Peter Rollings commenting on the Buy-to-let market
Wed 03 Apr 2013
"Generally, the BTL market is predominantly made up of relatively asset rich middle aged individuals struggling to identify suitable investment classes for future pension requirements. These investors tend to own their own home with very low loan to value ratios and therefore find themselves with increasing levels of spare cash due to both the departure of children from the family home and the potential for inherited wealth from close relatives. Traditionally, they have been inclined to build a mixed basket of investment types to balance such things as stock market and house price volatility against more stable investment such as unit trusts, gilts and bonds. Latterly, the poor performance of some of these classes, including low interest rates on savings, has resulted in wealth declining against inflation, and this has generated an imbalance as greater numbers invest in property and hold a higher percentage of their wealth in property.
"Equally, many of these buyers may well be first time landlords, despite their relatively older age profile but they are all looking for steady medium-long term price growth. Younger investors tend to struggle to raise the necessary deposits to make these types of purchase and they are also unable to make use of the equity in their principle residences to secure against the buy to let properties. Contrary to popular viewpoints, professional landlords do not dominate this market sector as the banks and building societies impose much greater levels of caution when considering an applicant who is very exposed to residential property prices the days of multiple purchases with low deposits are simply long gone and many of these types of historic investors are still recovering their balance sheets against losses made during 2008/09 on off-plan purchases secured in less desirable parts of the country."