Buy-to-let 'not a weak link'

The buy-to-let market is "here to stay", according to one property market expert.

Ed Stansfield, the manager of commercial property and housing market research at consultancy Capital Economics, said that landlords would still be entering the market in five to ten years' time.

His comments came after a report from Alliance & Leicester and the Centre of Future Studies predicted strong years ahead for the sector, which is expected to grow by 41 per cent by 2016.

Mr Stansfield said that contrary to what had been suggested in the past, the lettings sector was not going to act as a source of instability or a weak link in the housing market.

Even if those landlords who have entered the market in the last two to three years decided to leave due to factors such as rising interest rates, it would have a comparatively limited effect on the sector, he explained.

However, he added that those entering the buy-to-let property market needed to be looking towards long-term rather than short-term gains.

"It's an age old mantra: if you are convinced that you are in it for the long term, you can still make a decent return on a buy-to-let investment, even if house prices and inflation is running in the two to three percent level," he said.

House Prices Quiet

Nationwide Building Society released March’s house prices and these showed that in March prices fell for the fifth consecutive month. With the 0.6% fall in house prices it brought the annual rate of house growth down to 1.1%, the lowest since March 1996.

Inflation will be dampened with the banks reluctance to lend and when consumers start to spend less.

A survey by Nationwide states that people on average think that prices will fall 3% in six months time but two thirds think that in six months prices will be the same or higher whereas 3% think prices will be much lower.

Nationwide state that their predictions are the same as those they gave in November 2007 and that is they expect a modest fall during the year. They say that if prices fell to consumer expectations they would still be higher than two years ago. A fall in prices now will give greater market stability.

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