Duncan Lewis

Family Law

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highly sensitive and confusing

Buy to let market only sector which is seeing a boom with rental market at its rudest best

Date: (15 May 2012)    |    

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Hitherto the standard policy for buy to let lenders not to lend on properties until the homeowner had owned it for six months unless the funds were for the original purchase. This criterion was hard to emulate especially for the cash purchasers of auction property and development projects where the six month waiting period caused delays.
The policy was brought into force after the credit crunch and falling of house prices to avoid back to back re-mortgages and undeclared no money down deals.
Now Mortgage Trust would consider re-mortgaging a property inside 6 months of the date of purchase but if major improvements have been made to the property enhancing the value of the property.
If the property owner who has bought a property as investment could demonstrate show a detailed plan of works the Mortgage Trust under certain conditions would allow a re-mortgage within 6 months of purchase.
Buy-to-let lending has soared by 32 per cent year-on-year, according to the Council of Mortgage Lenders (CML).
The buy-to-let market is continuing to grow with 71 per cent of landlords feeling positive about the prospects for the market, according to specialist lender CHL Mortgages. Only 5 per cent of landlords feel negative about the sector.
Jonathan Samuels, chief executive of Dragonfly Property Finance, said he expected the buy-to-let market to continue to grow.
This is due to a shortage of rental stock and strong demand from the growing number of forced tenants who were driving the sector forward..
Samuels added that investors were looking for value and they were looking for reduced risk. With property prices falling and mainstream lenders tightening lending on owner-occupier loans, they saw buy-to-let as a pretty stable place to invest into.
However, he warned that investors should only enter the market if they were prepared for the up-cycle in interest rates.
The booming buy-to-let sector was in part due to rising rents across the UK. The average rent now stands at £868 per month, up 1 per cent year-on-year, according to property website Findaproperty.com. However, average rents in London soared by 9.3 per cent over the year, with the average tenant in the capital shelling out £2,152 each month.
With the six month period waived off with certain conditions by the Mortgage Trust the buy to let market looks much more promising.