First-time landlords drop

A panel-based survey of 200 mortgage brokers revealed the proportion of landlords either applying for portfolio extension mortgages or remortgages continued to grow in the third quarter of 2008.

Paragon said the number of first-time landlords applying for buy-to-let mortgages had fallen to its lowest level since the question was introduced into Paragon’s FACT survey in 2001. The firm said this suggests that growth in the buy-to-let market is being driven by experienced landlords building long-term portfolios rather than occasional investors or new entrants to the market.

In the three months to the end of September, intermediaries said that over half (55%) of buy-to-let business conducted was for remortgages, with 30% from landlords looking to extend their portfolios. Just 2.6% of business was for property substitution.

First-time landlords accounted for 10.6% of business during the period, down from 18.3% in the third quarter of 2007.

John Heron, managing director of Paragon Mortgages, said the number of first-time landlords entering the market was at its lowest level, which was a good thing in the current economic environment. He explained: “Landlords with experience of the private rented sector are well positioned to take advantage of current conditions, particularly with rising levels of current demand. As these landlords are typically lowly geared, they are also in a strong position to pick up property at bargain prices when they spot the opportunity.”