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Under the skin of the letting market

Here we share news and views on both the local letting market in & around Oxfordshire and all planned and recent legislation.

Are the buy-to-let headlines indicative?

You may have seen the bullish headlines about buy-to-let lending in the papers on Friday and over the weekend.

The Council of Mortgage Lenders reports then total sums lent rose 22% to £10.4 billion in 2010 against 2009 and transaction volume rose 10% to 102,000.

So in plain English we make it:

–          2009 saw 92,700 buy-to-let mortgages totalling £8.5 billion

–          2010 saw 102,000 buy-to-let mortgages totalling £10.4 billion

So the headlines do chime with our experience: we have a wide number of investors active at the moment and noticeably more than in 2009.

For example last Tuesday we sourced two units in Abingdon for two clients.  They are looking for income (our valuation is over 5%), stability and capital growth.

However we like to also dig beneath the headlines and put the latest figures into context for our clients. Perspective is important, although not always newsworthy. So putting the 2010 data against data from the hotter investment years:

–          2007 saw 350,900 buy-to-let mortgages totalling £45.3 billion

–          2009 saw 92,700 buy-to-let mortgages totalling £8.5 billion

–          2010 saw 102,000 buy-to-let mortgages totalling £10.4 billion

This may be no surprise: the housing market is clearly different than in the pre-Lehman Brother era with both stock levels and transactions levels much lower. The deposits required are (quite sensibly you could argue) much higher.

It is also interesting to work out the average size of mortgage (without getting lost in all the zeros on the calculator):

–          2007 = average mortgage size = £129,000

–          2010 = average mortgage size = £101,000

So, as you might expect, banks are lending far less per transaction. This is the age of cautionary lending of course.

The shortfall of new buy-to-let property continues to support rental valuations across Oxfordshire and demand has been strong in 2011.  

We are not investment advisers, instead we acquire property for clients using our contacts and experience. Our clients appreciate that our income projections are built on our letting thousands of properties a year – accurate valuations are a key part of the investment decision. We tend to then let the property for the clients, so we’re fundamentally motivated to recommend a property with the best yield possible for our clients. 

If you are interested in acquiring a property or want an introduction to a pre-vetted mortgage broker please contact:  

Frank Webster – 01865 302308

Simon Tyrrell – 01865 200012