UK’s buy to let situation
Thursday, May 1st, 2008The big attraction of buy-to-let over the past few years has been that landlords could look to getting a steady capital appreciation of around 10% plus per year while rental income paid the mortgage. With property prices now steady or dropping, the proposition looks less attractive; unless rental income can be increased, possibly difficult in the current environment.
Some predict that investors will hang on to their portfolios. Analysts Capital Economics dispute that even though house prices might fall over the next few years, investors that purchased their properties prior or in 2002 will still be winners as their investment would have gone up by 50 percent.
The number of buy-to-let mortgage products has diminished, going from 3,600 in 2007 to just 600 in 2008. This makes it harder not only for new landlords to get a mortgage but for existing landlords to remortgage in order to get a better deal. New investors hoping to get into the buy to let market might find it more difficult to do so in the future as more and more high street lenders are joining are unwilling to offer products for this type of investment in the current property market.
Individuals are not the only ones suffering. UK’s biggest property investment club, Inside Track, has suspended its buy to let ‘Become a property millionaire’ seminars. Another big name company making cutbacks is Paragon. This buy to let mortgage lender had to axe nearly 100 jobs due to falling shares and the money market crisis.
