Landlords Struggling With Buy To Let Finance Drought
13 October 2009
Research from one specialist lender has shown that despite a recent increase in the availability of credit in the current mortgage market, landlords across the UK are finding it more difficult to secure buy-to-let mortgage finance, as Accord Lets, specialists in property to rent in Birmingham, explain.
Almost seventy per-cent of the UK’s one million buy-to-let investors have been unsuccessful in obtaining a loan, with nearly nine out of ten landlords stating that it was more difficult to secure a buy-to-let mortgage than in the previous three months.
Mr Mimmack, from the firm which offers Birmingham apartments to let , property to rent in Leamington and Warwick property to let , said, “It seems that while more properties have been made available in the last quarter, securing a buy-to-let mortgage appears to be increasingly difficult. As you can imagine, this is problematic and frustrating for buy-to-let investors. There is also more demand for buy-to-let investments but the sourcing and securing of appropriate finance is having a significant impact on any such investments going ahead.”
Industry experts have expressed their concern in the slump in buy-to-let lending, with some arguing that mainstream lenders are moving focus away from this sector, while specialist lenders are unable to access the wholesale funding market.
Last month, the Lloyds Banking Group announced that its buy-to-let customers would be limited to loans worth £3 million or to nine properties, severely limiting landlords from expanding their portfolios. The introduction of additional charges and fees, such as the percentage fee, are now becoming commonplace, further suggesting that the private renter sector could start to contract. For example, the number of buy-to-let products at the end of August this year dropped by almost ninety-five per-cent, compared to August 2007.
Mr. Mimmack, from one of the leading letting agents in Birmingham city centre, added, “It is clear that the Government is trying to resolve this situation. For example, steps have already been taken to increase liquidity in the lending markets but this has not been as successful as those of us in the industry had hoped. More steps need to be taken to improve confidence in and increase access to the wholesale funding markets, especially for specialist lenders.”