New landlords are continuing to enter the buy-to-let sector, mortgage brokers have revealed.
Intermediaries said that 22% of their buy-to-let mortgage business in Q2 was from first-time landlords, the same level reported in Q1 and an increase on the 20% level reported for the same time period last year.
The percentage of cases from landlords looking to grow their rental portfolios increased during the quarter to 38% from 33% in Q1, whilst the number of landlords looking to remortgage fell from 33% to 28%.
More than half the intermediaries surveyed reported an improvement in the availability of buy-to-let finance, including 10% who said that, in their view, availability had improved significantly.
Intermediaries were also asked whether they had any cases of clients looking for let-to-buy mortgages, and 9% reported that they had dealt with such cases.
Let-to-buy mortgages are for situations where someone either cannot sell their house but would be able to rent it out to buy another, wants to return to live in the original property again at some point, or simply wants to get rental income from it while they purchase another home.
In such cases, the lender may allow the original residential mortgage to convert to become a buy-to-let mortgage, based on rental income rather than a borrower’s earnings, and the borrower is then able to take out a residential mortgage on the new property.
John Heron, director of mortgages at specialist lender Paragon, which conducted the survey, said: “We have seen over the past two years a steady rise in the number of first-time landlords entering the market.
“It would seem that an investment in property is increasingly attractive against a background of low returns on cash and volatility in global markets.
“With perceptions shifting in terms of the improved availability of buy-to-let finance too, the lending industry is in a good place to support the ambitions of both new and experienced landlords.”
* Meanwhile, the Paragon Group has announced big rises in buy-to-let lending and profits. Reporting for the nine-month period from last October 1 to June 30, it said buy-to-let lending was up 164% on the same period 12 months earlier. Pre-tax profits were up 10.2%.
Buy-to-let lending totalled £135.4m in its third quarter, compared with £102.3m for the first six months, with total advances reaching £237.7m.
The pipeline of new business stood at £220.2m at June 30, which Paragon said positions the business well for its final quarter.
Heron said: “The expansion of our funding facilities at the end of 2012 allowed us to be more competitive and we have seen the benefit of this come through.”
Comments