Surge in lettings

Wherever there’s a bear market, there’s generally a corresponding bull market somewhere.

The sales market for residential properties is and has been in the doldrums, and in our view, due to both macro, micro and sector specific reasons, we don’t see this changing for the foreseeable future.

The increased and increasing number of people who can’t afford to buy a residential property means that those people generally end up renting.

Put into some hard facts, a report from Paragon Group states that :-

• Over 17 % of housing stock in Britain is now being privately rented
• The above percentage has been increasing fast – it represents an extra 1.8 million rental properties on the market during the last decade

Maybe this increase in demand will have a knock on effect on the sales market, with more buy-to-let investors buying and more importantly more buy-to-let mortgages available.

Buy-to-let lenders, like lenders and banks generally, seem to us to be continuing with ill-thought out actions. The excesses of the last decade seem to be being matched by excess caution in this decade.

As an example, just at a time when the buy-to-let market is looking more attractive, The Mortgage Works are pulling out of the limited company buy-to-let market. While there are obvious risks in lending to limited companies, with the right safeguards, such as loan-to-value restrictions, the possibility of some personal guarantee element or a raft of other possibilities and combinations, lenders are quite capable of adequately protecting their interests. It is also in lenders interest generally to help to boost volumes of sales and stimulate some interest and possibly growth in the sales market, as otherwise the problem of falling prices, demand and possible losses for lenders becomes self perpetuating.