Rental demand set to propel buy-to-let in 2007

Seventy per cent of brokers expect buy-to-let business volumes to increase in 2007 due to product innovation and rising tenant demand, according to research from Mortgage Trust.

Buy-to-Let intermediaries are preparing for a bumper year in 2007, with product innovation and increasing rental demand predicted to drive the sector to record lending figures. According to the latest research from Mortgage Trust, almost 7 out of 10 brokers expect buy-to-let business volumes to increase on 2006 figures, with 38% of this number predicting an outstanding rise of 25% or more. These predictions were a marked increase on predictions received in 2005 when 44% of brokers expected 2006 volumes to rise.

When asked why 2007 volumes were expected to be so buoyant, product innovation and rising tenant demand were cited as the primary influencial factors, whilst city bonus payments and enhanced technology were considered to be the least. In terms of factors posing the biggest threat to the sector, interest rate rises were identified by 63% of brokers. Increasing legislation and oversupply were also mentioned, however only by a minority of respondents (13% in each case).

In terms of rental property types, the majority of brokers expect terraced houses or new build flats to be most popular with investors, followed closely by established flats. HMO properties and detached houses are expected to be the least popular property type.

Nicola Severn, Communications Manager at Mortgage Trust, comments: “Buy-to-Let brokers are extremely optimistic about 2007, and they have good reason. With immigration and changing social attitudes all set to continue to contribute to high levels of rental demand, and product innovation likely to develop on the back of increasing lender competition, it is no wonder that investors are expected to increase their buy-to-let activity. Although further interest rate rises may be a reality in 2007 the vast majority of buy-to-let borrowers will not be deterred from looking to expand their portfolios. Many consider finance costs to be part and parcel of their overall investment plan and are prepared for such developments.”