Buy-to-let market set to thrive

The buy-to-let market looks set to continue thriving despite falling house prices, commentators have said.

There have been concerns that a drop in the value of property could cause investment landlords to dump large numbers of homes on to the market in a bid to cash in on recent price gains, further depressing values.

There has also been speculation that buy-to-let investors could struggle to refinance in the current mortgage market as lenders continue to tighten their lending criteria, leading to forced sales.

But figures from the Association of Residential Letting Agents (Arla) suggest that the majority of landlords are well positioned and are happy to sit tight and ride out the storm.

Research carried out for the group found that nine out of 10 landlords had no intentions of selling properties if house prices fall, while 46% plan to increase the size of their portfolios during the coming 12 months, seeing price falls as a buying opportunity.

The majority of landlords are people who have been in the sector for many years, owning an average of seven properties each and planning to hold on to them for around another 17 years.

They also have very low gearings, needing to borrow an average of just 57% of each property's value.

Meanwhile, the housing market downturn means demand for rental properties is soaring, which is in turn pushing up rents.

Arla spokesman Malcolm Harrison said buy-to-let landlords saw their investment as being long-term and they were not looking to make rental profit, but just to cover their costs.

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