Buy-to-let leads the way to recovery
Bank of England governor Mark Carney has wasted no time in signalling his views on the economy and his plans for interest rates in particular.
It is perhaps unfair to contrast styles with his predecessor who had more limited wriggle room as a consequence of the downturn, but Carney’s pledge to keep rates low until such time as unemployment falls to below 7 per cent is a clear and concise steer which means decisions can be made in confidence.
For the property sector, this is another piece of good news to go along with the Government interventions of Funding for Lending and Help to Buy.
Stocks in listed residential property firms have performed well recently as investors work out that there are several benign influences now working to strengthen the market.
It’s also likely to mean that buy-to-let will increasingly be seen as an attractive form of investment for many- there are already signs to suggest this, with buy-to-let loans up 15 per cent in the last quarter.
A number of lenders have shared plans to grow this area of their product portfolio.
From a valuation perspective, the approach to advising on buy-to-let cases is fundamentally the same as for purchase – though it’s very important to ensure that the opinion around rental income can be supported.
Case law has arguably highlighted a different degree of protection for the consumer in buy-to-let cases, where the assumption is that they are perhaps more informed than a typical house purchaser. A recommendation to seek advice on value and condition separate from that provided to the lender is therefore a prudent one for your clients.
Article courtesy of Mortgage Strategy