Buy to let was meant to have been killed off by the housing market downturn. Instead the signs are that it is bouncing back.
The latest indications come in a new survey by the Association of Residential Letting Agents (ARLA), which reports a surge in the number of ‘reluctant tenants’ - people who want to buy but can’t find the right mortgage or property and people who were forced to sell due to financial instability or a job move.
That grabbed my attention as the reverse of what happened in the 1990s downturn, when thousands of homeowners who had to move but could not sell became reluctant landlords.
The proportion of ARLA members reporting that there were more tenants than properties surged from 24% in the third quarter of 2009 to 41% in the fourth quarter.
As the housing market crash started in August 2007, 51% of ARLA members said there were more tenants than properties but that the proportion fell to just 10% as the crash bottomed out in February 2009.
The first stages of the recession saw several thousand buy-to-let properties either repossessed or with a receiver of rent appointed (including two in my street alone). However, low interest rates appear to have come to the rescue of many landlords since then.
The results tally with anecdotal evidence from mortgage brokers that some lenders are targetting buy-to-let landlords because they see them as less risky than first-time buyers and from housebuilders, who report an increase in the number of people buying off-plan in new developments.
November’s third quarter survey by the Council of Mortgage Lenders (CML) showed that buy-to-let lending rose for the first time in two years but that volumes were still well down on 2007.
And a separate ARLA survey of landlords suggests that the recovery is still tentative. The proportion of landlords saying they expect to buy more buy-to-let properties in the next 12 months is still stuck at around 30%, compared to more than 60% at the peak of the buy-to-let boom in 2005. The proportion expecting to sell is still below 10% but has actually risen slightly this year.
Have your say
You must sign in to make a comment