The buy to let market shows signs that it is cooling down with a slower rate of growth than previous periods, according to a report.
The report, by the Council of Mortgage Lenders (CML), reveals those looking to invest in the property market are being deterred by the increasing cost of mortgage lending.
Long-term arrears on all mortgage lending have started to rise for the first time in 11 years, indicating that landlords and letting agencies are struggling to find tenants who are prepared to pay enough to cover the rent.
CML also revealed that buy to let loans fell in the second half of 2004 by 18 per cent from the first half of the year, reflecting wariness amongst potential landlords towards the future of the sector.
Andrew Heywood, CML Senior Policy Advisor, said: “As the housing market boom gradually subsides, it is no surprise that growth in buy to let lending is slowing down.”
Indeed, those looking to set up a letting agency will not be spurred on by news from the Royal Institute of Chartered Surveyors (RICS) of a slow down in decreasing house prices and a lack of available properties.
However, CML are confident that the sector will remain profitable.
Heywood said, “Recent CML research to gauge buy to let landlords’ intentions suggests that most expect to maintain or increase their holdings, and have a long term interest in the market.”
