Buy-to-let investors here to stay

A mass exodus from the buy-to-let market by investors is unlikely, says Paragon Mortgages.

While many predicted a flight of investors from the buy-to-let market as a result of Capital Gains Tax reform, and the current instability in the housing market, survey results from Paragon suggest that professional landlords are sticking around.

The poll of 200 brokers revealed the market is being driven by professional landlords who build long-term portfolios and that the percentage of remortgage and portfolio extension cases has risen steadily since 2002.

Paragon also cites statistics gathered by the Association of Rental and Letting Agents that reveal the average buy-to-let investor intends to hold a property for around 17 years.

In the three months to the end of February, the respondent brokers said four out of 10 landlords taking out buy-to-let mortgages (45%) were remortgaging, while 34% were seeking to extend their portfolios.

Nigel Terrington, chief executive of Paragon Group, says: “There is still demand from new landlords to enter the market and opportunities remain for those investors, but professional landlords hold the majority of stock in the private rented sector and these larger scale investors account for the bulk of the new transactions.

“These landlords represent the core of the buy-to-let market – they are investors that base their purchase decisions on proven tenant demand for long-term returns rather than speculative investment for a quick profit.”

Terrington adds: “We are experiencing one of the toughest environments for decades, but landlords are in a strong position and invest for the long-term, with some taking opportunist action to add to their portfolios.”