Buy-to-let financing in UK evaporates
By Sharlene Goff
Financing for buy-to-let investors is drying up as lenders slash funding for deals and tighten loan criteria.
The total number of buy-to-let mortgages on offer to borrowers has almost halved since July after an explosion in recent years of products that helped fuel the UK residential property boom, according to market research from Moneyfacts.co.uk.
Subprime buy-to-let mortgages, which cater for investors with blemished credit records, have virtually ceased to exist.
There are now only 18 available in the market for such borrowers compared with 1,383 five months ago, according to Moneyfacts. For prime borrowers, the number of products has dropped from 2,265 in July to 1,724.
Landlord Mortgages, a buy-to-let broker, said only two or three big lenders were taking on any sizeable amount of new business.
“We can’t see any significant input from 90 per cent of buy-to-let mortgage lenders,” said Lee Grandin, managing director. “The past two years have brought an enormous influx of buy-to-let lenders to the market but this has been dramatically wiped out in the past two months.”
Those lenders still active in the market have introduced blanket rate rises, increased deposit requirements and cut the amounts they are willing to lend.
Only a few lenders are willing to lend more than 90 per cent of a property’s value. The margin by which rent must cover mortgage payments has also been raised by a number of lenders.
Buy-to-let investors are also being stalled by lenders taking a more cautious view to property valuations. Liam Bailey, head of residential research at Knight Frank, said that one in ten larger sales were being delayed because lenders had valued the property at less than the asking price.
Platform, the specialist lender of Britannia Building Society, is withdrawing from the buy-to-let market on Monday. A number of other lenders, such as Northern Rock, Paragon, and GMAC, have pushed rates high enough to virtually – and deliberately – price themselves out of the market, according to broker John Charcol.
Lenders have also reduced how much they will lend in total or as a proportion of property value. Alliance & Leicester slashed the amount it will lend a single borrower from £1m to £250,000.
GMAC introduced a maximum loan-to-value of just 70 per cent while Northern Rock is reducing its maximum loan-to-value on buy-to-let properties from 80 per cent to 75 per cent on Monda
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The end is high (yeah I know it's nigh, but high sounds better)...
By Sharlene Goff
Financing for buy-to-let investors is drying up as lenders slash funding for deals and tighten loan criteria.
The total number of buy-to-let mortgages on offer to borrowers has almost halved since July after an explosion in recent years of products that helped fuel the UK residential property boom, according to market research from Moneyfacts.co.uk.
Subprime buy-to-let mortgages, which cater for investors with blemished credit records, have virtually ceased to exist.
There are now only 18 available in the market for such borrowers compared with 1,383 five months ago, according to Moneyfacts. For prime borrowers, the number of products has dropped from 2,265 in July to 1,724.
Landlord Mortgages, a buy-to-let broker, said only two or three big lenders were taking on any sizeable amount of new business.
“We can’t see any significant input from 90 per cent of buy-to-let mortgage lenders,” said Lee Grandin, managing director. “The past two years have brought an enormous influx of buy-to-let lenders to the market but this has been dramatically wiped out in the past two months.”
Those lenders still active in the market have introduced blanket rate rises, increased deposit requirements and cut the amounts they are willing to lend.
Only a few lenders are willing to lend more than 90 per cent of a property’s value. The margin by which rent must cover mortgage payments has also been raised by a number of lenders.
Buy-to-let investors are also being stalled by lenders taking a more cautious view to property valuations. Liam Bailey, head of residential research at Knight Frank, said that one in ten larger sales were being delayed because lenders had valued the property at less than the asking price.
Platform, the specialist lender of Britannia Building Society, is withdrawing from the buy-to-let market on Monday. A number of other lenders, such as Northern Rock, Paragon, and GMAC, have pushed rates high enough to virtually – and deliberately – price themselves out of the market, according to broker John Charcol.
Lenders have also reduced how much they will lend in total or as a proportion of property value. Alliance & Leicester slashed the amount it will lend a single borrower from £1m to £250,000.
GMAC introduced a maximum loan-to-value of just 70 per cent while Northern Rock is reducing its maximum loan-to-value on buy-to-let properties from 80 per cent to 75 per cent on Monda
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The end is high (yeah I know it's nigh, but high sounds better)...
centures of this world. 
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