21/11/2011
Property owners considering renting out their house for the first time due to the current favourable market need to consider landlords insurance.
Speaking at the Landlord & Letting Show in Birmingham, Gavin Elley, relationship manager at Mortgages for Business, said that as the rental market is undergoing a period of strong growth, lenders are beginning to see buy-to-let mortgages as a safer bet than the residential market.
This is both a cause and effect of an increase in the number of first-time landlords, many of which may not be aware of the need for landlords insurance.
But Mr Elley claims that the boost to the buy-to-let market is a good thing as it will help the private sector pick up the social housing slack and the option is far less risky for lenders.
"You have got the covenant of the borrower and you have also got the covenant of the tenant in there as well, so in terms of risk it is actually better for them. More lenders are now starting to move in to the buy-to-let market and that trend is going to continue," he explained.
He added that, going forward, the competition in the rental market will continue to be a good thing for landlords and homeowners thinking of renting out their properties.
"First-time buyers who traditionally would have bought a property, are now looking to rent … That is a very positive thing for a landlord," Mr Elley said.
This view was echoed by the Association of Residential Letting Agents (Arla), which recently claimed that a number of factors have combined to create an attractive environment for professional landlords.
However, Ian Potter, operations manager at Arla, said new landlords should be careful not to overstretch themselves when expanding their portfolio.
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