Buy-to-let confidence remains high

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Buy-to-let investors remain confident about their future prospects, new figures from Bradford & Bingley show.

The financial services provider conducted a survey of nearly 5,000 buy-to-let investors and found widespread anticipation for higher rental yields in the coming months.

Some 96 per cent of respondents stated that they expect rents to remain at current levels or to increase in the next six months.

Andy Wiggans, director of mortgages at Bradford & Bingley, said: "Confidence in the buy-to-let market remains high and there is very little concern over availability of tenants or rental yields."

Nearly nine in ten (88 per cent) of those questioned revealed plans to expand their property portfolios in the near future.

Mr Wiggans continued that the confidence was witnessed not only in experienced investors, but also among those who entered the buy-to-let sector in the past four years.

However, data published by the Royal Institution of Chartered Surveyors (Rics) contradicts the claims, showing a slowing in the buy-to-let market.

Rics detected a decrease in new buy-to-let instructions in the quarter to April and cited a continued decrease in rental yields as a potential factor in the decline.

An associated two-year high in the proportion of landlords putting their properties on the market was also recognised, with 5.2 per cent of buy-to-let investors selling up over the three-month period.

Jeremy Leaf, spokesperson for Rics, said: "Housebuyers are returning to the market to avoid rising borrowing costs, signalling a drop in demand for rental property."

"Rising borrowing costs and a subsequent drop in yields have also contributed to a worrying time for landlords," he added.

The news follows data published by Paragon Mortgages which showed that landlords have increased rents to recoup earnings lost due to recent rises in the Bank of Englands base rate of interest.

Average rents on a buy-to-let property were seen by the mortgage provider to have increased by 6.5 per cent over the first quarter of 2007, some 5.5 percentage points ahead of inflation on the consumer price index.

Paragon continued that about 70 per cent of buy-to-let investors may have been protected against the recent rate rises by obtaining fixed-rate mortgages.

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