Moody's, the New York bond credit ratings firm, has endorsed the UK buy-to-let industry by stating that the sector is continuing to grow.
The research, which looked into the performance of Residential Mortgage Backed Securities (RMBS) said the market had improved in the quarter finishing May 2012.
Meanwhile, the rate of repossessions remained stable at 0.1%, although cumulative losses grew from the 0.5% recorded in February to 0.6% this quarter. The agency also reported that its 90+ day delinquency trend decreased 0.2% to 1.3% over the last three months.
Meanwhile, the rate of repossessions remained stable at 0.1%, although cumulative losses grew from the 0.5% recorded in February to 0.6% this quarter. The agency also reported that its 90+ day delinquency trend decreased 0.2% to 1.3% over the last three months.
Moody's were optimistic about the future prospects for the sector: based on these results, they expect the performance of the buy-to-let sector to remain steady and predict that interest rates, unemployment and house prices will also remain relatively flat during the rest of the year. A rare burst of positive news in a year which has been overshadowed by the continuing spectre of the double-dip recession.
In a statement, Moody's explained the reasoning behind their predictions, which take into account such factors as interest rates and job security: "Performance in this sector has been stable for the past year mainly because of a low interest rate environment, which has helped borrower affordability, and relatively low job losses, which have helped tenants continue to pay their rent."
"Interest rates will remain low in 2012 and unemployment will rise only slightly to 8.7% in 2012 from an average of 8.0% in 2011. Also, house prices will remain within a plus-or-minus 3% band, which will help contain losses on foreclosed properties."
Speaking to Mortgage Solutions, Chris Norris, head of policy at the National Landlords Association (NLA), said that the NLA broadly agree with Moody's assessment, although he highlighted that difficulties do remain:
"According to our latest Landlords Panel, almost half (49%) of landlords experienced rental arrears in the last 12 months and over a third (37%) are worried about instances of arrears in the coming months.
"This is undoubtedly a sign of the difficult economic conditions and landlords should work with their tenants to minimise the impact of financial stress. This kind of professional and collaborative working will help ensure the private-rental market remains a promising investment opportunity. However, the UK buy-to-let market has shown signs of recovery recently and seems to be performing well, despite the recent rises in arrears."
In a statement, Moody's explained the reasoning behind their predictions, which take into account such factors as interest rates and job security: "Performance in this sector has been stable for the past year mainly because of a low interest rate environment, which has helped borrower affordability, and relatively low job losses, which have helped tenants continue to pay their rent."
"Interest rates will remain low in 2012 and unemployment will rise only slightly to 8.7% in 2012 from an average of 8.0% in 2011. Also, house prices will remain within a plus-or-minus 3% band, which will help contain losses on foreclosed properties."
Speaking to Mortgage Solutions, Chris Norris, head of policy at the National Landlords Association (NLA), said that the NLA broadly agree with Moody's assessment, although he highlighted that difficulties do remain:
"According to our latest Landlords Panel, almost half (49%) of landlords experienced rental arrears in the last 12 months and over a third (37%) are worried about instances of arrears in the coming months.
"This is undoubtedly a sign of the difficult economic conditions and landlords should work with their tenants to minimise the impact of financial stress. This kind of professional and collaborative working will help ensure the private-rental market remains a promising investment opportunity. However, the UK buy-to-let market has shown signs of recovery recently and seems to be performing well, despite the recent rises in arrears."
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