© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Despite being a year of widespread negative sentiment on the housing market, 2005 was another strong year for the buy-to-let market. According to buy to let lenders, Paragon Mortgages, conditions in the first half of the year were challenging, with falling confidence in the housing market as a consequence of increased interest rates and general concerns over affordability. The second half of the year however, saw improving landlord confidence.
Heightened public concern about the growing pension crisis has undoubtedly had a positive effect on the buy-to-let market. According to a recent RICS lettings market survey, landlords are holding onto their properties for the long term, viewing their investment as a significant part of their pension plan.
Demand for private rented property is expected to rise over the coming year, assisted by the record number of students in higher education and the number of people migrating to the UK, boosted by EU enlargement. As a consequence, activity levels should improve as landlords take advantage of this increase in demand.
Paragon’s buy-to-let trends survey reflects this positive sentiment, suggesting that landlords expect the net value of their investment portfolios to grow by 5% over the next 12 months. This is the highest growth expected for more than a year.
John Heron, managing director of Paragon Mortgages said: “We’re clearly now in a more buoyant phase for landlords. The market has proved more resilient than many expected, and we are definitely seeing a buy-to-let bounce.”
Lee Grandin, managing director of Landlord Mortgages, a specialist buy-to-let broker, believes the health of the rent market in 2006 hinges on the Bank of England’s stance on interest rates. “If interest rates rise, this could put the market into reverse and see many people investing in other asset classes,” said Grandin. “Next year will continue to see a vibrant buy-to-let market across the UK with growth driven by increased consumer confidence and high demand.”
Gordon Brown’s u-turn on tax breaks for residential property within SIPPs in his December pre-budget speech has caused much discussion in the financial services sector, with some predicting heavy fall-out from the closure of this loophole. Others, however, never believed that these products were going to cause the boom in the housing market some pundits had predicted, as most people simply do not have sufficient funds in their pension to purchase property.
Richard Donnell, Director of Research of Hometrack – the independent residential property research and database company - said that the changes announced in the Pre-Budget report regarding SIPPs have no impact on house price forecasts, as he expected the original proposals to have only a very limited impact on the housing market overall. “The proposed introduction of Home Information Packs from mid 2007, on the other hand, has implications for the availability of housing and levels of turnover over medium term,” said Donnell.