Buy-to-let growth driving housing market activity
A large rise in the number of buy-to-let property valuations was the reason for a rise in activity in the housing market, according to Connells Survey & Valuation.
Research by the firm found that valuation activity across the market during 2012 was 12% up on the year before. This growth was driven by a huge leap in the number of buy-to-let valuations conducted across the year.
Valuations in this area were up 33% against 2011 levels and now represent 14% of whole market.
John Bagshaw, corporate services director at Connells Survey & Valuation, said that rising demand for rental properties continued to push the buy-to-let sector ahead of the rest of the market.
“Buy-to-let was favoured more than anything else by conditions in the housing market last year. Alongside growing tenant demand and rising rates, buy-to-let borrowers, who tend to have substantial equity, have benefitted from Funding for Lending bringing down mortgage rates even further at lower LTV bands.
“With the gap between rental income and mortgage payments looking lucrative, demand from investors is likely to remain strong as the year progresses.”
Lending manager at Newbury Building Society Roger Knight, writing in a blog for Mortgage Solutions, said that a combination of low savings rates and high costs for first-time buyers would ensure the market prospers in 2013.
“Once again the housing market as a whole seems set to remain flat for yet another year and savings interest rates are visibly beginning to decline, so it seems people are turning to the rental sector either for investment or to fulfill their housing needs.
“Investors have seen little return on their savings over the past few years and appear to be choosing to invest it in property.
“BTL mortgages are not only popular with customers, but us lenders are pretty fond of them too. Our experience is a success story, with only two BTL cases going into arrears since 2008. In fact, BTL makes up 15% of our lending and which is very reflective of the market as a whole.”
Article courtesy of Mortgage Solutions