Interesting article from FT.com today telling us that more landlords are moving their focus to the cheaper buy to let northern property market where growth and yields are more sustainable. We have been telling everyone this for many years and it is what we have specialised in for over ten years. Not really new news is it?!?!
Purchasers of buy-to-let properties are turning to the cheaper end of the market as low rates encourage buying but incoming regulation douses demand for more expensive homes.
Landlord borrowers are moving away from higher-priced properties towards those valued below £150,000, according to research that tracks 250,000 monthly mortgage product searches carried out through price comparison websites.
The data, produced by the broker Mortgage Advice Bureau and search tool provider Twenty7Tec, will cause concern among housing policymakers who have warned of intensifying competition between first-time buyers and buy-to-let landlords for affordable properties.
The buy-to-let market has been growing rapidly: gross mortgage lending for buy-to-let has jumped from £16.4bn in 2012 to £27.4bn in 2014 and is forecast to reach £31bn in 2015.
The researchers found the proportion of searches for mortgages on homes worth less than £150,000 in the three months to September 2015 rose to 35 per cent from 21 per cent in the same period last year. Conversely, the proportion of potential buyers seeking properties worth between £250,000 and £499,999 has fallen from 44 per cent to 24 per cent over the period.
Brian Murphy, head of lending at Mortgage Advice Bureau, said the broker had seen a surge in buy-to-let landlords looking for mortgages on lower-priced properties. “As rental demand remains strong nationwide, opting for a cheaper property can result in more attractive yields. It appears many landlords are looking to invest in areas outside the south of England, where property prices won’t hold them back from making a profit.”
The researchers said there was evidence that many borrowers were switching from the previous hotspots of London and the Southeast to other parts of the country where rents remain relatively high but prices significantly lower. “You’re making a much better return pound for pound,” said Mr Murphy.