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Many mortgage brokers say their buy-to-let clients are looking to expand their  property portfolios, with over half stating the state of the housing market as their reason to buy.

Exact Mortgage Experts also revealed that 22% of brokers say their clients regard property as the best asset class for long-term returns.

Alan Cleary, managing director of Exact Mortgage Experts, said, “Investors have faith in the buy-to-let sector. With so many people cut off from getting a mortgage, be they first-time buyers or people with less than perfect credit records, the UK’s private rented sector will inevitably have to pick up the slack. That means there’s money to be made by landlords. But there continues to be a severe shortage of buy-to-let mortgage products on the market, and it’s putting the brakes on potential investment in the sector.”

Exact is asking for mortgage lenders to assess buy-to-let applications on the quality of the underlying collateral going forward. Having carried out credit assessment on several billions of pounds worth of buy-to-let assets this year, it believes that the performance of this asset class is largely dictated by the type of property the mortgage is secured on, a criterion currently given little weight.

Cleary said, “Buy to let has been demonised because of higher than average delinquency rates. But the buy to let asset class covers a vast number of very different borrower types and very different asset collateral. Arrears rates have been skewed by over-investment in city centre new build developments where there was no demand for rented accommodation and lenders have been put off offering buy to let products as a result. “But BTL borrowers can be a better credit prospect than prime borrowers if the underlying property is good quality. Underwriting buy to let mortgages needs to tighten up though – lenders should consider the standard of collateral more carefully in the future to insulate against unduly high buy to let arrears.”