by Mark Johnston
The past few years have been pretty difficult for investors in the private housing sector. Heavy losses as a result of the financial crisis meant that many banks and building societies stopped selling buy to let mortgage or put their rates up to such a level that it became impossible for would be landlords to make a profit.
The main issue for investors has been the amount of deposit required by lenders. With many lenders asking for upwards of a 35% deposit it was impossible for landlords to expand their portfolio. The turmoil in the private housing market has meant that more and more would be first time buyers are turning to private landlords to rent property. This together with falling house prices has meant that buy to let landlords are able to cash in on the situation. Lets not forgot, where there is demand, there is profit to be made and lenders are starting to see that.
Already some lenders are offering buy to let mortgages with an 85% loan to value which means that would be property tycoons just need to find a more manageable 15% deposit. This is the best loan to value on a buy to let mortgage since before the financial crisis began back in 2007. More demand means more lenders looking to access a profitable market which in turn means more competition and that means lower prices for consumers.
Following the move from Kensington Mortgages which is owned by the South African bank Investec to launch the 85% loan to value (LTV) mortgage, other big players on the high street have expressed an interest in the buy to let market. Santander, the Spanish bank as well as the Yorkshire Building Society have both said they are interested in getting in this lucrative market.
A spokesperson from the Yorkshire Building Society said: “Following our merger with Chelsea Building Society, we have an existing buy-to-let mortgage book. We are currently working on the possibility of pursuing new lending in this area.”
This is fantastic news for those looking to become landlords for the first time. Over the years the number of products available ton non professional property investors has dropped dramatically. If the market opens back up again it could give the UK housing market the push it needs. Currently prices are falling especially at the lower end of the market as people struggle to pay their mortgages, if fresh investors came in they would be able to bag themselves some bargains as well as help kick start the market again.
David Hollingworth of London & Country, the mortgage brokers. :“It has to be a welcome addition to the current range of buy-to-let products on the market and opens up options for those keen to invest without making such a big capital outlay required of many lenders.
But more lenders need to get onboard, only a small hand full of providers are offering buy to let mortgages for those with less than a 20% deposit and it’s just not enough.
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