Fall in mortgages for first-time landlords

Ryan Fowler

July 4, 2016

buy-to-let buy to let house

The proportion of mortgage deals for new landlords has actually shrunk to a record low despite a year-on-year in the overall number of buy-to-let mortgages, research from Moneyfacts.co.uk shows.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “Despite all the changes to regulation in the BTL market, the number of BTL mortgages has increased; however, first-time landlords have been missing out on this boost in product numbers. Indeed, the percentage of the market that is available to new landlords has now dropped to just 75%, down by around 10% in two years.

“As first-time landlords don’t have a proven track record in managing rental properties, offering them a BTL mortgage poses a greater risk to the lender, and it’s this risk that is making the number of first-time landlord deals remain relatively static.

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“The additional regulation in the BTL market and the added economic uncertainty following the Brexit vote means even more lenders may reconsider whether first-time landlords are a ‘safe bet’. As a result, would-be landlords are likely to face more probing questions about their finances than their more experienced counterparts.

“Nevertheless, high rents and rock-bottom mortgage rates mean that BTL is still an attractive proposition for aspiring landlords, particularly those who are fed up with the dismal savings options currently available. However, BTL is not without its risks, so anyone considering it as an option should seek the advice of an independent financial adviser to determine whether it is the best choice for them.”