Confidence remains in the UK buy-to-let property market

UK buy-to-let property investors are remaining calm despite the economic turmoil and are not planning to sell because of falling prices, according to a report published today.

Over 75% of those questioned for the third quarter Association of Residential Letting Agents Review and Index said they expect to keep their property portfolios for an average of over 16 years. A further quarter intend to hold their investments for more than 20 years.

And four out of ten said they expect to buy property over the next 12 months and continue adding to their property portfolios, the largest independent quarterly survey of its kind for the private rented sector, found.

'These figures show that investors are still intending to make use of the availability of Buy to Let mortgages. The average investor is cautious, mature and aims to support the Private Rented Sector for the long term by looking for the right property in the right market,' said Ian Potter, ARLA's Head of Operations.

Confidence in this sector of the property market is helping to prevent a serious shortage of property to rent. There is high demand, for example, from migrants from the new European Union countries, ARLA has found.

'Before the credit crunch, ARLA was forecasting sustained growth in the rental market, driven by a variety of domestic demographic factors. It is very clear that without the support of the Buy to Let investor, the sector would be seeing some very serious shortfalls in the supply of housing to rent in some areas given the downturn in the housing market,' added Potter.

However, letting agents report they are seeing an increase in rental property coming onto the market because it cannot be sold. Overall, this has been mainly houses rather than flats, except in London where the reverse is true.

The Third Quarter Review also shows that the average rate of return over five years on residential rental property bought outright averages 10.92%. For a geared investment with a Loan to Value ratio of 75%, the average return is 21.07%.