Property News Item: 00123

5th May 2006

Bradford & Bingley's landlord survey demonstrates buoyant buy-to-let market

Source: http://www.bbg.co.uk

* 83% of landlords plan to increase or maintain their portfolios in next six months
* 85% of landlords say rent is the same or higher than one year ago
* The number of landlords reporting rent arrears is down 7% from last quarter

Bradford & Bingley's quarterly survey of UK landlords, the biggest poll of its kind, reveals that 83% of landlords are planning to either increase or maintain their portfolios in the next six months. The bank asked the opinion of over 2,700 customers of its specialist lending arm - Mortgage Express, the UK's largest buy-to-let lender.

Tenant Demand
Landlords' upbeat feelings are supported by healthy tenant demand. Rental arrears have dropped from 26% to 19% this quarter and over half (52%) of landlords questioned said they had no void periods in the past six months. Of those that did, 30% were pre-arranged in order to undertake repairs and renovation. More than a quarter of landlords (26%) invested over £2000 maintaining their rental properties over the past year.

Investing for Capital Growth
Nearly half (46%) of landlords state their main reason for investing is capital growth. When choosing a property to buy, 28% of landlords are purchasing in an 'up and coming' area with a view to benefiting from potential house price increases and a further 28% of buy-to-let investors are looking to add value to their investment by developing their property. Landlords are choosing their properties carefully and buying in areas where tenant demand exists; 39% state that a thriving rental market is the main driver behind their purchase. London and the South East remain the most popular regions with investors. The majority (57%) of landlords own a property in one of these areas.

Property Types
Terraced houses are the most popular property for buy-to-let investors, 57% have this type of property in their portfolio and of those planning to increase their holdings in the next six months, 49% plan to buy a terraced property. Nearly half (49%) of landlords have a two bedroom flat. The average property value is between £100,001 and £150,000 and 50% of property portfolios are now worth more than half a million pounds.

Andrew Moss, Bradford & Bingley's buy-to-let product manager, comments: "Buy-to-let ranks high in the popularity stakes for investors. Landlords are benefiting from the continuing rise in property prices and rents mostly staying the same or increasing. 83% of landlords told us that they are planning to maintain or increase their portfolios. The outlook for tenants is positive too as confident landlords are investing in their properties. One quarter of landlords spent between £1000 and £3000 refurbishing the last property they bought and 17% spent between £3000 and £5000."

High Awareness of the Housing Act
This quarter saw the introduction of licensing for houses in multiple occupation as detailed in the Housing Act of 2004. Despite the licenses being required for only a small proportion of rental properties, the majority of landlords say they are aware of the new legislation and what action they need to take.

Mortgage Market
As interest rates remain stable for the ninth month, the overwhelming majority (83%) state that a competitive rate is the most important factor when choosing a new mortgage. A third cite fees as most important and just over a quarter (27%) choose their product based on the maximum borrowing the lender allows.

Andrew Moss concludes: "Our research findings are clear, the buy-to-let market remains buoyant with high levels of confidence from landlords and sufficient demand from tenants to support this. The Government's 'u-turn' on holding residential property within SIPP's and the introduction of the Housing Act have seemingly had little effect on confidence in the market. Landlords are taking the changes in their stride and see bricks and mortar as a sound long term investment, for capital growth or to fund retirement."