Buy To Let Investors Back In Market

Buy-to-let property investors are returning to the market, according to the Royal Institution of Chartered Surveyors (Rics).

The Rics Letting Survey shows a rise in tenant lettings and new landlord instructions.

A total of 20 per cent more chartered surveyors recorded a rise in landlord instructions - compared with eight per cent in the previous quarter - and 29 per cent more Rics members reported a rise than a fall in tenant lettings, up from 15 per cent.

The increased activity in the buy-to-let market comes despite concerns that increasing interest rates may slow activity.

Rics spokesperson Jeremy Leaf said: "Current economic uncertainty has created an ideal platform for buy-to-let investors to cash in on rising rental levels. Many would-be buyers have decided to wait and see how the interest rate cycle will affect the market.

"Rising rents are offering some compensation for landlords that are experiencing higher borrowing costs although buy to let investment will struggle for funding in 2008 as lenders become more discriminating, especially for 'sub prime' properties."

However, the Rics research does show that the interest rate rises may be affecting landlords in the south-east and London, as landlord sales rose above the national average.

This autumn, the survey forecasts rent growth to reach record rates and demand for rental properties to be led by flats, as first-time buyers hold off before setting out on buying a property due to the rise in interest rates.

Meanwhile the Association of Residential Letting Agents (ARLA) Members Survey of the Buy-to-Let sector reveals a common theme with tenant demand now outstripping supply in all areas of the market.

ARLA finds the increase in demand for the rental sector matches the traditional cycle of softening house prices. Rents also rose in all areas.

Ian Potter, ARLA operations manager, said: "These figures are consistent with the traditional cycles that are always underlined by the Private Rented Sector when house prices soften. Demand for rented accommodation rises.

"Once again, the sector is acting as the only viable safety valve for housing as a whole and bridging the gap between owner-occupation and the various provisions for social housing."