Has Buy to Let reached the Awkward Teenage Years?

Published: 28/09/2011

Officially launched on 24 September 1996 by the Association of Residential Letting, last Friday saw the buy-to-let market celebrate its 15th birthday. But like every teenager, they are prone to the odd mood swing and temper tantrum.

Recent figures showed promise; BTL figures drove up UK lending figures in August. A survey by the National Landlords Association (NLA) found the number of buy-to-let products increased by 25 per cent in Q2, as did the average loan size, from £2,166 to £138,525.80, demonstrating the potential of the industry¹.

But as we enter the difficult teenage era, the market has taken a turn for the worse, seemingly drawing inspiration from the Harry Enfield character, Kevin.

More than 50 best-rate buy-to-let deals have been taken off the market. The Post Office pulled all of its buy-to-let mortgages while Skipton Building Society, Kensington and Aldermore withdrew its ultra competitive rates. Skipton tracker rate was 3.24 per cent but has now increased to 3.59 per cent, Aldermore has withdrawn its popular fixed rate deal and Kensington, the buy-to-let specialist, pulled the market’s remaining 85 per cent loan-to-value mortgages².

Industry experts believe the abundance of buy-to-let mortgage applications from landlords in the recent months is the reason behind this sudden turnaround from lenders. Aaron Strutt, Mortgage Adviser with broker Trinity Financial, said:

“Landlords have been seizing the opportunity to cash in. Now many banks have simply reached the maximum amount they can lend on their cheapest, most popular, mortgage deals.”²

But alas the hike in buy-to-let product rates is not the end of the world. With first time buyers still largely priced out of the market and rents steadily rising, it remains a landlord’s game and experts are steadfast in their belief escalated rates will not deter landlords. So just as you would with a dramatic teenager, ignore it and carry on regardless!

Sources
¹National Landlords Association (Sep 2011)
²Daily Mail (Sep 2011)

Content correct at time of publication