The housing market stands delicately poised. With the Halifax’s announcement last week that prices were flat in January, both the main lenders’ measures are telling a similar story (Nationwide was down a minuscule 0.1%). Prices were weak last autumn, with November the weakest month of all, reflecting a combination of the credit crisis and the distortions caused by the introduction of home information packs. Since then, there has been a flattening out, although activity measures such as mortgage approvals remain weak.

Where do we go from here? Part of the answer will be provided by the buy-to-let sector. Is buy-to-let dead and buried, destroyed by a toxic combination of low returns, worries about property prices and expensive, hard-to-get finance? Or will it prove, as in the 2004-05 housing pause, more resilient than meets the eye? Could it even be that turbulence in financial markets encourages more people to become landlords and existing ones to add to their portfolios?

The evidence, so far at least, is that there is no mass exodus from buy-to-let. Some hobby buy-to-let landlords, with only one or two properties, may be waiting until April and the start of the new capital gains tax regime, when the tax they pay if they sell will fall to 18% from a minimum of 24% now. It appears to be the case, however, that beyond the usual flurry of anecdotes – an ever-present during the buy-to-let boom – most landlords are hanging on. One of the elements in the buy-to-let equation is doing rather well at present: rents. This is partly a function of uncertainty among potential home buyers, which is pushing up demand for rented accommodation.

Those who tap into landlord opinion on this tend to have a vested interest – they are often buy-to-let lenders – but that should not invalidate their findings. One such survey, published last month by Bradford & Bingley and Mortgage Express, its specialist lender, covered 4,000 buy-to-let investors.

The survey, carried out by the respected pollster GfK NOP, found fewer than 1% planned to sell up and leave the market, while 4% intended to slim down their portfolios. This was balanced by 43% who planned to increase their investments and a similar proportion who intended to stay with what they had.

The typical buy-to-let landlord that emerged from the survey is male, aged between 36 and 55, and with another job apart from property investment. Most appear to be in it for the long term, frequently regarding their buy-to-let portfolios as a retirement nest egg.

This is crucial. Calculations by Nationwide show the compound annual growth in house prices over the past 30 years has been 9%. Even on the assumption that this now falls to just 3.5% over the foreseeable future, it says, “a buy-to-let investor holding the property for the longer term could probably still expect reasonable after-tax returns”. The key is timing. Anybody who sells up after less than five years will not do well. Those who stay in it for the longer term are still pretty well placed.

home.economics@sunday-times.co.uk

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