The results of the recent research indicated that almost one third of Brits thought that the buy to let bubble would burst as a result of the recession and the current financial climate, with 28 percent of respondents expecting buy to let investor to take a significant financial hit.

A further 25 percent of those responding to the survey thought that buy to let investors were more likely to break even rather than make a loss, which means that they expect that they will not make losses but also that they will not make any profit from their investments in the current climate.

Lending levels in the buy to let sector have continued to decline, with many investors struggling to get the finance that they need.

One industry official involved in the research stated: “The years of the booming property market made investing in bricks and mortar very attractive. But unfortunately this boom couldn’t continue forever and those invested in the buy-to-let property market may now be facing losses due to the current economic climate. Furthermore, the number of buy-to-let mortgages on offer has greatly reduced, meaning those lenders remaining in the buy-to-let space have tightened their lending criteria making funding even harder to find for potential landlords.”


He added that any buy to let investor that was struggling to keep on top of their buy to let mortgage repayments should contact an industry specialist for advice and assistance, stating: “A whole of market mortgage adviser can also talk you through the opportunities and potential pitfalls of the buy-to-let market and whether this is appropriate for you.”

Recession to affect buy to let investors is a post from: Glitec Loans

One landlords’ group has said that it was the late 1980s, which was the start of the last recession in the UK, when tenants were last in so much debt. The claims come from the National Landlords’ Association.

The NLA has said that an increasing number of tenants are now falling behind with their rental payments on their homes, partly due to the increase in unemployment levels that has stemmed from the recession. This has left around a third of NLA members in arrears, and the NLA said that it has taken more than twenty thousand calls from landlords that are concerned about rent arrears.

One member said that she was owed nearly £9000 by the tenants that were renting her property, as both of them had lost their jobs in the economic downturn, and this had left her high and dry. This has led to landlords such as her having to put pressure on already stressed out tenants, many of whom end up getting evicted because they cannot afford their rental payments after losing their jobs.

An official from the homeless charity Shelter said that the government needed to act to help troubled tenants in the same way that it had been trying to help troubled homeowners.

He said: “The government needs to look to see how the payment of housing benefit can be speeded up. Otherwise more tenants are likely to become homeless.”

Officials are also urging landlords to be more helpful and sympathetic to struggling tenants given the current climate.

Debt amongst UK tenants soars is a post from: Glitec Loans

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.”

How will buy to let landlords fare after B&B collapse? is a post from: Glitec Loans

Two of the sectors that have been seriously adversely affected by the global credit crunch are the housing market and the mortgage market, and lenders, borrowers, sellers, buyers, and landlords have all felt the effects of the problems that have hit these sectors. A rising number of homeowners have faced repossession as a result of being unable to keep up with rising mortgage repayments and being unable to get a more affordable mortgage elsewhere, and a recent report has shown that this is a problem that is also now affecting landlords.

According to industry officials the number of landlords that have fallen three months behind with their mortgage repayments has now smashed through the ten thousand barrier, and many think that the situation is set to get much worse. This is because many landlords originally took out low interest rate deals several years ago, and the low rate period is due to expire. For many the tighter credit conditions mean that they will be unable to remortgage to a better deal, and most will be unable to get the same sort of loan to value offer as previously.

Furthermore the situation is made worse by the fact that house prices are falling month on month, and are now said to be 10% lower than this time last year. This will leave landlords that have entered the buy to let market more recently facing negative equity. Officials claim that many landlords could be forced to sell their properties early if they cannot afford the repayments in order to avoid repossession.

One industry official that was involved with the research stated: “Borrowing to invest can be a hazardous strategy, just as much with property as with any other form of investment, because you magnify losses as well as gains. This was as true 10 years ago as it is today, and will be in 10 years time when everyone has forgotten the current credit crisis. For the overwhelming majority of the population, buy-to-let should not be seen as an alternative to making regular savings into a pension.”

The global credit crunch has also made it more difficult for those that might have been interested in entering the buy to let market to do so, as availability and affordability when it comes to buy to let mortgages has been reduced over recent months, in the same way as with standard mortgages. Information suggests that each pound invested in buy to let property is now worth considerably less than each pound invested into a pension.

Rising number of landlords in serious mortgage arrears is a post from: Glitec Loans

In addition to this the difficulties that many would be buyers are having in obtaining an affordable mortgage, coupled with the many potential buyers that don’t want to take the plunge just yet due to house prices still falling, is resulting in a healthy uptake of rental properties, with demand likely to remain strong for the foreseeable future. However, the number of buy to let loans has been falling over recent months, reflecting a combination of tighter credit conditions amongst lenders and fewer applications from would be landlords.

The figures show that in the first half of this year there was a fall in buy to let mortgage figures for the first time in three years. Compared to the last six months of last year there was an 18% drop in new buy to let mortgage loans in the first half of this year, with just 144,600 loans being approved. However, the drop in the number of standard mortgage loans being approved was even greater, with a 28% drop in standard mortgage approvals in the first half of this year compared to the final half of last year.

Officials have said that the strong demand for rental homes is still encouraging, and the Council of Mortgage Lenders stated: “We expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now.”

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Buy to let mortgage demand is falling is a post from: Glitec Loans

At the end of 2006 the amount outstanding on buy to let mortgages was around £847,000. However, one year later at the end of 2007 this figure had rocketed to £1,038,000. The actual value of the buy to let market has also rocketed, with its value rising to £122 billon by the end of 2007 compared to £95 billion at the end of 2006. With high demand for rental properties from consumers that cannot afford to purchase on the open market landlords are having few problems when it comes to finding suitable tenants.

A Council of Mortgage Lenders spokesperson stated: ‘Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market. We expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property.’

Many non-homeowners are now unable to get onto council or housing association lists because many are closed, and with house prices still unaffordable for many there is little option for many people other than to rent on the private market, which is creating the high level of demand that buy to let landlords are enjoying.

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Impressive figures on buy to let mortgages is a post from: Glitec Loans

Figures show that buy to let mortgages stormed through the £1 million barrier by the end of last year, with the number of outstanding buy to let mortgages standing at £1,038,000, which reflected a rise of 23%.

The figures come from the Council of Mortgage Lenders, and show that at the end of 2006, just one year earlier, outstanding buy to let mortgages stood at £846,900. It seems that the housing market slowdown has had no impact on the buy to let market, with figures showing that the buy to let market is now worth £122 billion, which is a rise from £95 billion at the end of 2006.

Michael Coogan from the Council of Mortgage Lenders stated: ‘Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high quality homes to rent. Buy-to-let has remained resilient in the face of the funding constraints that have affected the sector and the wider mortgage market. We expect to see a continuing healthy appetite for buy-to-let finance this year, in line with continuing expected consumer demand for private rental property.’

With many non-homeowners unable to get onto the property ladder due to high interest rates and high property prices, many have opted to rent, and in many cases, with social housing lists so over-subscribed, consumers are turning to private landlords in order to put a roof over their heads.

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Buy to let mortgage figures soar is a post from: Glitec Loans