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Mortgages for First BTL Landlords Decline

Landlords Decline

The number of mortgage products available for first-time buy to let landlords is falling as a proportion of the market, research reveals.

The findings from Moneyfacts.co.uk show that the number of first-time landlord products has fallen to 68% of the market, that’s down from 73% recorded in April last year. It’s also a large fall from the 81% recorded in 2015.

The fall has been attributed to the tightening of buy to let regulations brought in by the Prudential Regulation Authority including improved stress testing for a landlord’s finances.

The website’s finance expert, Charlotte Nelson, said: “The extra regulations mean borrowers facing questions and extra checks about their finances.

“Landlords have a smaller proportion of the market and have missed out on the buy to let boom and with the uncertainty that exists, some providers are becoming more risk averse.”

She explained: “First-time landlords, by their nature, lack the experience in managing a rental property and it is considered to be more of a risk now than it once was.”

Mortgages available for first time buy to let landlords

However, despite the proportion of mortgages available for first time buy to let landlords falling in proportion, the numbers have risen significantly to reach 1,047 from 650 recorded in April 2015.

The website says that first-time buy to let landlords are now being better served by the finance industry than they have for many years.

They also warn that under the new affordability rules, the amount a landlord could borrow has been reduced.

Ms Nelson said: “Would be buy to let landlords need to do their homework and should prepare in advance so they deal with the extra regulations with flying colours and get the mortgage they want.”

She added: “Buy to let still looks like being a good option with saving rates remaining in dire straits but anyone considering an investment should seek independent financial advice to see that this is the right choice for them.”

Buy to let mortgage loan to values

The survey coincides with figures produced by Paragon Mortgages which found that buy to let mortgage loan to values (LTV) are getting lower and that the sector is still delivering good returns.

The firm says that the LTV on a buy to let mortgage has fallen by 2% and is now at 35% when it was 42% just five years ago.

The firm says that landlords are spending on average, 30% of rental income on mortgage payments with 43% saying they spent less than a quarter of their rent on the payments.


About S Thompson

Simon Thompson is Chairman of the Landlord Syndicate and CEO / Co Founder of Accommodation for Students Ltd.

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