Love him or loathe him, we could all learn a thing or two from Warren Buffett. He once said “Be fearful when others are greedy. Be greedy when others are fearful” – words that could certainly ring true for the London property market right now.
This month’s My Property Consultant Property Index Tracker is showing an interesting turn of events. While residential lending has plummeted since last month, buy-to-let lending is still on the increase. Admittedly the increase is small, but it’s an increase nonetheless. These figures cover the first full month of lending following the EU referendum, and show a month-on-month decline in first-time buyer and home mover activity. Gross buy-to-let lending, while lower than levels we saw last year, saw the highest monthly levels of activity by volume and by value since the stamp duty changes on second properties came into force on 1st April this year.
The perfect storm for landlords?
So what does this tell us? Are buy-to-let investors staying positive, and taking advantage of favouring market conditions, including Brexit fears? It certainly looks that way:
- Buy-to-let re-mortgage lending is making up two-thirds of gross lending, which is interesting in itself. What this tells me is that buy-to-let investors are releasing equity from their investments, and they could well be doing this to expand their property portfolios while the property market remains soft, and mortgage rate remains so low.
- The fact that rental yields are also on the increase helps. According to Your Move, the average rent in England and Wales reached an all-time high in July 2016 with a year-on-year rent increase of 5.4%. A spokesperson at Your Move said “For landlords, market sentiment remains positive with the vast majority still looking to add to their portfolio of properties, despite the Brexit vote.”
Time to take advantage?
If you’ve been thinking about becoming a buy-to-let investor, now could be a good time to take the plunge – particularly if you have equity tied up in your residential property. With mortgage rates so low, and a cooling property market, why not be the one to take advantage?