Low interest rates and soaring rents are resulting in fantastic yields for landlords – but its not all good news for those looking to buy to let at the moment. With the banks’ tightening their grip on lending, a ‘mortgage drought’ appears to be holding back the BTL market. Lenders are aware of the ever-increasing rental yields and have acted by way of an increase in rates and lower LTVs.
Paragon’s re-entry to the market may ease the drought slightly, but it may only be professional landlords that will benefit: Paragon being one of the lenders that does not deal with ‘armchair investors’ – those seeking to make a fast profit from buy to let, instead chooses to focus on investors who are managing their portfolio for long-term capital growth.
It’s not all bad news though – the fact that armchair landlords can’t access the capital they need to get into the buy to let market can be seen as something of an opportunity for the first-time-buyer.
An article on the This is Money website refers to professional landlords Phil and Mark Stewardson, who were able to secure properties at 40% below the asking price simply because the demand for buy to let style properties isn’t at the level it once was.
In September, for example, the brothers bought a two-bedroom semi-detached house in a partially industrial area of Stourbridge.
The property had been on the market since the end of 2009, priced at £80,000. Phil made an aggressive offer of £42,000, which the vendors finally accepted.
Those purchasing with a standard residential mortgage do not have the same lending conditions thrust upon them by the banks, making purchasing a property much more affordable. In some cases, first-time-buyers can get a better deal than the rest of the market, in the form of a higher LTV figure (though the arrangement fees may be slightly higher).
Any first-time-buyers prepared to get their hands dirty with a bit of renovation may decide that this presents an excellent opportunity to get on the ladder. It’s actually quite feasible that a first-time buyer could turn this into an investment opportunity of their own; purchase a typical buy to let property, renovate and then cash in/remain in the property.
Leave a comment
You must be logged in to post a comment.