16th May 2014
The buy to let market looks set to expand further during 2014, with 60% of landlords planning to increase their property portfolios over the next six months, according to research by broker Mortgages for Business.
The poll of 251 property investors shows that landlord appetite for more purchases stems from the attractive yields. The research also suggests that investors are looking for more diversity, with a rise in those planning to purchase houses in multiple occupation (29%), multi-unit freehold blocks (19%), semi-commercial property (15%) and commercial property (15%). As might be expected 82% of survey respondents are also considering purchasing at least one vanilla buy to let property.
Some 45% of landlords said they were looking to remortgage in the next three to six months. Only 3% of landlords say they are planning to trim their portfolios over the next six months, down from 6% six months ago.
When asked about initial mortgage rate periods, five year fixed rate products came out top with 34% of the votes something Mortgages for Business is advocating given the prospect of interest rate rises.
For those looking to expand, 47% say they will need to refinance in order to do so.
In terms of lending, nearly half (47%) of landlords would like easier lending criteria, including relaxing age restrictions and removing non-property related income requirements.
Some 41% of respondents indicated earning less than £25,000 a year in addition to rent. This is despite most buy to lenders stipulating landlords must have an additional annual income of around £25,000 in order to get finance.
David Whittaker, managing director at Mortgages for Business, says: “With buy to let mortgage rates at historic lows, this strategy may well prove prudent in protecting them against future interest rate rises. Of those who are not looking to remortgage, we must surmise that some will be keen to hang onto their existing reversion rates for as long as possible. It will be interesting to see whether the situation changes as the year goes on. Accordingly the next survey will include a question about recent remortgaging activity.”