Landlords add to buy-to-let portfolios thanks to Bank of England's lending scheme
Sunday 20 January 2013
Landlords are looking to take advantage of slightly looser bank lending to add to their property portfolios according to a raft of research from the rental market.
The Bank of England's £80bn Funding for Lending scheme, designed to boost lending in the wider economy, is seemingly encouraging established buy-to-let landlords to add to their portfolios. According to the Association of Residential Letting Agents the number of buy-to-lets owned by each landlord has on average risen from seven to eight at the end of 2012 – just when looser lending kicked in.
"The latest data from Arla suggests that landlords are carefully but concertedly increasing their portfolios. Strong tenant demand coupled with affordable house prices in some areas will help to sustain the sector's growth," said Ian Potter, Arla's managing director.
Brokerage firm Mortgages for Business says an increasing number of landlords are remortgaging properties to buy more or to move to a cheaper deal. In fact, according to the broker, 80 per cent of landlords it has surveyed are looking to refinance, this compares with just 55 per cent in the fourth quarter of 2011.
"Gross yields on buy-to-let property are particularly attractive thanks to the mess of the first-time buyer market. Property prices are flat and tenant demand is stratospherically high, which is why more landlords are refinancing and manoeuvring to add to their portfolios," said managing director David Whittaker.
In addition, it seems some lenders are looking to get landlords off their books to reduce their property exposure. "While high demand and subdued property prices are the carrot, certain lenders are the stick, particularly RBS and Irish lenders which are demanding landlords refinance elsewhere," Mr Whittaker added.
LSL Property Services says it is already feeling the impact of Funding for Lending on buy-to-lets, observing: "Stronger lending at lower loan-to-value is helping landlords cater for renters, but can't clear the five-year backlog of demand that will underpin rental yields," David Newnes, director of the company.
The Funding for Lending scheme has courted controversy in recent weeks, particularly when it was revealed by financial information service Moneyfacts that a host of savings accounts with high introductory bonuses have been withdrawn. Experts suggested that banks and building societies, boosted by the scheme, are no longer as reliant on savers' cash and are able to pay lower rates of interest, while offering borrowers cheaper deals.
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