Why is Buy-to-Let Booming?
Just last week in a conversation with a letting agent, I was told they only had three properties to let. “That’s great news”, I said, but as they explained, they desperately need more properties on their books because the demand is outstripping the supply.
In Norwich, the situation has been exaggerated by increasing student numbers. The universities are building over any spare land they have to take advantage of this new revenue stream, and still, we lack space.
The good or bad news, depending on your view, is that the shortage is likely to get worse. With changes in housing benefit rules, many claimants who are in houses will be moved to smaller units, likely to be rooms in HMO (Houses of Multiple Occupation) properties.
Landlords are bound to take advantage of this demand, “we are seeing a real increase in the demand for Buy-to-Let mortgages”, says Stephen Robinson, Financial Advisor at Oracle Financial Services. Stephen adds, “we are really busy, working with landlords who are trying to increase the size and performance of their portfolios”.
With growing confidence in the sector, mortgage lenders appear to be doing their bit to help, although this can be patchy. Kensington, who were allowing buy to let borrowing at 85% loan to value recently announced that their funds for that product had already run out.
In the short-term, landlords are demanding more innovative products from lenders, whether they can keep up is another question.
James Ewles wrote this article on the 9th November 2011. The points raised in this article are the opinion of James Ewles.
James is the Managing Director of Oracle Financial Services.
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