Banking on BTL as 60% of landlords look to develop portfolio

Published: 25/07/2012

With business as dismal as the weather, news that 60% of landlords are planning to increase their property portfolio is a little like a sunbeam bursting through the constant cloud cover.

According to research by specialist mortgage broker Mortgages for Business, of those looking to expand their property range, 85 per cent are in the market for “vanilla buy to let” (houses or flats). The survey also revealed an increased appetite in more complex buy to let properties including house in multiple occupation (HMOs), multi-units and semi-commercial property.

However a lack of lender support, computer based lending decisions and, unsurprisingly, gripes with rates, fees and LTVs could cause it to rain on investor’s enthusiastic parade.

High loan-to-value mortgages remain non-existent for buy to let properties; as of June this year, there were just four 85 per cent LTV mortgages on the market. And there is a growing concern surrounding availability with 8 per cent of landlords confirming they have been asked by lenders to refinance elsewhere. This is largely down to RBS looking to reduce its exposure to property and Bradford and Bingley keen to exit the market completely.

Yet despite these financial hurdles, only 3 per cent investors are looking to reduce their portfolios, down from 6 per cent quarter-on-quarter.

David Whittaker is the Managing Director at Mortgage for Business:

“Landlord appetite for buying residential property is high. This will support the private rented sector and ease the strain on would be renters chasing too few properties.

“Landlords are bullishly confident about the prospects of the buy to let market over the next six months. There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6 per cent threshold.”

Content correct at time of publication