Mortgage advisers report they are continuing to see a strong flow of business from the buy-to-let sector, with around 21% of their current business coming from landlords, according to Paragon's September Buy-to-Let Index.
The latest Index also claims landlords have seen average prices fall in the past month and are looking to increase their portfolios by an average of 5%.
The research found the price landlords paid for property fell 1.6%, from £181,533 to £178,566 between August and September. Paragon says this is generally because landlords are more experienced at negotiating prices and are often able to spot under-valued locations.
The report also says landlords are hoping to increase the size of their portfolios, with the average portfolio expected to grow 5% in the next twelve months, from 11.5 to 12.1. With 90% of buy-to-let mortgages being bought through intermediaries this means the flow of business to advisers is likely to increase.
Tony Finalson, managing director of IFA firm Professional & Commerical, has observed growing business volumes and says: “The stream of buy-to-let business is still strong. Investors have been able to spot bargains as the housing market slows down, allowing them to build up their portfolios.”
Paragon also claims rents have risen 2.4% over the past year and average yields remain steady at 6%, meaning the market is still profitable.
“Recent increases in borrowing costs, as a result of both the MPC’s successive rises in Bank base rate and of the current disruption in the wholesale financial markets, continue to deter people from committing to buying a home”, says John Heron, managing director of Paragon Mortgages.
He adds: “This feeds through to stronger demand for rented homes, with would-be home buyers competing for a limited supply of suitable rented accommodation with other categories of tenant who would not typically purchase”
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