Who is Buying Property in the Credit Crunch?

According to the Times, the amateur buy-to-let investor has had his day. Deterred by falling property prices and hampered by a lack of mortgage credit as banks tighten their lending criteria, small players who want to buy one or two homes to supplement their income or bolster their pension are fast disappearing.

However, professional investors with large property portfolios are cleaning up; many are sitting on substantial sums of equity built up throughout the housing boom. Unlike new investors, they can afford to meet lenders’ more stringent requirements for larger deposits. Figures from Hometrack, the property data company, indicate that 82 per cent of rented property is in the hands of professional or semi-professional landlords who own at least ten homes. For these people, a weak housing market represents an opportunity to find a bargain property and take advantage of rents that have risen by 12 per cent over the past six months, according to Paragon Mortgages. Investors know that fewer buyers in the market equates to a greater demand for rental homes.

According to Tack, today’s investors take great pains to avoid costly mistakes. “Property investment has become much more professional and much more technical. At the moment you could buy a property and instantly go into negative equity if you got it wrong. But it is quite an exciting time. This year will be very interesting.”