30 May 2007
Buy-to-let activity fell in the first quarter of this year, a sign that property price growth is beginning to slow, according to a new report by Rics.
Landlords are ratcheting up rents at the fastest and most sustained rate in almost a decade, as those involved in the buy-to-let market struggle to make money from their investments, according to the Rics residential lettings survey Great Britain.
Rics economist David Stubbs said this was a sign that hard-pressed landlords are having to squeeze more money out of their tenants to improve their margins, following a full percentage point increase in borrowing costs over the past year.
"We are seeing significant rent increases across the country which will allow landlords to claw back a lot of this extra expense," he said.
"That can't do anything but slow down buy-to-let growth as time goes on. Buy-to-let lending has exploded since 1998, but it really has been slowing down recently. The easy money has already been made. People made an absolute killing at the start, but now the sums don't add up so well."