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Buy-to-let forecast to stay strong despite crunch
30 April 2008 10:30
Present liquidity problems are affecting the provision of buy-to-let mortgages, but demand for these products will remain strong this year, a specialist broker has predicted.
A spokesperson for the Mortgage Business Company noted that buy-to-let lenders were seeking to reduce their exposure to risk by tightening their criteria, including lowering loan-to-values and maximum loan sizes and increasing the rental coverage they require.
Nonetheless, she argued that the sector's fundamentals remain strong, with uncertainty over the property market boosting tenant demand, while adding that the slowdown in house prices could make this year a great time for landlords to expand their portfolios.
The spokesperson therefore concluded that, while there is undeniably a lack of choice in mortgage products for buy-to-let investors at present, the market should nonetheless continue to perform well throughout 2008.
Recent figures from Paragon have underlined the reasons for buy-to-let's popularity, with yearly rental income rising by 15 per cent year-on-year in February to an average of £11,604, while total annual returns remained at a historically high level of 17 per cent.
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