Good News for the Buy-to-Let Market
Research from Paragon Mortgages revealed that the proportion of landlords obtaining a buy-to-let mortgage in order to extend their property portfolio has hit its highest level for almost a decade.
48% of landlords took out a mortgage in order to extend their portfolio compared with 31% at the end of 2008. On average they owned 12 properties by the third quarter of 2009 as opposed to an average of 11 at the beginning of 2007.
Lending in the buy-to-let sector grew in the months between July and September for the first time in two years, according to the Council of Mortgage Lenders (CML). It totalled £2.1 billion, which was 10% higher than in the previous three months.
Due to the economic downturn, forecasts were made of a mass sell-off of the buy-to-let market; however, buying activity was subdued. Now that house prices have stabilised landlords are starting to expand their portfolios and take advantage of the lower house prices before they begin to increase again.
It is not certain when the mortgage market will recover but it may take a number of years. This means more and more people are renting properties as they cannot afford to take out a mortgage.
With annual property investment returns turning positive in October this year for the first time since the recession and a huge improvement in the problem of rental arrears, the buy-to-let market is looking better than it has done in a long time.