Landlord Finance Showing Positive Signs For 2011

A mortgage specialist company has predicted greater availability of landlord finance to fuel buy-to-let investments in 2011.

Bbuy-to-let mortgage specialist Paragon is expecting gross lending to end next year between 10% and 15% above 2010 levels, as the number of lenders and available finance products increase.

Nigel Terrington, Paragon's Chief Executive, suggests strong tenant demand will continue, especially with the Government’s proposed changes to social housing helping to stimulate growth in the UK’s buy-to-let market.

Mr Terrington stated: “Landlords should profit from lower void periods and strengthening yields, given rising rental levels and a flat housing market.”

However, he also warned that landlords must be cautious of tenant unemployment and arrears.

Paragon's Chief Executive is also concerned that new lenders could focus on smaller-portfolio landlords at the expense of the more 'professional' landlord, noting that some lenders are testing affordability on a short-term product rate, which could prove risky when interest rates start to rise.

Mr Terrington summarised: “Risk and affordability is not the same thing and the industry must be conscious of this as it underwrites new business”.

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