Buy To Let Updated:
The buy-to-let market is enjoying a period of rapid expansion, and on the whole, the choice of mortgages available in the sector is in a period of what would appear to be unhindered growth. However, the choice for first-time landlords is dwindling, with this sector losing market share.
Buy-to-let isn't subject to as much regulation as the residential market, with the Mortgage Market Review and income multiple caps not applying. This has undeniably helped the growth of the sector, with research from Moneyfacts finding that the number of buy-to-let (BTL) mortgages available has increased by 237 in just one year – an impressive rise of 52%.
The number of products available to first-time landlords in this sector has also increased, this time by a total of 147. This is a 33% increase on the same time last year, but closer analysis suggests that it isn't all it's cracked up to be. In fact, it looks like first-time landlords are being squeezed compared with borrowers with a proven history – the proportion of the BTL market available to first-time buyers (FTBs) has reduced to 82%, down from 93% a year ago.
It's also interesting to note that, even though the number of BTL products on offer at 80% loan-to-value – typically the preserve of the first-time landlord – has increased by 43% in the last year, high street banks aren't willing to get involved. But is this really that surprising?
"The list of lenders offering BTL mortgages at 80% is empty of the big high street names," said Sylvia Waycot, editor of Moneyfacts.co.uk. "Because first-time landlords don't have a proven track record for running a BTL business, they do pose a greater risk to the lender. Appetite for this risk is still lacking, which is borne out by the rise in the numbers of attractive LTV deals that are restricted to borrowers with a previous BTL history."
It looks like the first-time BTL market has been given the cold shoulder, similar to the fate of the residential FTB market in the wake of the financial crisis. It isn't all bad news though, and there are still options for the would-be landlord. Seeking a lower LTV could be a great way to go, as you're effectively becoming a less risky proposition. For example, high street lenders have embraced the 60% LTV sector, so it could be worth trying to amass that extra deposit if you want to get your foot on the BTL ladder.
Then it all comes down to doing your research to find the mortgage that will meet your needs. Our best buy chart of mortgages for first-time landlords is a great place to start, so see what you can find – you could be building your portfolio before you know it!
Find a buy-to-let mortgage
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