Buy-to-let market safe, say Mortgage Trust

Specialist lender Mortgage Trust has announced that the buy-to-let market is in no immediate danger.

16:17 07 December 2004

Specialist lender Mortgage Trust has announced that the buy-to-let market is in no immediate danger.

Despite falling house prices across the country, Mortgage Trust's study has found that just 13 per cent of mortgage intermediaries expect less business over the next quarter.

That view contradicts the recent announcement from the Halifax, which claimed that house prices would fall during 2005.

However, many industry experts consider a dip in prices might actually improve the market as many landlords are thought to be waiting for the opportunity to pick up a good deal.

According to Mortgage Trust, 47 per cent of mortgage intermediaries expect to write more business in the next three months, while 40 per cent say they are likely to write the same.

The two major reasons given by the intermediaries for their expectations of an upturn in the buy-to-let market are increasing rents and more "bargaining power" on the part of the landlords.

Landlords have also seen the most widespread rise in rental yields for three years.

A survey by the Royal Institution of Chartered Surveyors (Rics) found uncertainty in the housing market is fuelling rental demand, which rose 23 per cent for flats and 22 per cent for houses in the three months to October, compared with the same period last year.

Research from first-time buyers' website FirstRungNow.com highlights the increased power landlords are wielding.

Findings show house price confusion reigns, with some people seeing the current slowdown as an opportunity to buy and others waiting for a crash in property prices.

Helen Adams, director of FirstRungNow, noted: "Rents are increasing due to an apparent shortage of rental properties as buy-to-let landlords switch their investments and they don't know whether to take the plunge and step onto the property ladder.

"Panic is leading to short term thinking which should be tempered by a long term view on home ownership."