How buy-to-let may save the property market

The bad press that the buy-to-let industry has had in some quarters in recent years seems never to abate; it simply shifts target. Previously, the industry was
blamed for rising prices on the basis of the nation that homes being snapped up by investors could have gone to first-time buyers instead. More recently, buy-to-let has been described as a disaster for investors who have got their fingers burned with investments that have lost them money in the recent market slowdown.

Both of these notions have been disputed. In the period when the market was booming investors were at pains to state that most of the buy-to-let homes were unlike the sort of property being purchased by first-time buyers. In the current climate, it has been noted in at least some quarters that the bulk of investors are in a better position than suggested.

A report by Reuters yesterday made this point, alongside another interesting suggestion: that far from being the villain of the property market, buy-to-let may be a hero because the continued investment in it by those who can see plenty of good reasons to go on doing so is helping to provide a bulwark against what may otherwise be a much more pronounced downturn.

The top lenders, Reuters noted, are certainly finding that this kind of investment is still going on for well-organised landlords who are planning ahead for the future by making the most of the present.

One of them, the head of buy-to-let lending mortgage at Bradford & Bingley Jeremy Law, told the news agency: "All our anecdotal feedback is that significant landlords ... are absolutely seeing the current market environment as an ideal opportunity for them either to continue to expand their portfolio or to start expanding them again."

If opinions and anecdote count for anything, it may be fairly said that there are many voices which take an upbeat view of this kind of continued optimism. At the recent Property Investor and Homebuyer Show in Manchester a debate on the state of investment there were plenty of experts willing to go on backing such activities.

Glen Armstrong, of G & A property, pointed to the issue of rents, which was counterbalancing falls in value. He stated: "If every single one of our properties is generating at least £150 a month after the property mortgage payment then the actual value of the property is immaterial to me."

Alastair Dickens, managing director of ISIS, acknowledged that there were some difficulties caused by the liquidity crisis but stated that "the market fundamentals are actually still pretty good" and that the key adjustment required now was to look around for a good finance deal in the way people used to look for the cheapest deal.

Undoubtedly there will be adjustments to the market, but the recent surveys - from the Association of Residential Letting Agents survey in March showing 46 per cent of landlords planning expansion to the Mortgage Express survey reported in Letting News this week revealing that six out of ten landlords think now is a good time to invest - suggest that the bolstering effect on the property market postulated by Reuters is showing no signs of diminishing.

Jim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties, french property investment, German property, Cyprus holiday homes, Property in Cape Verde, German property investment, cape verde property buy to let property.