It also says that nearly three in five landlords expect to expand their portfolios over the next six months and 64% of those looking to expand will need to refinance in order to do so.
However, some two thirds of landlords feel lenders could do more to help property investors at a time when lending to buy to let investors is now 135% higher than the trough in 2009 but remains someway below the 2007 peak of £45 billion.
Of landlords who already own between one and 10 properties, often classed as part time landlords, some 54% intend to expand over the next six months. Of those with more than 11 properties, traditionally seen as professional landlords, some 66% intend to bolster their portfolios in the New Year.
The research also found that 59% of part time landlords say they will need to refinance to fund their expansion while 72% of professional landlords will need to refinance. But only 7% of all landlords say they intend to shrink their portfolios over the next six months.
‘Despite easing conditions for owner occupiers and first time buyers, the prevailing conditions mean the private rental sector remains a vital element of the housing mix. The growth in lending to property investors is proof of this and the intention of landlords to expand further demonstrates that demand for rental property shows little sign of waning,’ said David Whittaker, managing director at Mortgages for Business.
Investment in vanilla residential buy to let property is the most popular property type among investors looking to expand in over the next six months with 84% of landlords intending to target these properties.
Among the more complex property investment options, the most popular property types are Houses in Multiple Occupation and 20% of investors intend to purchase HMOs, and Multi-Unit Freehold Blocks, with 14% intending to buy these property types.
Despite the sentiment towards expansion and the large proportion of landlords needing to refinance in order to do so, over two thirds of property investors feel lenders could do more to support them.
By far the biggest challenge that landlords say they face from lenders is their lending criteria, 60% of investors feel lenders need to ease their criteria to support the market. Specifically, investors would like to see lenders remove non-property related income requirements, increase the LTV threshold and increase the number of products available at higher LTVs as well as reduce the amount of computer based lending decisions.
‘The appetite for expansion is large among property investors. Yields are strong, property prices are rising and demand from tenants shows little sign of slowing. As a result it’s poor that so many landlords feel lenders are not doing enough to help them. This will be emphasised even further if the Bank of England confirms that buy to let lending will be left out of the new slim line Funding for Lending scheme,’ explained Whittaker.
Difficulties in obtaining mortgage finance in the past few years has meant many would be buyers have been forced to rent instead, pushing up rents and attracting more investors into buy to let.
According to George Spencer, chief executive officer of Rentify, an online service for tenants and landlords, 2013 saw strong demand for rental property pushing up rents in some areas, although not all. ‘This has encouraged investors into the market, viewing bricks and mortar as more attractive than savings accounts or equities, given historically low interest rates and returns,’ he said.
‘A rise in the number of landlords in 2013 should result in more rental property becoming available in 2014, which will curb some rent rises. We expect rents to plateau more in 2014 in line with inflation figures, although London is truly establishing itself as a micro-market, with its own rules,’ he pointed out.
