UK landlords increase demand for buy to let bridging loans

Fewer brokers think this is a good time for UK private property landlords to expand their portfolios than at the beginning of the year, according to new research from a bridging lender.

In February 2012, when West One Loans last surveyed brokers on their confidence in the buy to let market, some 83% said they thought it was a good time for investors to expand their buy to let portfolios. However, six months later, that number has fallen to 81%. At the same time, the number of brokers who are unsure of the market has doubled, from 5% in February, to 10% in August. ‘While there has been a fall in the number of brokers who are certain investors should expand their portfolios, the change is small and 81% of brokers are still confident it’s a good time to invest in the sector. Furthermore, the number of brokers who think it’s definitely not a good time to pile into the market has fallen to less than one in ten,’ explained Duncan Kreeger, chairman of West One Loans. He also pointed out that landlords and brokers have different opinions of the market. While fewer brokers think it is a good time to invest in buy to let, high demand from landlords suggests they feel otherwise. As part of the research, West One Loans specifically polled brokers who were already offering buy to let bridging products, to see if they were writing more or less buy to let bridging business than they were six months ago. In February 2012, 73% of brokers offering buy to let bridging products said they were doing more business than they were six months before. This has now risen to 98%. ‘Despite a slight cooling of broker sentiment towards buy to let as an investment for the future, thanks to the current demand from landlords, buy to let bridging is flourishing,’ said Kreeger. Back in February, 70% of brokers offering buy to let products said they were writing more buy to let business than they were six months before. That number’s now risen significantly. ‘Bridging is still not being affected by increasingly problematic conditions in the wider residential market. In fact, it’s thriving off the back of them,’ he said. Also buy to let business seems to be growing at a sustainable rate. Three out of every five brokers say growth is ‘moderate’ or ‘fast’ compared to just two out of every five back in February. The growth in buy to let business is reflected in brokers’ customer profiles. Some 38% of brokers’ bridging customers are now landlords, compared 37% six months ago. The increase has been driven by demand from professional, rather than amateur landlords, with professional landlords now representing 25.4% of brokers’ bridging customers, compared to 23.3% in February. ‘I am pleased to say that the growth in buy to let business seems to be steady, rather than explosive at the moment. We aren’t seeing a massive increase in the number of brokers saying buy to let is booming, this is a moderate, sustained rate of growth,’ said Kreeger. ‘The long term macro economic picture appears to back that up. Given the current housing shortage, buy to-let should represent a sound investment for the future. But professional landlords are finding it difficult to get access to finance from high street lenders. Even when they can it’s painfully slow. Over the last six months, they have woken up to the fact that bridging loans provide a rapid solution to their problem. And as property investors embrace bridging, brokers are seeing the benefits,’ he explained. Aside from buy to let, bridging for all purposes is expanding, with more than seven out of every ten of brokers reporting an increase in the amount of bridging business they are conducting, compared to the year before. In February, six out of every ten bridgers said they were writing more business than they were a year ago.