lenders supporting the event along with Goldsmith Will-iams – West Bromwich, Mortgage Express and Paragon Mortgages. I know budgets are under pressure but buy-to-let represents one of the few bright spots on the horizon so I was expecting to see more.

Buy-to-let will be an important market for lenders and brokers in 2008 and beyond. Brokers must take advantage of the opportunity and lenders must do everything they can to help. And there’s also a need for more efficiency in support services such as conveyancing to ensure the market continues to operate efficiently. We’ll be doing our bit.


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