Recent figures from the Council of Mortgage Lenders showed that mortgage borrowing on buy to let properties increased 18% for 2007 and grew stronger as the year progressed.
In total, mortgage lenders lent over £45 billion on buy to lets last year, with new purchases accounting for just over 50% of the total, indicating that it remains an attractive investment for UK’s landlords. This assumption is supported by London & Country’s research among our own buy to let clients, where over 90% said they planned to either maintain or increase their property portfolio over the next two years.
Long Term Investment
Investing in rental property should not be viewed as a short-term investment, and was something which over 70% of our study agreed with, confirming they are in it for the long term. The majority also said that capital growth, rather than income, was the main attraction in this type of investment.
Arrears and repossessions
Arrears and repossession levels in the buy to let sector were below those in the owner-occupier market for the year, but even with these healthy indicators, we have started to see signs of lenders tightening their belts and the changes have largely mirrored those for owner-occupiers.
Mortgages for those landlords looking to borrow up to 90% of the property value were in abundance before the credit crunch, but are now much scarcer, with most schemes now reverting to the once common 85% maximum. Fixed rates over the most popular 2 and 3 year terms have become cheaper over recent months, but those looking for a buy to let discounted or tracker scheme will be faced with less competitive deals, just as in the owner occupier market.
Rent and Fees
Rental calculations have remained largely stable among lenders, but we have seen some of the more adventurous lenders with lower minimums, drop back into the pack this year. Arrangement fees have also stayed fairly constant although it is more common to find them calculated as a percentage of the loan with buy to let mortgages.
Best Mortgage Deals
While lenders have moved away from the extremes of lending, the market is still very competitive for buy to let mortgages, and although the number of new landlords is expected to slow, those looking to remortgage will find it still pays to shop around.