Monday, May 21, 2007
Buy-to-let lender claims all is well in the buy-to-let market
MoneyWeek: Why statistics get a bad press
Paragon Mortgages, buy-to-let specialists, sent out a press release last week proclaiming that all‘s well with the buy-to-let market. Apparently, in a recent survey, “almost a third of landlords said they were reacting to rising borrowing costs by increasing rents, while another 43% reported they are taking no specific action as a result of the interest rate rises.” That’s not all. “As further evidence of their confidence in the future, in the survey 12% of landlords said they were increasing their involvement in buy-to-let as a reaction to the rises in borrowing costs.” Wait a minute. Did we miss something here?
Posted by mary @ 01:47 PM (345 views) Add Comment
3 Comments
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1. denzil said...
Neat piece of turd polishing from Paragon. Nearly a third of landlords stated that they would increase rents in line with additional borrowing costs. A third?!? If the market was that healthy it would have been up around 90%. In the Bristol area rents have barely risen in 15 years.
2. paul said...
Turd polishing? A turd with marzipan and icing is still a turd.
The idea that landlords can increase rents with interest rates is bunkum, for two reasons:
1) Opportunity cost for the tenant. There will always be someone less leveraged than the landlord for whom they own the property and interest rates don't matter a jot. Those landlords set the market rate low.
2) How exactly do you break a shorthold tenancy agreement mid-contract to raise the rent? And when you do, you have to let the tenant know in advance and what's the risk there? You'll lose the rise in rent to a void period as your tenant ups sticks to a less leveraged landlord's property.
Bunkum.
3. shipbuilder said...
These are the same witterings of the halfwits that refuse to drop their house price when no one wants to buy it - 'the estate agent told us it was worth this'. I've said about rising rates to prospective landlords before and they've actually looked at me like I was the idiot and said 'i'll just raise the rent'. No planning, no worries, the rising market will sort everything out.