The Inside Edge
Last week at The Big Property List, we looked at the high number of mortgage applications that are currently being turned down and highlighted just how difficult it is to gain any foothold on the property ladder today. As with most things however, bad news for many will result in good news for a few and figures are clearly showing a significant increase in the number of buy to let mortgages currently being granted.
In relatively recent times, buy to let mortgages were seen as a market for specialist lenders only but all that has changed to move in line with the property market itself. When traditional house sales are slow, buyers with money to invest in rental properties step in and this type of purchase becomes more prevalent.
Now it seems the buy to let boom is back, with specialist lenders returning to the market with good rates after identifying the trend for investment properties. As a result, in just over 12 months, the number of mortgages available for this niche market has increased from 295 to 481.
David Hollingsworth from independent broker London and Country said,
“There are definitely more lenders who are back in the market. Skipton stopped any buy-to-let and came back within the past couple of months offering quite good rates.”
“Paragon, a specialist lender in the sector, came back at the end of last year,” he added. “They had been associated with a professional landlord but have launched mortgages which are geared more to ordinary people entering buy-to-let for the first time.”
With the increase in second homes there has been a steady entry into the market of families who buy an additional property as a one off investment. While the professional landlords still remain, there is an increase in the number of investors who are taking advantage of the market to snap up a second property. As that additional purchase is made available for rent, the need for buy to let mortgages has grown.
Times have changed however and the new range of buy to let mortgages are, as rule, more restrictive and whereas a deposit of 10% may have been enough to secure a loan some five years ago, you can expect to have to find around 30 to 35% now. Additionally, there is now an absolute minimum salary requirement of £20,000 which shows a shift away from previous times where buy to let income alone could secure a mortgage.
This is all very well but on the face of it, it seems like good news for the professional landlord, but with the market becoming increasingly difficult for first time buyers, there is a noticeable shift towards renting your home.
With two thirds of mortgage applications being turned down, renting can quickly become the only option. In turn, professional landlords are now being joined by the one off property investors and as a result, an imminent boom in buy to let mortgages seems like a natural progression.