View more on these topics

Landlords are not calling time

New investors in the buy-to-let sector have halved in the past year, according to figures released by Mortgage Trust, but brokers say established landlords are ensuring that the market remains fluid.

Mortgage Trust’s survey of borrowers found the number of new investors had nearly halved from 23 per cent in July 2004 to 12 per cent in May this year. Figures from the Council of Mortgage Lenders show a decline of 4 per cent in new loans in the first half of this year.

But Mortgage Intelligence managing director Sally Laker says BTL and sub-prime are two areas that have been relatively buoyant through-out the housing market downturn. “From a broker perspective, there is still BTL business even though new investors may be down. It is about managing portfolios for clients who are currently landlords and making sure they are remortgaging to another good rate.”

The CML figures show a slight upturn in the BTL market for the first half of this year, with lenders advancing around 9.9bn in new mortgages – an increase of 0.1bn from the second half of 2004.

Assetz managing director Stuart Law has increased his personal portfolio by 50 per cent in the past three months because he says there are “superb opportunities”. He claims the firm’s sales have gone up by 5 to 10 per cent compared with two months ago. “The negativity in the national media press would make you think it is all doom and gloom but the reality is that now is the most perfect buying time,” he says.

Law says the upturn in the market is due to providers relaxing their lending criteria on BTL mortgages. The reason for this, he says is that lenders had no choice but to do this in order to keep business volumes flowing.s

The flexible lending criteria that he has seen include deposits of as little as 5 per cent and rental interest cover at 110-125 per cent, as opposed to 130 per cent required a year ago.

Mortgages for Business strategic development analyst Graham Dowson says lenders’ criteria have relaxed because the market is characterised mainly by professional landlords rather than first-time investors. Dealing with professional landlords, he says, means lenders are exposed to less risk and can therefore afford to relax the criteria. But he does not see the criteria loosening up much further as “there is only so much that a lender can actually relax”.

Dowson believes the days of having BTL owners with one or two properties are disappearing and says he gets fewer speculative enquiries from potential investors – a theory backed up by figures from Mortgage Trust. The company report that 13 per cent of landlords own 74 per cent of the stock and 53 per cent of landlords own just 3 per cent of stock. Marketing manager Nicola Severn says: “This is a market dominated by established landlords who know what they are doing and are not the get-rich-quick speculators. The latter group is disappearing from the market.”

Laker wonders if there will be a return of the five-year fixed-rate mortgage. She says: “It very much depends on long-term thinking and demand and I think that it may be sufficient to get people thinking that perhaps they should. It needs five-year fixes to be attractive enough for people to go in.”

Mortgages for Business managing director David Whittaker is seeing evidence of the return of five-year money. He cites the five-year fixed rate from Mortgage Express, with a rate of 4.69 per cent and a 1.5 per cent fee. He says: “Almost against our predictions, this product has been moving quite well and has been quite popular.

“Traditionally, a buy-to-let customer has always had this three-year horizon but, all of a sudden, they are seeing slower growth and a good rate and some of them are now going for five year money. It seems to have hit sentiment at the right time.”

Whittaker thinks that to a certain extent, the lack of new investors is a positive thing. He says: “I think the market will thrive better for the lack of new investment companies who do not know what they are doing. I think you will find what is happening now is the investor who has been in for a year or two and who has been taking a bit of a holiday is now starting to get active again.”


SII encourages youths working in financial services

The Securities and Investment Institute is teaming with charity The Brokerage Citylink to raise the numbers of young inner city Londoners working in financial services. The SII is offering free places to 20 Brokerage students on its one day introduction to financial markets course. All 20 candidates expressed an interest in working within the banking […]

Collegiate sets up A-Day seminars

Collegiate is holding a seminar on the potential risks and rewards presented by A-day at the Aztec Hotel in Bristol on 29 September 2005. A second Collegiate seminar looking at A-day and tools to establish clients’ attitude to risk and selection of appropriate products will take place in the National Motorcycle Museum Birmingham on 26th […]

Skandia slashes Bankhall value

Bankhall is now valued at just 25m after Skandia wrote down 82m following a writedown of 70m last December, The new move fuels industry speculation that Skandia is poised to sell the loss-making support service organisation. Skandia paid 145.8m for an 81 per cent stake in the business in 2002, valuing Bankhall at 180m, and […]

Globe - thumbnail

Considerations for overseas workers in Germany

With Germany’s strong economic growth leading the eurozone’s recovery, many UK businesses are keen to be part of the success story: recent data shows that there are currently more than 280,000* employees working for a UK-controlled company in the country.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm