UK buy to let market has positive outlook for landlords, new survey suggests

The buy to let market in the UK looks set to expand further during 2014, with 60% of landlords planning to increase their property portfolios over the next six months, according to new research.

Lenders are being viewed increasingly positively and 45% of landlords are looking to remortgage in the next three to six months, says the latest survey from specialist mortgage broker Mortgages for Business.

The survey also found that 95% of landlords have borrowing on their current portfolio and five year fixed deals are the most preferable loan options.

According to the lender the research suggests landlord appetite for more purchases stems from the attractive yields available across a variety of investment property types. Landlords are looking into having portfolios with more diversity.

‘With buy to let mortgage rates at historic lows, this strategy may well prove prudent in protecting them against future interest rate rises,’ said David Whittaker, managing director at Mortgages for Business.

‘Of those who are not looking to remortgage, we must surmise that some will be keen to hang onto their existing reversion rates for as long as possible. It will be interesting to see whether the situation changes as the year goes on. Accordingly the next survey will include a question about recent remortgaging activity,’ he added.

Only 3% of landlords say they are planning to trim their portfolios over the next six months, down from 6% six months ago.

When asked about initial mortgage rate periods, five year fixed rate products came out as the favoured choice amongst property investors, with 34% of the votes. This reflects current advice from Mortgages for Business that investors should consider five year fixed rates as part of their portfolio finance strategy.

The results also produced some encouraging news for lenders with fewer respondents, 58% compared with 68% in October 2013, believing that lenders could be doing more to support the property investors, even with the backdrop of the MMR.
One suggested reason for this improved positivity comes from the increase in product availability and competitive pricing. This is good news considering 60% of landlords intend to expand their portfolios over the next six months and 47% of these will need to refinance in order to do so.

There were still suggestions for improvements with the biggest issue being lending criteria. Some 47% commented that they would like easier lending criteria, including relaxing age restrictions and removing non-property related income requirements.

The research also found, perhaps surprisingly, that 41% of respondents indicated earning less than £25,000 a year in addition to rent. This is despite most buy to lenders stipulating landlords must have an additional annual income of around £25,000 in order to get finance.