Research by Paragon Mortgages’ Trends has revealed that 10% of landlords are looking to expand their portfolio in the first three months of 2010, but are still restricted by the lack of suitable mortgage finance.

Terraced housing is the most popular choice of property with 65% of those surveyed stating that would be their preference, followed by semi-detached houses at 25%, 20% are looking at flats and just 10% detached property.

John Heron, Paragon Mortgages’ managing director, said: “It is encouraging that landlords are still active in the market and are looking to expand their portfolios. With tenant demand at such strong levels and soft house prices presenting the opportunity for bargains, it is easy to see why. But investors continue to be frustrated by a lack of choice and competition in the buy-to-let mortgage market, which is dominated by just two lenders. Landlords have told us that it was more difficult to source mortgage finance in the fourth quarter than in the third, and we see nothing to suggest that the situation will improve quickly.”

According to the survey, landlords found it was more difficult to secure mortgage finance during the fourth quarter than in the three months previously. Of those that did apply for a mortgage to expand their portfolio or for remortgaging purposes, 67% stated it was harder to secure a mortgage in Q4 2009 than Q3, with 26% stating there was no difference, whilst 7% said they found it easier to secure mortgage finance between the two quarters.
Heron said: “Most buy-to-let lenders currently active in the market employ aggregate or maximum lending levels, placing a ceiling on the number of properties they will lend against, which makes it difficult for professional landlords to expand portfolios because they are usually already at those lending levels. It is ironic that the criteria employed by most lenders favours inexperienced landlords over those with proven track records in residential property investment and management.”