Buy-to-let up in January but activity in the rest of the market dropped
- Credit: PA Archive/Press Association Images
Buy-to-let far out-performed other areas of the housing market in January, with a significant month on month change and the smallest annual drop in activity.
The sector saw a 37 percent increase in activity between December 2014 and January 2015 and only a 4 percent annual drop according to research from Connells Survey and Valuation.
First-time buyers were the only other group to see a monthly increase in activity, with numbers up 3 percent since December. However, activity in the sector was down 28 percent compared to the same period in 2014.
Nick Collins, partner at Hadleigh Residential in Belsize Park said: “Broadly speaking buy-to-let is certainly one of the leading sectors in the local market at the moment.
“We get a lot of buy-to-let investors in this area; anybody from grandmas, people buying for the kids, or the kids’ trust funds. I’ve had people buying flats for people who aren’t even old enough to be living in them yet.
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“If you’re a saver, and you have a little bit of money on account, it’s only earning you very little, so there’s a real incentive to put your money in bricks and mortar where it’s making a higher percentage yield but it’s also making a capital gain.
“Also, it’s a simple, transparent market, it’s not like buying stocks and shares, you know your house will be there in the morning.”
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Experts have also cited the record number of mortgage products and cheap rates available at the moment are also contributing factors to the bounce back of the sector.
John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Low mortgage rates have also continued, posing even more attractive deals for potential landlords or those expanding portfolios.”
While buy-to-let surged this month, both home mover and remortgagor activity dropped significantly year-on-year and saw monthly decreases, and overall the housing market began the year with a subdued outlook.
Mr Collins said: “First time buyers aren’t as common as they used to be in Belsize Park. This is partly because they’ve been priced out of the area; they’d rather go a bit farther out and have a bit more space than just get a studio around here.”
Mr Bagshaw, said: “First time buyer activity increased on a monthly basis despite a stark contrast in performance with January 2014 when this sector had dominated the housing market.
“This was largely due to the flurry of activity as customers rushed to secure deals before the Funding for Lending Scheme (FLS) stopped mortgage funding at the end of January 2014. At the time the policy had boosted the housing market, particularly first time buyers by lowering mortgage rates.
“Since then however, a series of policies have been introduced that have restricted lending criteria which have affected first time buyers more than other sectors and consequently had a major impact on demand.”