Lower mortgage approvals continue to benefit landlords
There are a number of reasons why landlords with rented property insurance are enjoying record rents.
The high cost of property continues to keep out buyers – particularly first timers.
But lack of mortgage finance is perhaps a much greater reason why people are currently choosing to rent rather than to buy.
Further evidence of the state of the market is revealed in the latest lending figures from the British Bankers’ Association.
April’s statistics show that house purchase approvals were down a little on March – and a massive 18% lower than in April 2010.
The average value (£145,100) was 1.1% lower than a year earlier.
BBA statistics director, David Dooks said: “Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a ‘wait and see’ attitude. However, banks are still able to meet the need for home loans even though demand remains weak. Businesses – SMEs in particular – are using cashflow and deposits to fund expenditure rather than taking on more borrowing.”
The low level of mortgage approvals must concern sellers who are trying to offload property – but it will be music to the ears of landlords who know this means more people are choosing to rent.
Landlords should be wary, however, that this golden period for renting property may also have a troubled side in terms of the number of people struggling to pay rent.
With increasing numbers of tenants in arrears landlords should safeguard their income by getting rent guarantee insurance.