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Landlords, landlords everywhere, but not a mortgage in sight

This week the Royal Institute of Chartered Surveyors revealed there has been a record rise in the number of properties available for rent.

Some 43 per cent of surveyors polled by RICS reported a rise in new landlords – a 10-year high. RICS attributed this statistic to the fact that more people are unable, or unwilling to sell their properties right now, choosing instead to let.

Many new landlords are taking a ‘wait and see’ approach, preferring to hold on to their assets rather than selling for a potential loss.

The study also found rents continued to rise while house prices fell, pushing yields up. Basically RICS reported perfect landlord conditions up and down the country.

But recent statistics from found that buy-to-let mortgages are down by 93 percent – from 4387 products in 2007 to only 307 today. Lenders pulled many of these products at the start of 2008 as funding became untenable and the shutters had to be pulled down.

Paradoxically, if there are no mortgages on the market, people must rent, but there are no buy-to-let mortgages to rent with – and a vicious circle is created.

In a recent interview with Money Marketing, Paragon Mortgages chief executive John Heron reported many landlords he talked to remained frustrated that they could not get funding – they want to keep buying but are hindered by the dwindling buy-to-let lending market.

He also predicted that the buy-to-let market would be the first to bounce back thanks to landlords, particularly professional landlords, being the safest borrowers to back.

So if demand is rising, but funding is limited, what is going to happen? John Charcol senior technical manager Ray Boulger thinks that this could be an endemic problem across the whole mortgage market in the near future. He says the black hole that will develop will lead to a problem that can only be solved by the Government.

Also in the news this week Bradford & Bingley, one of the UK’s biggest buy-to-let lenders appointed Richard Pym as its chief executive. Pym has promised to bring B&B out of the doldrums and back into the lending fore. So could this growing demand for buy-to-let deals be the perfect medicine for the beleaguered lender? Could it even be the cure to many of the specialist lending ills that currently stalk the market?

Where there is demand there is the possibility for profit. And as the industry well knows a kick-start could be all the mortgage market needs. Buy-to-let could well be the answer to many people’s prayers. To break the vicious circle, there has to be action from someone.

Whatever happens, it is a broker bonus. Landlords will always turn to advisers for help, especially while times are lean. Next week the Council of Mortgage Lenders will reveal the results of their latest buy to let survey but brokers shouldn’t worry – whether there are 300 buy-to-let mortgages on the market or 3000, brokers who can offer the right advice and find the best deals will still come out tops.


Investment matters Kira Nickerson

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