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Lack of mortgage funding restricting BTL market

Half of landlords who want to expand their portfolios are being frustrated by the lack of mortgage finance, shows a survey conducted by LSL Property Services.

LSL owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains. 

Some 49% of landlords it polled said the current market is attractive for investment and that they wanted to expand their portfolios.  But only 27% of landlords say they’ll be able to buy more property in the next 12

months.  The lack of availability of mortgage finance remains the fundamental barrier for landlords. Only 12% of respondents mentioned the availability of finance as a positive factor for buy-to-let investment.

David Brown, commercial director of LSL Property Services, says: “2009 saw the buy-to-let market return as a viable investment.

“Landlords recognise this, despite the rough ride they have had to endure over the last couple of years.  The average landlord made losses in 2007-8, but 2009 marked a return to form for property investment.  But the availability – or lack of – of mortgage finance is holding the sector back. 

“Even experienced landlords who are keen to take advantage of lucrative returns and improving market conditions can’t get access to the cash they need.”

The research shows landlords’ confidence in the market is driven by their desire to maximise returns in a low interest rate environment, with a third of them attributing their positive sentiment to the superior capital returns of buy-to-let as compared with other forms of investment.

In 2009, a typical landlord made a total return of 7.6% – higher than many other forms of investment.


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  • Jon 1st February 2010 at 7:49 pm

    As a landlord I would not buy in this market on the back of low interest rates. The price of property is too high for the rents achievable – in most areas this is around 4 – 5% – any increase in rates can quickly put a landlord in to a lost making position with the current low rents.

    Some of the return being quoted is from a small increase in national property prices, and this is not necessarily representative of all areas. As usual it is those with a vested interest in trying to talk the market up.

    The recent increase in property prices is being attributable to a shortage of property, but if mortgage funds were more readily available the rate of growth on property prices would be greater – and I do not think many of us want to see double digit property prices increases in the near future.