The recent collapse and part nationalisation of Bradford and Bingley came as a shock to some, and none more so than the many buy to let landlords that have been affected by what has happened to the lenders. The Bradford & Bingley has been a primarily buy to let lender, and many landlords may have had buy to let mortgages with the lender set at special rates for a fixed period. Moreover many of these landlords may be due to come off these set rates, and this could prove to be a problem for some.

Many of the landlords due to come off these cheap buy to let mortgages may find that they now have to pay a far higher rate of interest, and this could result in their repayments being far higher, in some cases by hundreds of pounds per month. After the collapse of Bradford and Bingley many lenders began to feel restless and uneasy, and as a result a large percentage of mortgage deals were taken off the shelves, including many buy to let mortgage deals offering impressive rates of interest. This has resulted in far less choice and far less chance of getting an affordable mortgage for buy to let mortgage holders.

It is thought that many buy to let borrowers could end up having their properties repossessed as a result of being unable to keep on top of their repayments once their current mortgage deal comes to an end, and already a high number of buy to let repossessions are being seen going under the hammer at auctions.

One official said: “Repossessions are already going up quite dramatically, and a lot of these are buy-to-let. There were also some people taking out mortgages and clouding the issue as to whether they were for them or for buy-to-let purposes. These have all gone wrong too.”

He added: “We sold a two-bedroom new-build flat in Leeds for £107,000. It had been bought for £238,000 last year.”

One mortgage official recently said: “Those who have bought a new-build flat in the past couple of years will be in for a shock.”

An official from the National Landlord’s Assocation stated: “Many of those affected will be smaller, novice landlords, who went into the buy-to-let business as a way of augmenting their pensions. This kind of market is not for the faint-hearted and the landlords who may be struggling may well be the more recent entrants with more highly geared portfolios.”

The cut in the number of both general and buy to let mortgage products since the collapse of Bradford & Bangley is likely to cause problems for many would be buyers and for existing mortgage holders.

One official said: “This news will be another blow for mortgage borrowers, as not only do they now have a more restricted choice, but the insecurity in the money markets has caused many lenders to increase their mortgage rates.”

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