With all the pessimism which is surrounding the housing market and the economy in general at the present time, there is little wonder that no one is willing to commit to buying a new house until things settle down and we see some level of stability return to the price of property.
Coupled with this is the fact that, following the credit crunch many lenders are not prepared to grant loans and mortgages to individuals due to a tightening of lending criteria and even if they do offer a home loan, in many cases the potential borrower is unable to afford the repayments due to high interest rate charges.
As a result, landlords are rubbing their hands together with glee as many people who would normally buy a property are choosing to rent until the situation returns to normal (whatever that is!) Recent research from Paragon mortgages, a lender who specialises in buy to let loans and mortgages revealed that more than 50% of landlords who own residential property believe that the demand for rental property will continue to increase over the next twelve months. The lettings market is in a strong position at the moment, with void periods in properties at an all time low and rental yields now at their highest level since the beginning of 2006 and continuing to increase.
With estate agents struggling to sell any property at all in the current climate, there are some bargains to be had for those landlords who are in a position to expand their portfolios. I spoke to one landlord this week who said that he was being offered properties by agents with discounts of up to 40% below the asking price. With the gap between rental income and house prices closing, the investment yield for buy to let property is starting to look attractive once more and landlords should be able to find it easier to obtain a buy to let loan or mortgage on a new investment property.
