Fewer Brokers Think Investors Should Expand BTL Portfolios

  • Number of brokers who are unsure of the market doubles
  • But landlord demand drives growth – 98% of brokers writing BTL business say they are writing more of it than they were at the start of the year

Fewer brokers think this is a good time for landlords to expand their portfolios than at the beginning of the year, according to research commissioned by West One Loans, the privately funded bridging lender.

In February 2012, 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 buy-to-let portfolios. Six months later, that number 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.”

As part of the research, West One Loans specifically polled brokers who were already offering buy-to-let bridging products, to see if they were writing more or less buy-to-let bridging business than they were six months ago.

In February 2012, 73% of brokers offering buy-to-let bridging products said they were doing more business than they were six months before.  This has now risen to 98%.

Duncan Kreeger said, “Despite a slight cooling of broker sentiment towards buy-to-let as an investment for future, thanks to the current demand from landlords, buy-to-let bridging is flourishing.  Back in February, 70% of brokers offering buy-let products said they were writing more buy-to-let business than they were six months before.  That number’s now risen significantly.  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.”

Buy-to-let business seems to be growing at a sustainable rate.  Three out of every five brokers say growth is ‘Moderate’ or ‘Fast’ (61%), compared to just two out of every five (40.2%) back in February.

The growth in BTL business is reflected in brokers’ customer profiles.  38% of brokers’ bridging customers are now landlords, compared 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.

Duncan 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.”

Aside from buy-to-let, bridging for all purposes is expanding, with more than seven out of every ten of brokers reporting an increase in the amount of bridging business they are conducting, compared to the year before.  In February, six out of every ten bridgers said they were writing more business than they were a year ago.

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