Both the Royal Institute of Chartered Surveyors (RICS) and Hamptons International Mortgages recorded a dip in the BTL sector in their latest figures, with RICS members seeing their quietest quarter since Q2 2005 and Hamptons noting a 3.85 per cent drop in BTL purchases in October.
Jeremy Leaf, housing spokesman for RICS, commented: “The recent interest rate increases have painted the buy-to-let market as a less than favourable investment. With profit margins potentially reduced, affordability conditions could bite hard into investor’s pockets and push up rents if interest rates rise further in 2007.”
RICS also logged the first drop in gross yields for two years after they hit 4.6 per cent in October, compared to 4.8 per cent this time last year.
This decline was blamed on house prices rising fastest than rents and RICS commented that rents could be pushed up as a result.
However, despite the fall in the market, both Leaf and Jonathan Cornell, technical director at Hamptons, believed there were positive indicators which pointed to a brighter future.
Cornell said: “The developer deals that helped buy-to-let investors last month have now finished and property has become too expensive for a quick investment. However, with the Christmas City bonus and a guaranteed return of the developer sales at the end of the year, December’s figures will be one to watch.”
