Buy-to-let landlords still bullish despite tough times ahead

New research by specialist broker Mortgages for Business has found that almost 10% of residential property investors have been told by their existing lenders to start looking for a mortgage elsewhere.

This is mainly down to RBS who are looking to reduce their exposure to property, while Bradford & Bingley are expected to exit the property market completely. However, despite the mortgage difficulties, six in ten private landlords have plans to expand their portfolios by the end of 2012. The research also found that for the first time since the last quarter of 2007, more investors are considering organising property insurance on an overseas purchase rather than making additional buys in the UK.

Over three-quarters of investors (76%) feel mortgage lenders need to be doing more to help them out. The main gripes were with rates, fees and LTVs. Landlords are also looking for more innovative lending and they were also interested in seeing more case-by-case underwriting rather than computer-based lending decisions. Around 54% of investors who have plans to expand revealed they will need to refinance their existing properties first. Of these, one-fifth admit they will struggle to secure finance because of a lack of equity and this they feel may well put an end to their plans to expand.

David Whittaker is the Managing Director at Mortgage for Business, he said “Landlord appetite for buying residential property is high. This will support the private rented sector and ease the strain on would be renters chasing too few properties. Landlords are bullishly confident about the prospects of the buy to let market over the next six months. There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6% threshold.”