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Buy-to-let landlords snap up mortgage deals

Thu, 27 Apr 2006

The buy-to-let sector of the mortgage market remains strong despite a slump in property prices paid by landlords in March. New statistics from the buy-to-let index compiled by Paragon Mortgages have revealed that March witnessed a 1.5 per cent drop in property price paid by buy-to-let investors.

However, the market remains strong, buoyed by sustained demand from tenants. There has been a surge in activity from smaller scale investors. The MD of Paragon Mortgages, John Heron, was reported as saying that "At the end of 2005 and especially the start of 2006, we witnessed a significant pick-up in activity in the buy-to-let sector, with professional and smaller scale landlords alike purchasing additional properties in response to identified demand from tenants. Since November, property values had been rising steadily, but this month saw an easing in prices paid. This reflects the fact that tenant demand is strongest for smaller homes, as singletons and young couples look for clean, simple rental properties to fill their accommodation needs. As serious investors buy in response to actual tenant demand, average prices paid have eased a little."

This slight decline in prices has led to slightly lower rents. Average yield is now 6.26 per cent. Landlords, according to Paragon, remain confident when purchasing properties. Long-term confidence in the property market is also reported to be at a high. Landlords were said to be actively growing their portfolios.
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