There was a period, about a year and a half ago, where it seemed like the world and his wife were getting into the property rental market. "Buying-to-let" was the fashion across any level of society where it could be afforded, with converts to the trend almost evangelical about its benefits.
Soon afterwards, however, the mood became a little more chastened and the benefits of buying-to-let were suddenly questioned. The main driver behind this self-doubt came in falling rents, as a residential construction boom began to feed into more supply for previously put-upon tenants. Over time, buying-to-let became less of a sure thing and, while house price increases will have protected most landlords from actually losing money, the lower gains available from rents will have made some new members of the breed feel nervous about their investment.
Fast-forwarding to today, the buy-to-let market continues to attract its fair share of detractors who believe that the real money to be made out of being a landlord is only available to those who got into the market before the boom. For every one of these, however, there will also be an eager investor who reckons that buying-to-let is still the best option for them.
Mortgage broker Peter Bastable of Simply Mortgages reports a steady pick-up in demand for buy-to-let loans over the past few months as rents in "well-located areas" have begun to improve again.
He acknowledges that the market may have suffered a "purchase pause" towards the end of 2004, but says that this was not unusual. One shift that he sees becoming more ingrained, however, is in the profile of the buy-to-let investor.
"The profile of the Irish buy-to-let investor is reverting to the seasoned buyer," he says. "Yields are lower but those with well-balanced portfolios, spare cash and surplus rents are continuing to purchase property rather than equities." More popular among first-time investors, he says, are "new" overseas destinations such as countries in central and eastern Europe. Mr Bastable is personally not a fan of this strategy but he acknowledges its appeal, in light of the lower entry costs it involves. Back at home, he says the locations that are most popular with investors continue to be close to the city centre or have good transport links. The reverse is also true, with declining demand for areas that suffer from traffic congestion.
Simply Mortgages is finding that investors can hope to borrow up to 90 per cent of the property purchase price as long as they fit the lender's idea of "quality". "The only way to gear 100 per cent is to cross charge on an existing investment property where there is sufficient equity, or indeed on the family home where the existing mortgage is with the same lender. Releasing equity without cross charging is the other option," he says. Lenders' idea of quality will vary, but Mr Bastable says they are currently taking a close look at the area involved, keeping an eye on rental trends, resale values and the volume of resales. It would not be unusual, he notes, for the lender to discuss these issues with local estate agents. He also points out that some lenders will take great care with the percentage of buy-to-let loans they offer in a given housing scheme.
