Buy-to-let is alive and well, it just got more challenging

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by Kay Murchie

There have been many reports recently about buy-to-let with City Homes London saying buy-to-let landlords risk losing a minimum of 30-40% off the price of their investments over the next 18 months.

However, the latest is that buy-to-let is alive and well in spite of the headlines, at least that is the resounding message from landlord lenders, buy-to-let mortgage brokers and, most importantly, landlords themselves.

Some landlords believe that prospects are looking rosy currently because the housing market is cooling. Furthermore, it has become a buyers’ market again.

It has been a difficult time though for landlords as increasing mortgage rates have made that tough for a while. In spite of increasing rents, which have been driven partly by demand from migrants and young workers who cannot afford to buy, they have not kept pace with mortgage costs.

However, with an unsteady housing market, opportunities are back, say landlords.

Buy-to-let investment specialists Property for Life, also say the buy-to-let sector will remain strong next year. The company predicts prices in the wider market will be static for the first 6 months of next year, rising by at least 3% during the latter half of the year.

A recent study by the Mortgage Trust has discovered that the most desirable tenants for landlords are couples. The lender has noted a rapid rise in the amount of landlords looking to let to corporate tenants, with this group now being targeted by nearly 30% of landlords, compared with just 14% in January.