Private rental sector continues to grow

Private rental sector continues to grow

.Mortgages for Business have identified that many landlords are confidently planning expansion whilst Association of Residential Letting Agents (ARLA) research show 55% of lettings agents believe demand for rental property is now outstripping supply.

Their research indicates that three in five property investors plan to expand their portfolios over the next six months but the majority of these will need to refinance to enable them to do so.  Of these most felt that lenders are not doing enough to support property investors

The Telegraph also reported on Friday that increasing numbers of frustrated sellers are becoming “accidental landlords” and finding that they are “forced” to rent due to low numbers of buyers.

Ian Potter, operations manager at ARLA, said: "Investing in a buy-to-let property has always been an attractive opportunity, and the high demand for rented property means there are a growing number of first time landlords in the market."

Mortgages for Business say that the strength of the private rental market and the poor performance of property prices over the last year has given professional landlords and property investors the platform upon which to build their portfolio of properties. While the majority of investors (63%) will need to remortgage existing properties to fund their expansion, a similar proportion (62%), believe lenders are not doing enough to support landlords and property investors. The results come from Mortgages for Business’ inaugural quarterly Property Investor Survey in which 185 landlords and investors were surveyed. 

One in five (20%) feel that lenders should reduce their fees in order to support property investors. 18% believe lenders should increase LTVs and 15% feel that lenders should grow the number of case by case lending decisions rather than rely on computers and credit scores. 

David Whittaker, managing director at Mortgages for Business, commented: “Although overall mortgage and lending to first time buyers is finally starting to increase, landlords remain confident about the future of the private rental market and plan to expand their portfolios over the coming months. However, more and more investors are exploring which options will give them the best returns on their investment. While vanilla buy to let properties remain popular, more complex deals are offering higher yields on average and are growing in popularity, particularly because of the shortage of housing stock currently on the market.”

If more landlords are likely to buy than traditional home buyers conveyancers may seek to package their conveyancing service with landlord related services to differentiate themselves in the market.  However conveyancers need to be wary to ensure that the mortgage provider knows that the property is being used for letting or the conveyancer could end up being thrown of a panel for failing to disclose key information to the lender.  Conveyancers should also not forget that it is a lot easier for a lender to repossess a buy to let property than owner occupied property.  Therefore if repossession is easier losses crystalise and claims are more likely.

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