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NLA continues to defend buy-to-let

Wednesday, 11 June 2008 12:00 AM

The National Landlords Association has continued to defend the buy-to-let sector, insisting market fundamentals "remain strong".

The organisation argues the private-rented sector is entirely counter-cyclical.

For first-time buyers who are still struggling to make it onto the property ladder, their only choice is renting. And with the increased demand comes an increase in rent and, for the professional landlord, the current market is providing opportunities to expand portfolios, finds the NLA.

Research from Paragon - a specialist buy-to-let lender - finds UK rents have increased by 13.8 per cent in the year to April 2008.

"The NLA does not subscribe to the view that the end is in sight for the buy-to-let market," said NLA chairman, David Salusbury.

"On the contrary, we believe now is a good time for the professional portfolio landlord, many of whom will be benefiting from increased demand and rising rents."

However, there are some glaring signs of trouble in the market, despite the NLA's protests.

Paragon itself presented a worrying set of results in May.

Profits for the six months to March 31st at the company fell 39 per cent to £26.4 million - although this includes the costs of a £287 million rights issue the firm needed to ward off its funding problems.

More importantly the lender also announced lending had fallen by half - down to £987.6 million over the six months to the end of March, compared with £2.1 billion over the previous period, a fall of 53 per cent.

The Bradford & Bingley (B&B) bank - the UK's leading buy-to-let specialist - has also slipped into the red in recent weeks, racking up a £8 million pre-tax loss in the four months to the end of April.

The loss was largely blamed on defaults from buy-to-let investors, with B&B arrears levels rising to 2.16 per cent against 1.63 per cent at the end of December for those three months or more behind with repayments.

Chris O'Toole

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