The Association of Residential Letting Agents (ARLA) has rejected a statement published by the Property Investment Show and has confirmed the buy-to-market remains healthy, despite recent concerns.
A news release published on behalf of the Property Investment Show, quoted John Crossley, chairman of ARLA, saying: ‘The buy-to-let market is too big to allow house prices to collapse.’ ARLA however does not monitor capital values in the housing market.
Crossley was misquoted by The Mail on Sunday, where he said price rises are unsustainable. He continued: ‘The private rented sector is much bigger than people realise. There may be temporary oversupply, but it will adjust.’
Malcolm Harrison, ARLA spokesman, explained: ‘What John Crossley was saying is there is a large private rented sector outside the buy-to-let market. There are approximately 200,000 mortgages on buy-to-let and 2,250,000 properties in the private rented sector. So the private rented sector is too big to be affected by what happens in buy-to-let.’
The amount borrowed by the typical buy-to-let investor has not risen significantly, despite current house price inflation, according to ARLA figures. The average loan size in the first six months of this year was £80,200, compared to £80,240 throughout 2000 and 2001.
Fixed rate loans are the most popular mortgage arrangement and account for 55.1% of the buy-to-let loans arranged. Discounts were the next most popular choice at 16.1%. Only 6.6% of mortgages were taken out at standard variable rates. Overall 59.4% of buy-to-let loans are interest only.
Crossley said: ‘These figures demonstrate caution and sophistication. There are property hotspots that affect investment, but it must be remembered that the private rented sector is a fluid market that finds its own level quickly.’