Paragon reports confidence in buy-to-let market

Permalink: Paragon reports confidence in buy-to-let market
by Lin Freestone

The confidence of landlords in the buy-to-let market is still strong, according to the latest research from Paragon Mortgages, the buy-to-let lender.

A combination of high tenant demand, rising rents and falling property prices are tempting landlords to grow their portfolios over the next 12 months. Over 71% of landlords indicated that they are attracted by the availability of properties at lower prices and the chances of a bargain purchase.

Twice as many landlords intend to add properties to their portfolio than intend to sell.

Although 14% of landlords said they intended to purchase properties in the current market, the vast majority intend to sit tight and take no action at the moment.

John Heron, Managing Director of Paragon Mortgages, considers that now is a good time for landlords to tweak their portfolios and dispose of properties that aren’t performing as they would have hoped, while picking up property at cheap prices to bolster their portfolios.

He reports that professional landlords are using current market conditions to get ahead. With an average portfolio gearing of just 36%, they are well placed to free up equity to expand their portfolios and Paragon is seeing landlords take this action.

Paragon’s research reveals that the majority of landlords have made improvements to a residential investment property since purchase to help improve its energy efficiency, with more than half installing a new boiler into a rental property.

From 1 October 2008, landlords offering property for rent will be legally required to provide tenants with an EPC. Failure to comply with the legislation will result in a £200 fine and the landlord being unable to market the property until they obtain the certificate.

The Landlord Energy Savings Allowance enables landlords to offset the cost of installing energy saving measures, including loft, cavity wall and floor insulation, against income tax, up to a value of £1,500.