Research released by buy-to-let franchise Platinum Property Partners earlier this month shows that, although more than two fifths plan to expand their property portfolio in 2015, landlords are also concerned about what the coming year will bring.

80% of landlords are apprehensive about factors that could affect the buy-to-let market, including a change of government in the coming general election (9%), the direction of property prices (13%) and changing law and legislation (26%). The most common concern among landlords, with 29% citing it as a worry, is the possibility that interest rates will rise next year [1].

Indeed, that interest rates will go up seems almost like a foregone conclusion. The Bank of England's Monetary Policy Committee (MPC) has been split on whether to raise interest rates for the past five monthly votes [2], and in its final quarterly inflation report for 2014, the central bank hinted that the economy could handle rising rates [3] – suggesting that an increase may be on the cards.

That two fifths of landlords are planning to expand despite these concerns, however, shows a prevailing sense of confidence in the buy-to-let sector. In fact, a recently commissioned independent review suggested that the industry in its current form could survive a recession similar to or worse than the 2007/08 crash [4].

Much of this confidence stems from the feeling that house prices are going to continue to rise, with over three quarters of the landlords surveyed predicting positive movement next year. Following a sharp downturn in asking prices between November and Dec ember, industry experts are predicting an increase of between 4% and 5% [5], which, whilst lower than the surge experienced in 2014, is still far in excess of projected inflation [6].

To Let 2The upwards pressure is expected to come from a combination of sources, including the recent restructuring of stamp duty to a progressive form of tax that should result in savings for 98% of purchasers [7]. Landlords as well as homebuyers will benefit from this move; investors typically target properties worth far less than the threshold at which the new system becomes more expensive, and a number buy more than one property a year, boosting their potential savings further.

Landlords are benefited further by the current strength of the buy-to-let mortgage market, which has become significantly more competitive and innovative in the last year. Big contributory factors to this evolution were the Mortgage Market Review (MMR), which made it more difficult for residential borrowers to be approved for a mortgage, and the subsequent limit on loan-to-income ratios for regulated borrowers. The resultant loss in residential profits caused some lenders to enter or re-enter the commercial marketplace, and many of those lenders whose businesses already had a buy-to-let aspect to shift their focus to landlord customers.

Because of this, the wariness with which many investors are approaching 2015 is tempered with optimism. Whilst rates might rise, they will do so slowly, and the strength of the buy-to-let market will help to keep costs down. If short-term profits are impacted, upwards-trending house prices will ensure that investment property retains its long-term earnings potential.

The buy-to-let market has consistently demonstrated its resilience during recent years, and there is every reason to think that investors can be confident about the coming year.

Written by Ben Gosling for Commercial Trust


[1] "Half of buy-to-let investors anticipate an interest rate rise in 2015 year 2 in 5 plan to expand their portfolio." Platinum Property Partners. 16 Dec 2014.

[2] "Historical MPC voting spreadsheet" [XLS]. Retrieved on 18 Dec 2014 from

[3] "Quarterly bulletin: 2014 Q4." Bank of England. December 2014.

[4] Bembridge, R. "P2P to revolutionise buy-to-let." Mortgage Introducer. 18 Dec 2014.

[5] "December 2014 House Price Index." Rightmove. 15 Dec 2014.

[6] "Overview of the Inflation Report November 2014". Bank of England. Retrieved on 15 December 2014.

[7] "Stamp duty reforms on residential property." HM Treasury. December 2014.

Comment Here!