Landlords hit by lack of finance
Share
Landlords are looking to buy more properties in Q1 but admit it is becoming increasingly hard to secure a buy-to-let loan, research from Paragon Mortgages reveals.
The latest set of data from Paragon’s ongoing Trends research shows out of 200 landlords 10% are looking to expand their portfolio between now and the end of March.
But property investors also reported that that they found it harder to obtain a mortgage in Q4 last year compared to Q3.
John Heron
Out of the landlords that applied for a mortgage to expand their portfolio or remortgage, 67% said it was more difficult to secure a mortgage in Q4 2009 than the previous three months.
John Heron, managing director at Paragon Mortgages, says: “Investors continue to be frustrated by a lack of choice and competition in the buy-to-let mortgage market, which is dominated by just two lenders.
“Most buy-to-let lenders currently active in the market employ aggregate or maximum lending levels, placing a ceiling on the number of properties they will lend against, which makes it difficult for professional landlords to expand portfolios because they are usually already at those lending levels.
“It is ironic that the criteria employed by most lenders favours inexperienced landlords over those with proven track records in residential property investment and management.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
Readers' comments (4)
Anonymous | 19 Jan 2010 3:19 pm
John Herron is absolutly right, portfolio landlords with good track records who have been established for many years are less likely to be given a new BTL mortgage than their counterparts with no experience and no track record.
Unsuitable or offensive? Report this comment
Geoff Laird | 20 Jan 2010 11:52 am
Once again John Heron demonstrates his understanding of what is happening within the Buy to Let market and the constraints being placed upon the established Portfolio Landlord in developing by new acquisitions.
I have several portfolio landlords who bridle at the exorbitant completion fees being applied and the resirictive levels of borrowings.
The question I am repeatedly being asked is when will lenders develop criteria which meets the aspirations of prudent portfolio borrowers and of greater importance when will Paragon come back to the market since clearly their absence is sorely missed .
Unsuitable or offensive? Report this comment
Punter | 1 Feb 2010 6:25 am
At least the banks now understand that if you expand credit recklessly and bid up house prices you get an almighty disaster. At least they are now keeping the reckless in check. If that denies credit to a few decent deals, I won't weep. Do you guys really not understand that the bank bailout has cost the AVERAGE taxpayer £ 40,000 ? This will come in future taxes to pay down the extra government debt.
BTL is a perfectly sensible activity. So is go-kart racing. Both are legal and broadly harmless. But what the BTLers and Banksters did was like running millions of go-karts all around the country - through gardens, high-streets and people's drawing rooms. Enough is enough.
Unsuitable or offensive? Report this comment
Jon Pratt | 1 Feb 2010 7:10 am
I suspect the reason that borrowing is expensive is that banks are pricing for risk. They all know that further falls in capital values are almost inevitable.
Unsuitable or offensive? Report this comment