Investors pledge commitment to buy-to-let

A massive 77% of lettings offices and investment landlords surveyed in August and September pledged to retain their investment properties, despite falling house prices.

Of the 453 letting offices and 494 landlords surveyed for the Association of Residential Lettings Agents’ Q3 Review and Index, a quarter plans to retain their property portfolios for more than 20 years, though just 40% plan to purchase new property in the next 12 months.

The publication of the review coincides with the Government’s decision to nationalise buy-to-let specialist mortgage lender Bradford & Bingley.

Abbey has bought B&B’s UK and Isle of Man retail deposit business and branch network, while the rest of B&B’s assets and liabilities having gone into public ownership via a transfer of the company’s shares to the Treasury.

To enable the transfer of the retail deposit book to Abbey, the Financial Services Compensation Scheme paid out approximately £14bn to back the deposits in B&B it covered; the Treasury shelled out around £4bn for the deposits not covered by the FSCS.

Ian Potter, ARLA’s head of operations, dismisses claims about B&B’s nationalisation signalling the death toll for the buy-to-let market.

He says: “Buy-to-let will not die out. The property market will at some point in the future recover. On the upturn investors will start to see a capital growth return, as well as a yield enabling them to show profit from their investment.”

Similarly, the Council for Mortgage Lenders has dismissed the negative sentiment surrounding the takeover of B&B, describing speculation about any negative future performance in buy-to-let lending as ‘misleading’.

Outstanding buy-to-let loans totalled 1,103,000 in the six months to June 30 2008, valued at £132.5bn. This compares with 11,741,000 loans outstanding in the mortgage market as a whole, worth £1.2 trillion.

Of these, 1.10% of buy-to-let mortgages were more than three months in arrears compared with 1.33% across the whole mortgage market. The percentage of buy-to-let mortgages taken into possession was 0.16% - the same as for the mortgage market as a whole.

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