The survey provides a snapshot of landlord’s views on the buy-to-let market and includes questions on a variety of sector issues including plans for the future, buying constraints, impact of changes in Capital Gains Tax (CGT), tenant demand and rental income.
Of those who responded the majority (64%) are still positive about the future for buy-to-let, although this has fallen from a figure of 81%, while those who are unsure about the future rose from 9% to 25%.
This greater uncertainty about the future has translated into landlords’ short-term purchase intentions with 28% of respondents looking to purchase more investment properties, a drop of 10% from the last survey. More landlords are now looking to sit tight with the properties they hold – 66% up from 53%.
The lending squeeze continues to make itself felt, even with the addition of a number of new buy-to-let lenders over the past six months. When asked: ‘What constrains you from buying more BTL properties?’, 46% of respondents cited a lack of finance for both new purchases and remortgaging with 30% saying that the increased deposit requirements now necessary to obtain a buy-to-let mortgage were also impeding their purchase ambitions.
The 10% increase in CGT for higher rate tax payers, announced in June’s Emergency Budget, appears to have had little impact on landlords with only 19% suggesting that the move has changed their view of buy-to-let as an investment.
The survey was completed by 622 individual respondents and undertaken in July 2010.
Bob Young, Managing Director of CHL Mortgages, said:
“Given the speculation around the buy-to-let market over the last six months, particularly with regard to the increases in CGT and the potential for FSA regulation, it is perhaps unsurprising that landlords are less sure about the future for the sector than they were six months ago.
"While the CGT issue has been put to bed following the Emergency Budget in June, the issue of the regulation of buy-to-let and whether it becomes part of the FSA’s regulatory patch has yet to be decided and this has only been exacerbated by the decision to disband the FSA itself and the huge regulatory shifts we are about to see.
"It is therefore entirely understandable that landlords are adopting more of a wait and see approach with both the overall future of the sector and in terms of their own plans to add to their portfolios.
“The sector has seen a number of new entrants since we last took the pulse of the landlord community and while greater competition is clearly a positive, there are still funding and lending issues which impact on purchasing ambitions.
"Clearly, landlords would like to see greater access to finance and perhaps less hefty deposit requirements however this seems unlikely given the current climate. What comes across from the survey is a clear view of the buy-to-let market as one in which professional landlords dominate, which in our view is no bad thing.
"The sector’s recent past shows us the trouble that novice landlords got into when finance became far too freely available and criteria became far too slack. While landlords may be frustrated by the current financial environment it is clear that this status quo will be with us for some time; opportunities do still exist but require a greater level of work, due diligence and increased funding before they can be translated into a portfolio addition.”
