While the rest of the housing market is taking a down turn, new figures from the CML show that the buy-to-let market is very much on the up.
In the face of today’s news that house prices continued to fall throughout February for the fifth month in a row, the future of the British property market is looking pretty gloomy. That is of course unless you have a buy-to-let investment.
New figures from the Council of Mortgage Lenders (CML) have revealed that while the housing market as a whole is slowing, the buy-to-let sector is still picking up speed.
2007 saw a 23% increase in the number of buy-to-let loans undertaken with over 179,000 being granted in the last 6 months of the year alone. This increase takes the number of buy-to-let properties in the UK to well over a million with this sector now representing over 10% of the mortgaged property market.
Furthermore, although last year did see an increase in the number of repossessions and arrears affecting buy-to-let properties, with figures up 0.18% and 0.73% respectively, the incidence of this type of financial difficulty has been at a significantly lower level than the rest of the market as a whole.
Uncertainty in the housing market and the continued expectation of a readjustment in house prices has meant that a large number of potential buyers have looked to the rental market as a short term housing solution while they play the waiting game. This has meant fewer investors nursing empty properties and is irrespective of rents increasing at their fastest ever level as landlords chase interest rate rises to maintain their profits.
What’s more, with interest rates now leveling for the first time in years, costs are finally starting to stabilise for those that rent out property, potentially meaning more income against their ‘high-risk’ investments.
CML director general, Michael Coogan commented:
"Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market. We expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property."
All in all, while the time may not be a good one for buy-to-let investors looking to sell up, 2008 has the potential to be a very good year for those looking to maintain their investment.
