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Buy-To-Let Mortgage Boom Continues Due To Tenant Demand


Tuesday, May 13, 2014

Demand For Rental Property Fuelling Buy-To-Let Mortgage Boom

Demand For Rental Property Fuelling Buy-To-Let Mortgage Boom

Demand For Rental Property Fuelling Buy-To-Let Mortgage Boom 

The UK buy-to-let boom looks set to continue for the foreseeable future as economists and estate agencies predict increased demand from over 1 Million more tenants, who will be looking for homes in the UK’s private rented sector over the next five years.

The expected tenant requirements are driving up demand for buy-to-let mortgages from property investors and existing landlords who want to expand rental property portfolios despite facing a number of detrimental factors, including: 

  • High mortgage fees
  • Rising energy costs
  • Increased cost of repairs and maintenance
  • Fear of rising interest rates
  • Political interference as parties campaign for next general election

Data from Savills estate agency reckons that up to a million more tenants will be seeking rented property in the next five years and these tenants are likely to be hard-working professionals who have been frozen out of the mortgage market by tough new affordability tests imposed by the Financial Conduct Authority (FCA) on 26th April 2014.

The new Mortgage Market Review (MMR) applies to residential property purchases but does not apply to buy-to-let mortgages, at present, however the increase in the number of buy-to-let mortgage approvals has been blamed for a 12% fall in the total number of private residential mortgage approvals.

Property investors and portfolio landlords are keen to expand property portfolios in order to make the most of the increased demand for rental properties and this is backed up by data published by Mortgages for Business after they surveyed a panel of UK landlords and the results showed that 60% of PRS landlords are hoping to buy more rental properties this year.

The good news for these property investors is that rates for buy-to-let mortgages are relatively low but application fees are far higher as many buy-to-let mortgage loans charge percentage fees rather than flat rates.

Buy-to-let mortgage lenders offer mortgages with at least a 20% deposit provided by investors, who may need to prove income and employment status or have rent protection insurance or other measures in place to cover mortgage payments if the rental income suddenly stops.

Research from buy-to-let specialist Paragon shows that the majority of existing buy-to-let landlords have variable-rate mortgages and they face the prospect of higher costs when interest rates rise. However, falling inflation and unemployment figures suggest that this situation could happen earlier than expected.

Buy-To-Let Mortgage Boom Continues Due To Tenant Demand

Buy-To-Let Mortgage Boom Continues Due To Tenant Demand


This was written by Mike Clarke. Posted on at 11:45 am. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.