Lee Grandin, managing director of Landlord Mortgages predicted the following for the buy-to-let market in 2006:
“The health of the buy-to-let market in 2006 hinges on the Bank of England’s stance on interest rates. We are currently seeing a vibrant market, which is being driven by high levels of consumer demand as well as the opportunity for landlords to borrow money relatively cheaply. However, if this changes and rather than falling (as predicted) interest rates rise, this could put the market into reverse and see many people choose to invest in other asset classes.
“Gordon Brown’s surprising u-turn on tax breaks for residential property within SIPPs in his pre-budget speech has caused much discussion in the financial services sector. I’ve never believed that these products were going to cause the boom in the housing market some pundits had predicted, as most people simply do not have sufficient funds in their pension to purchase property. However, it will be interesting to see if the closure of this loophole will lead to a boom in residential property funds – a cheaper and more tax efficient option!
“Lenders are currently launching increasingly innovative products and this is likely to grow in 2006 as property investment becomes even more commonplace. However, I don’t feel that some of the more gimmicky products such as those, which only need 100% rental cover will ever become popular. Buy-to-let investment for the majority of landlords is all about rental yields and ‘not doing the deal until the figures stack’ so they are unlikely to find these products attractive.
“Next year will continue to see a vibrant buy-to-let market across the UK with growth driven by increased consumer confidence and high demand.”
