Immigrants may boost brokers’ B2L business

A number of recent re-ports have highlighted the fact that buy-to-let is now a mature sector and should perform relatively well in 2008, de-spite the expected economic downturn.

There is no shortage of statistics available to prove the success of the rental sector.

It has expanded by more than 20% in the past five years, according to the UK Housing Review recently published by the Building Societies Association and the Chartered Institute of Housing.

There is a body of opinion that maintains the buy-to-let market has been an important factor in house price growth in recent years.

But on February 6 the government’s National Housing and Planning Advice Unit published a report entitled Buy-to-let mortgage lending and the impact on UK house prices.

The report states that the growth of the buy-to-let market has in fact made only a small contribution to house price inflation – 7% between 2006 and 2007 – compared with more important factors such as rising incomes, relatively low interest rates and the limited supply of housing.

But statistical re-ports often go unread by the public and many consumers still believe increased demand for property from investors and immigrants is the main cause of rising house prices.

In turn, many think this makes it harder for first-time buyers to get a foot on the property ladder, so it’s refreshing to have the buy-to-let effect put into perspective by the NHPAU report.

The main factors driving the buy-to-let market have been well documented, with a large student population and the burgeoning number of immigrants often being cited.

The issue of immigration is interesting and may present further opportunities for brokers in the buy-to-let market.

Paragon Mortgages says Poles account for much of the increase in rental demand. Most European Union immiandy youngis chief executive of The Business Mortgage Companygrants stay in the UK for a short time, usually returning home after a couple of years.

They are normally unsuitable as mortgage clients due to their credit status, so renting is appropriate for them.

But some immigrants come to this country with the intention of establishing themselves with their families.

Well paid immigrants intent on staying in the UK for the longer term may look to enter the buy-to-let market themselves. For example, they may use their experience of renting to specialise in providing accommodation for immigrants from their home country.

Some buy-to-let lenders will lend to non-UK residents although most require that applicants meet the same credit scoring criteria as UK residents and have a right to re-side in the country for at least two years.

But foreign nationals who are neither born nor resident in the UK can obtain buy-to-let mortgages.

However, they present a higher risk and the number of lenders willing to lend to them is lower than for mainstream applicants.

Nevertheless, buy-to-let is still a popular option for property investors and has an important role to play in the housing market’s capacity to cater for lifestyle demands that reflect changing demographics in the UK.