Half of landlords who want to expand their portfolios are frustrated by the lack of mortgage finance according to a survey conducted by LSL Property Services, owner of Your Move and Reeds Rains.
Almost half the landlords polled said the current market is attractive for investment and that they wanted to expand their portfolios. But only 27 per cent of landlords say they’ll be able to buy more property in the next 12 months. The lack of availability of mortgage finance remains the fundamental barrier for landlords., said LSL.
David Brown, commercial director of LSL Property Services, added: “2009 saw the buy-to-let market return as a viable investment. Landlords recognise this, despite the rough ride they have had to endure over the last couple of years. The average landlord made losses in 2007-8, but 2009 marked a return to form for property investment. But the availability – or lack of - of mortgage finance is holding the sector back. Even experienced landlords who are keen to take advantage of lucrative returns and improving market conditions can’t get access to the cash they need.”
Of those surveyed, 11 per cent of landlords plan to leave the private rental sector – a figure that includes those selling for retirement or lifestyle reasons.
Landlords’ confidence in the market is driven by their desire to maximise returns in a low interest rate environment, with a third of them attributing their positive sentiment to the superior capital returns of buy-to-let as compared with other forms of investment, said LSL.
In 2009, a typical landlord made a total return of 7.6 per cent – higher than many other forms of investment.
Strengthening demand from tenants has played an important role in the market pick-up. Of the landlords surveyed, 39 per cent think tenant demand has grown in past six months, and two in three landlords anticipate the number of tenants looking for rental properties will grow in the next two years as it remains difficult for people to get on the housing ladder.
Brown said: “With the shortage of mortgages for first time buyers, we’ve seen significant growth in demand for rented homes. However, the difficulty of selling also led to many properties being put on the rental market, which created a glut in some areas. That surplus has now corrected itself and the rentals market is looking very sound, especially as thousands of potential homebuyers continue to rent while they save for larger deposits. This is set to continue.”
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