Current conditions in the lettings market provide a number of positive factors for landlords, but new research has unveiled several limiting factors as well.
Borrowing costs are currently low, tenant demand is high and voids and arrears are down, according to the main indexes – all good signs for the buy to let and rental markets.
However, BDRC’s latest survey of its Landlords Panel has uncovered a series of insights that suggest accessing buy to let still has some challenges.
This will be particularly concerning for lenders as around a quarter of landlords are currently looking to expand their portfolios in the coming 12 months.
Most of them will want to use a traditional buy to let loan in order to fund such a purchase, but the BDRC has suggested some issues are preventing growth.
Conservative lending criteria was listed as a barrier to growth by 56 per cent of the 1,000 strong survey, while one in five said they were concerned over the length of the process.
The average application from broker interview to the release of funds was found to take eight weeks, but around 20 per cent of landlords revealed it took them at least eight weeks.
Potentially this could delay rental income for the landlord, while around 200 landlords in the study suggested slow processing by a lender meant they missed out on a property.
A similar number said they had reached their lending limit with at least one buy to let provider and this was therefore limiting their options.
Securing investment properties can need to be done in a very short window of opportunity – such as purchasing at auction – highlighting the need for as few barriers to growth as possible.
The number of buy to let and lending products on the market has increased at rapid rates in the past year and this is just one way that lenders are looking to overcome some of the issues faced.
Growth predictions in the sector for 2015 and beyond are also high, according to BDRC director Mark Long.
22nd October 2014