by Mark Johnston
The buy to let market has been struggling since the financial crisis made it difficult to raise credit. That may well be about to change in 2011 as a number of new providers are set to enter the market.
The chief executive of Paragon, Nigel Terrington spoke recently about the concerns of some landlords that funding has become very difficult. He spoke out highlighting the importance this will be in the new year.
His message was that he believed that the situation was improving and said: “It is expected that we will see a number of new lenders enter the buy-to-let market in 2011.” But at the same time he raised concerns that more lenders didn’t always mean better products as he was worried that the market may become over crowed with far too many small lenders competing for a share of the market. He thought that this could be avoided by lenders producing exciting new products instead of going head to head on the same old products.
The number of buy to let mortgages has increased this year but are still not up to historic levels. That said, gross lending is up by 10% and that’s expected to go up even further in the new yea following positive buy to let figures being released by the Council of Mortgage Lenders.
A leading housing expert is predicting that poor market conditions in the retail housing market may well create perfect conditions for buy to let landlords for rents will rise. Chris Horne, the editor of a leading Property website highlighted that the shortage of rental properties together with an increased demand due to first time buyers finding it difficult to get home loans could drive the cost of renting up.
Mr Horne said: “I think that rents will grow, certainly in the short-term as renting becomes a more realistic alternative to buying.”
London is expected to return the best rental yields and is more likely to see a hike in rents over the coming months going into 2011. According to Malcolm Harrison, a expert in the field, the South of England is expected to see a big demand so Landlords may be advised to look there if they are wanting to make bigger returns.
Recent research into the rental market in London showed a large increase in letting agreements in 2010 alongside much higher rents being agreed. Laurence Glynne, a property expert suggested that the trend may well continue well into the new year as there are still a lot of people searching for rental accommodation. This demand together with a shortage of properties has created the perfect conditions for landlords.
Whilst this was excellent news for landlords looking to cash in on the current situation, it left many would but buyers out in the cold. It’s difficult enough to find a bank that’s willing to lend to first time buyers without property speculators buying up all the reasonably priced property to rent back. Many less well off home buyers are now having to look much more further afield to find the home of their dreams.
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