Buy-to-let finance woes to continue for two years - Mortgages - News - Moneyfacts

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Buy-to-let finance woes to continue for two years

Buy-to-let finance woes to continue for two years

Category: Mortgages

Updated: 24/08/2010
First Published: 24/08/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The rise in capital gains tax for higher rate tax payers in tandem with the recent drop in house prices has seen confidence amongst buy-to-let investors stumble over the last three months.

Despite a slight improvement in buy-to-let lending over the last quarter, the latest quarterly survey from LSL Property Services also suggests that the amount of available buy-to-let finance will remain constricted until at least the end of 2012.

Confidence is said to have dropped after the survey found that 42% of landlords believe now is a good time to invest in property, down from 48% in the first quarter of the year.

Total annual returns from buy-to-let investments also fell in July, to 10.1%, down from 13.2% in April, while the recent levelling off of house prices means an investor buying property now could expect a total annual return of 3.5%, or £5,838.

David Brown, managing director of LSL Corporate Client Department, said that rising rents and house prices had inflated the annual returns available to landlords at the start of the year, but the recent slowdown in house prices and the capital gains tax hike had seen confidence drop.

However, growing tenant demand was said to be helping to cushion the blow of slowing capital gains.

With mortgage finance remaining a daunting obstacle for first time buyers looking to get a foot on the property ladder, Mr Brown said that thousands of frustrated buyers were being kept in rented accommodation, pushing up tenant demand and rents.

However, even though the latest Council of Mortgage Lenders data showed a 13% increase in the number of buy-to-let loans over the past quarter, Mr Brown warned that borrowing remained 'a thorn in the side' of potential investors too.

"Despite a slight easing in lending in the last quarter, mortgage finance constraints are hitting landlords," he added. "Funding conditions remain tight for lenders, and lending to landlords won't loosen significantly in the next two years."

If you're thinking of investing in property or you are an existing landlord looking for a new buy-to-let mortgage, you might be able to find what you need in our best buy buy-to-let mortgage chart.

Find the best mortgage rate - Compare best selling mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Homemover numbers fall for first time since 2011

The mortgage market enjoyed a record year in 2016, so it may come as a surprise to hear that the number of people moving home has fallen for the first time in five years, with fewer apparently taking advantage of the market.

2016: the best year for remortgaging since 2009

Remortgaging has certainly seen a surge in activity of late, helped in no small part by the dramatic drop in mortgage rates over the last year, so much so that 2016 as a whole proved to be the best year for the sector since 2009.

Homeowners underestimate remortgaging savings

Remortgaging has been enjoying a surge in popularity in recent months, and considering how much you could save, it’s a no-brainer! Unfortunately, many fail to realise the extent of potential savings, which could mean too few make the switch.
 
Close