As mortgages rise and rental income drops, a report from a high profile online letting agency suggests landlords may have seen the peak of the boom that has enveloped the sector for the last couple of years.
According to LSL Property Services the average monthly rent dropped to £707 in February. Still way above the average of two years ago but significantly lower than the £719 being achieved at the back end of 2011. At the same time as income has dropped landlords are finding their mortgage payments going up for the first time in ages. Santander and the Leeds Building Society, both big players in the buy-to-let market, have upped the rates on mortgages targeted by landlords, and other lenders are expected to follow.
The drop in rental achievement accompanied with higher loan repayments will certainly make some landlords think twice before they go ahead and buy more properties but insurance companies who specialise in landlord insurance say they are still experiencing high demand for their products.
David Newnes, speaking on behalf of LSL, said it is too early to say the boom is over just yet explaining: “There are already indications that mortgage lending is falling back, and that mortgage rates are beginning to climb, which will limit the number of prospective homebuyers leaving the rental sector. Given the growing number of households, the pressure will remain on the private rented sector.”
Certainly government experts expect house prices to fall slightly this coming year, the big question may be who will have the easiest access to funds, landlords or first time buyers.