2012- The return of the investor?

2012- The return of the investor?

Buzz around the property market at the moment only suggests one thing – the return of the investor.

Right across our regions we’re expecting a second buy-to-let boom in 2012 with  rental values in many areas reaching a historic high and void periods (when rental properties are unoccupied) becoming a thing of the past.

Already according to recent data from the LSL Property Services Buy-to-Let Index the average rent in England and Wales has never been higher.  As a result demand for quality rental properties is continuing to soar and there is fierce competition among rental tenants to secure a home – particularly in some of the prime locations.

Indeed here at Miller Homes we began to see a marked increase in the number of landlords towards the tail end of 2011 and we expect this upward trend to continue throughout 2012.

We’re not alone in this thinking either.  Recent research from specialist buy-to-let lender Paragon Mortgages suggested that more than 22 per cent of landlords expected to buy additional properties in the New Year while just eight per cent were considering reducing their stock in comparison.

All in all thanks to low interests rates coupled with the worst housing shortage since the Second World War property is once again being seen as pretty much the soundest option for long term financial investment.

But where does this leave First Time Buyers? Well according to the most recent Zoopla Rent vs. Buy index buying is now more affordable than renting in 47 of the 50 largest towns across the country.

Buying is obviously the most sensible option – but that hinges on getting a mortgage and that hinges on raising a deposit naturally.

Or does it?  There is a raft of options available to First Time Buyers and Second Steppers alike in the form of equity loans - where a new homes developer (and the Government in the instance of FirstBuy) lend buyers up to a maximum of 20% of the purchase price (based on the open market value). This means that qualifying house hunters only need to fund the balance of the purchase price (as little as 80%) by means of a conventional mortgage (from a Qualifying Lending Institution) savings and any deposit where required.

As well as FirstBuy by March this year the Government Backed Mortgage Indemnity scheme NewBuy Guarantee will become available helping purchasers get on to the property ladder responsibly. The new scheme heralded as a way to get First Time Buyers back into the market offers 95% loan to value mortgages that will be available to people spending up to £500000 on a new-build property.

All of this paints an interesting picture.  When the recession first hit back in 2009 the availability of buy-to-let mortgages dried-up overnight and investors all but disappeared from the marketplace. The recent return of the investor is no doubt a positive sign that property is once again being seen as a sustainable investment and crucially would-be landlords are finding it easier to raise the necessary funds.

Add to this the help available to First Time Buyers 2012 looks set to be a milestone year in residential property with the potential to be a real turning point for the industry investors and buyers alike.

Watch this space!

By Chris Endsor
Chief Executive of Miller Homes