Buy-to-let needs new blood as well as the seasoned pros, argues Bob Young, managing director of Capital Home Loans
I’m struggling to remember a period post-Credit Crunch when buy-to-let, its lenders, the products, the sector overall, etc has been more in the news. From a period a few years ago when many appeared to be giving the sector the last rites to the positivity and confidence we see today, it has been one hell of a turnaround.
Of course the real truth about the sector is that it was never on its last legs as some might have wanted us to believe, indeed, it was (and remains) one of the most important parts of the mortgage market. This was evidenced recently by the recent BBA mortgage lending figures which showed an increase in the amount of buy-to-let finance being taken out by borrowers in September.
Part of this increase in lending and product availability has been existing lenders showing more appetite to lend in the sector, while we have also witnessed new and returning lenders dipping more than a toe back into buy-to-let waters. This new lending that is fuelling a more vibrant buy-to-let sector is also likely to receive a further boost towards the end of this year/start of next when Abbey for Intermediaries begins offering products again.
Abbey is an interesting case as it has already said clearly that it will be targeting non-professional landlords who own less than three properties. Clearly, they have been struck by the number of new landlords entering the sector over the past year, and given the volatile state of the stock market and other supposed ‘save havens’ for investors’ money, it is perhaps not surprising that property is once again looked upon favourably.
The true detail of the Abbey buy-to-let offering has yet to be seen however its focus on first-timers and non-professionals is bound to be followed by others in the sector. While I am a great believer in the need for landlords to be professionals when it comes to property investment, clearly the sector needs to bring in new blood as well.
Therefore if more people are looking to make that first step into buy-to-let I applaud them – there is certainly going to be increased demand for private rental properties in the years ahead. One word of caution I would however make is the need to be a realistic landlord, whether you would deem yourself an amateur or a professional. If the new blood is entering the sector thinking they can make themselves a very quick buck, then they are still likely to come unstuck.
Buy-to-let property investing remains a fantastic long-term investment provided the individual does all their due diligence before putting their money where their mouth is. This includes all the obvious areas to consider such as the type of tenants they are looking for – students, families, retired, etc – plus what are sustainable levels of rent to charge and how that covers the mortgage, and most importantly whether the individual is buying at the right price.
Clearly, this is where a quality mortgage adviser can be of great benefit and one would expect those specialist advisers to be looking forward to a particularly vibrant marketplace in the years ahead.
All in all there is much to be positive about with the buy-to-let sector, provided all concerned are aware of their responsibilities and the individuals concerned know what they are doing. It should always be advised upon as a long-term financial planning tool which, providing all the necessary homework has been completed, is likely to deliver a very pleasing return.