The Changing Face of the Property Market

A month into 2013, how is the property market in the UK doing? As ever, indicators are contradictory, with experts unsure how the market will develop over the coming months and years. House prices in much of the country remain largely static, with some regions experiencing small falls and rises, but little significant change. As ever, London performed best, but rises there still averaged at only 0.3%, well below the kind of rises seen pre-downturn. But there is room for optimism on prices, with falls in just 16% of postal districts this month, compared to 27% in November and December.

Despite the lack of property price growth, large numbers of people are unable to afford to buy property, as prices outstrip wages by a significant amount in most parts of the country. Banks are unwilling to lend to lend to anyone with less than perfect credit, or without a hefty deposit. Buy-to-let landlords have been able to profit from this situation. The government has been attempting to encourage more lending to first time buyers and homeowners with its Funding for Lending scheme, and there is evidence that mortgage availability has increased as a result.

So what does that mean for landlords? Despite the increased availability of owner occupier mortgages, the buy-to-let market is still booming. Lending criteria remains tight, and renting the only option for many. This is reflected in the increase in availability of mortgages for landlords, with many lenders relaxing their lending criteria for buy-to-let. The Funding for Lending scheme is helping increase lending and reduce rates across the board, and that includes mortgages for landlords. Rates for buy-to-let mortgages are now lower than they have been for six years, before the banking crisis.

If you are looking to increase your portfolio or get started in buy-to-let, the signs are that now could be a good time to do it. However, as ever there is a need for some caution. Rents have been rising for some time, but many predict they will hit a ceiling soon. Tenant arrears have also increased in the last few years. Make sure you make sensible rent predictions when you calculate your likely return, and have landlords insurance that will cover you for arrears.

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