BM Solutions has unveiled the first study comparing the buy-to-let market across the European Union.
At a presentation at the European Parliament in Brussels yesterday, BM Solutions invited MEP and EP vice-president Diana Wallis to listen to the findings of its research.
The study looked at the characteristics of the BTL sector in twelve countries, with an in-depth analysis of tenants and landlords in Germany, Poland and Portugal.
In its findings, BM Solutions found that there is no substantial requirement for a specialist BTL mortgage outside of the UK. In Germany, 94 per cent of landlords stated that a specialist mortgage is not required, with 92 per cent of landlords in Poland and 80 per cent of landlords in Portugal agreeing.
In Germany, Portugal and Poland the average age of leaving the parental home is 23 years. However, in Germany, 43 per cent of tenants have no intention to ever buy property and, of those that do, the average age they intend to purchase property is 45. This is compared with 34 in Poland and 36 in Portugal.
Whilst in the UK 70 per cent of landlords use an intermediary to organise their BTL mortgage. This is the greatest level of intermediary involvement compared to 26 per cent in Germany, 23 per cent in Poland and a mere 6 per cent of intermediary support in Portugal.
Lending by financial providers is most likely to be calculated using a combination of personal and rental income in Germany (52 per cent), compared to 30 per cent in Poland and 18 per cent in Portugal. Personal income was the key factor in Poland (68 per cent) and Portugal (68 per cent). Rental income was the deciding factor in just 4 per cent of cases in Germany and Portugal, and not at all in Poland.
Landlords in all three sample countries rely on some element of mortgage funding to finance their investment properties; Germans 84 per cent, Polish 68 per cent and Portuguese 70 per cent.
Germans and Poles cover voids with regular income whilst English and Portuguese dip into savings. With much greater void periods German landlords (58 per cent) need to supplement, on average, three months rent and Polish landlords (66 per cent) over two months rent, the majority from both countries do so by drawing from their regular income. The majority of Portuguese landlords (62 per cent) fund, on average, two months rent with their savings as do the greatest percentage of British landlords (42 per cent) – for an average 15 day void.
BM Solutions head of specialist lending strategy Steve Sandiford says: “BM Solutions’ study is the first of its type on the European private rented sector. It is a major step forward for the market. This review will underpin the development of Buy-to-Let with solid numbers and strong market insight. Across Europe the norm is to buy well into your thirties. The UK is moving to a more continental European mindset with home ownership no longer the be all and end all.
Sandiford adds: “While the UK has a clearly defined concept of a ‘Buy-to-Let’ mortgage – it appears to be something that is unique. European mortgage lenders do not offer specifically underwritten products for landlords in the same way. Personal income is a defining factor in obtaining mortgages to fund rental properties within the EU sample countries that we selected.
“There are common themes throughout Europe. The different country approaches demonstrate the important of acting locally when supporting the needs of tenants and landlords, whilst thinking globally about best practice, which can improve the private rented sector in each country.”