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Posted by Let Alliance on July 19, 2012
Six in ten landlords are planning to expand their portfolios in the next 6 months, with 84% planning on purchasing residential investment property.
This comes with the news that the number of investors planning to reduce their portfolios over the next six months has halved, now standing at only 3% compared to the last quarter.
David Whittaker, managing director of Mortgages for Business, commented: “Landlord appetite for buying residential property is high. This will ease the strain on would be renters chasing too few properties.”
A survey by specialist mortgage broker Mortgages for Business, which polled the views of 159 investors, suggested that the majority of landlords wish to increase their supply of rental properties. This would help cater for the growing demand for rental properties due to more consumers choosing to rent rather than buy.
Whittaker added: “There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6% threshold.”
Many property investors will opt to buy ‘vanilla buy to let’ houses and flats by the end of the year, which can then be to rented to potential consumers.
However, interest for complex buy to let property is also increasing, mainly due to the more attractive yields that can be gained. A quarter of respondents said they would purchase either Houses in Multiple Occupation (HMOs), multi-units or semi-commercial property.
Nonetheless, many landlords feel that mortgage lenders should be doing more to support them, particularly with better rates, fees and Loan to Value ratios. As of last month, there were only four 85% LTV mortgages available from Kent Reliance.
Many are also looking for buy-to-let mortgages which allow for more specialist scenarios such as products for limited company applicants, deals for holiday lets and more lending to ex-pats. Brokers also asked for more case-by-case underwriting rather than computer-based lending decisions.
Over half of investors planning to expand revealed that they will need to refinance their existing properties, with 20% likely to struggle to secure finance due to a lack of equity.
Almost a tenth of respondents stated they have been asked by lenders to refinance elsewhere, particularly from RBS, which is looking to reduce its exposure to property, and Bradford & Bingley, aiming to exit the market entirely.
Source: www.mortgagesolutions .co.uk