It is clear from the latest figures that buy-to-let landlords have stepped in to replace retreating first-time buyers and to support the market, undeterred by the scare stories circulating the property market and taking advantage of their improved negotiating power.
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Reflecting the fact that buy-to-let landlords are proving a better credit risk than the average homeowner, lenders have relaxed their criteria, with required rental income dropping from 125% to 120%. In fact, I would forecast that many buy-to-let lenders will permit experienced landlords to borrow on the basis of just 100% cover going forwards, once the rental growth is taken on board by the lender as a statement of fact rather than just initial data suggesting this is happening.
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It is clear that we are not in the middle of a housing crash and instead we are just seeing a confused period where well funded buyers are negotiating extremely good prices, albeit temporarily. The house price indices point to strength in average house prices and indeed there are some indications of the rate of growth recommencing in the spring. Rents are rising, house prices are firm but bargains can be had and interest rates are falling – buy-to-let landlords are confident and looking forward to some increasing rental profits over the next two years.”
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