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News: Landlord confidence sky high

Wed, 05 Sep 07

FTBs may be in despair over getting onto the property ladder, but landlords have never been happier...

The latest reports indicate that confidence in the British buy-to-let sector is riding at an all time high. Despite rising interest rates pushing up the cost of mortgages and borrowing in general, investors have on average been able to recoup better returns than ever before.

That was the conclusion reached by a report from Paragon Mortgages released this week. Its buy-to-let index shows that the value of the average landlord's property portfolio has increased steadily every quarter since this time last year.

On average, rental yields for residential landlords with three or more properties were found to have climbed from 6.1 per cent in February to 6.3 per cent last month. This has prompted professional landlords to add properties to their portfolios, according to Paragon.

Hoping for signs of a slowdown

A number of landlords surveyed for the report said they were hoping signs of a slow down in the housing market proved true, so that they could add to their existing properties at more advantageous prices. The average landlord had 11 properties but expected to acquire one more within the next 12 months.

Commenting on the report, John Heron, managing director of Paragon, said landlords "are confident because tenant demand is strongly underpinning the market - young people are choosing to stay in rented accommodation for longer" and there are also "a growing number of students and immigrants who are fuelling demand for rented property".

"Just this week we have had data on record numbers of students and strong net immigration figures which indicate demand for private rented property will continue to rocket," he revealed.

Analyst expect a rate hold

Late this week, the Bank of England monetary policy committee is due to hold its monthly meeting to discuss the interest rate, inflation and other economic concerns. Since last August, the committee has voted to increase the interest rate a total of five times, taking it up to its present rate of 5.75 per cent.

However, analysts are not expecting the interest rate to be increased this month as reports indicate that inflation - which was rising high at the start of the year - is now coming back under control.

A key benchmark for the committee is whether inflation is running above or below three per cent. At present, it is under that target, but should it exceed it, or look likely to exceed it, in the near future, a further rate rise would be inevitable.

Source: http://www.assetz.co.uk (Press Release)

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