Date Published 04 September 2012
Bridging loan brokers are handling more buy-to-let business than at the start of the year as landlords expand their portfolios but increasingly find they cannot raise money – either at all, or quickly enough – from the high street.
Specialist bridging lender West One Loans says that 98% of brokers are now writing more BTL business than six months ago. When the company did the same survey in February, 73% of brokers said they were writing more BTL business than in the previous six months.
However, slightly fewer brokers think this is a good time for landlords to expand their portfolios than at the beginning of the year.
In February, when West One Loans last surveyed brokers on their confidence in the buy-to-let market, 83% said they thought it was a good time for investors to expand their portfolios. Six months later, that proportion has fallen to 81%.
At the same time, the number of brokers who are unsure of the market has doubled, from 5% in February to 10% in August.
Duncan Kreeger, chairman of West One Loans, said: `While there has been a fall in the number of brokers who are certain investors should expand their portfolios, the change is small – and 81% of brokers are still confident it’s a good time to invest in the sector. Furthermore, the number of brokers who think it’s definitely not a good time to pile into the market has fallen to less than one in ten.
`Landlords and brokers have different opinions of the market. While fewer brokers think it is a good time to invest in buy-to-let, high demand from landlords suggests they feel otherwise.
`Despite a slight cooling of broker sentiment towards buy-to-let as an investment for the future, thanks to the current demand from landlords, buy-to-let bridging is flourishing.
`Bridging is still not being affected by increasingly problematic conditions in the wider residential market. In fact, it’s thriving off the back of them.`
The growth in BTL business is reflected in brokers’ customer profiles, with 38% of bridging customers now landlords, up from 37% six months ago.
The increase has been driven by demand from professional, rather than amateur landlords, with professional landlords now representing 25.4% of brokers’ bridging customers compared to 23.3% in February.
Kreeger said: `I am pleased to say that the growth in buy-to-let business seems to be steady, rather than explosive at the moment. We aren’t seeing a massive increase in the number of brokers saying buy-to-let is booming – this is a moderate, sustained rate of growth. The long-term macro-economic picture appears to back that up.
`Given the current housing shortage, buy-to-let should represent a sound investment for the future.
`But professional landlords are finding it difficult to get access to finance from high street lenders. Even when they can, it’s painfully slow.
`Over the last six months, they have woken up to the fact that bridging loans provide a rapid solution to their problem. And as property investors embrace bridging, brokers are seeing the benefits.`