Research collected over the last eight months shows that both brokers and lenders are reporting a surge in interest in the buy-to-let property market from more mature home owners. The interest in buying is being fuelled by rocketing demand for good quality rental property from the large number of people unable to get a mortgage due to the economic situation as well as those needing to relocate for personal reasons or because of a new job.
Figures released by mortgage lenders show a robust recovery in buy-to-let lending, with more and more lenders returning to the sector. However, following the credit crunch, lessons have been learnt the hard way and much stricter qualifying criteria is being applied to loan applications. These include lower lending limits and higher booking fees. One thing is clear and that is the new breed of buy-to-let private landlords are taking a longer term and more pragmatic view of the sector. They are also looking to cherry pick the properties they buy and protect with cheap landlord insurance, and will not just buy a new property for the sake of it.
Many older buyers have been quietly saving money in ISAs, PEPs and savings accounts. However, the poor returns they are getting on the savings has seen them looking for alternative opportunities. The landlords are looking at properties that will give them an immediate return in excess of 6% and some will only look at opportunities offering at least a 10% return.
Simon Inch, from Somerset-based brokers Jenner Group, said “While it is possible to get a buy-to-let mortgage above 75% loan to value, we prefer to work with clients looking to borrow 60% or less. The fees and the rates are more attractive as the lenders feel that the investor is sharing in the risk. While the majority of our clients have at least £40,000 in cash, others have substantial amounts of equity available in their own properties.”