Money News
The buy-to-let market is increasingly populated by professional, experienced landlords investing for the long-term, research from Paragon Mortgages has shown.
A panel-based survey of 200 mortgage brokers found the number of first-time landlords applying for mortgages has been in decline since the beginning of 2002, while the percentage of remortgage and portfolio extension cases has steadily risen over the same period. This suggests growth in the buy-to-let market is being driven by experienced landlords building long-term portfolios rather than occasional investors or new entrants to the market.
According to ARLA (Association of Residential Letting Agents), the average buy-to-let investor intends to hold the property for 17 years, while a separate survey from Paragon shows that 93% of landlords have held buy-to-let property for 6 years or more.
In the three months to the end of February, brokers said four out of 10 landlords taking out buy-to-let mortgages (45%) were remortgaging, while 34% were seeking to extend their portfolios. Only 16% of buy-to-let business comes from people making their first buy-to-let purchase. This figure has declined steadily since May 2001, when four out of 10 buy-to-let mortgages were taken out by first-time investors.
Nigel Terrington, of Paragon Group, says there is still demand from new landlords to enter the market, 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.
Terrington added: "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.
"We have seen reports that there will be a flood of properties being put up for sale following changes to the capital gains tax rules, but we don't believe this will be the case. You may see a trickle of properties being marketed by speculative investors wishing to make a quick exit."
30 April 2008 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.