Over 50% of existing landlords responding to a major Homebuyer Show survey of property investors have declared their intentions to re-mortgage within the next 12 months. 35% reported that they had already re-mortgaged within the past 12 months. In contrast, the Council of Mortgage Lenders have reported that less than 20% of all residential mortgage holders over the past year have re-mortgaged. This implies that investor landlords are much more prone to take advantage of the latest cut-price mortgage offers.
Mr Schuman (aged 35, married with 2 children) a chartered professional surveyor is a typical case in question. His own property company, Magnet Properties, has 12 properties and until a few months ago these were financed by a large fixed rate mortgage of 8%. He comments:
“As soon as my fixed rate deal finished, I immediately searched the market and found an excellent offer from Paragon Mortgages. The rate of 4.8% saved me over £3000 per month.”
“As an astute landlord with a watchful eye on my outgoings, I will continue to monitor rates, and will not hesitate to switch to a better rate or more flexible deals when they become available.”
Landlords continue to be confident about future of housing market.
72% of landlords expect house prices to grow within the next year with 30% believing prices will continue to grow strongly. This does not stop over 70% believing interest rates will rise over the next 12 months. Also only 14% forecast that their gross rental yield will fall as a result of house price rises, expecting rents will increase to compensate.
Future expansion of buy-to-let market likely
82% of existing landlords plan to purchase at least one further property this year, growing their existing portfolios. 27% indicated multiple planned purchases. Not surprisingly 84% expected the buy-to-let market to continue to grow in 2004.
Properties that landlords are most likely to buy for rent, in order of desirability:
Type of Property Desirable score (1-10)
Apartment without a garden 10
Apartment with a garden 6
Terraced House 3
Maisonette 1.5
Penthouse apartment 1
Semi detached house 0.5
Detached house 0
[key: 10 = most desirable
0 = least desirable]
The main reason for the above preference in favour of apartments is that they are easier to rent (being appealing to students, young buyers who can’t afford their own homes, and young childless couples).
Nick Clark, Director of the Homebuyer Show 2004 comments:
“Our survey shows that confidence in the buy-to-let market remains strong with the vast majority of landlords predict continuing growth, in both property prices and market size. The general mood of confidence in the housing market is also reflected in the number of people registering for our Homebuyer Show in March. Over 5000 have already signed (up from 19% this time last year). We are expecting over 24000 visitors this year, up 17% on last year. This makes the Homebuyer Show 2004 the largest show of it’s kind in Europe. Interest in property continues unabated, and all signs point to continuing home buying optimism”.
