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Fall in mortgages for first-time landlords

Fall in mortgages for first-time landlords

Category: Buy To Let

Updated: 04/07/2016
First Published: 04/07/2016

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 It is now over 6 months old so the content may be out of date.

Year-on-year, the number of buy-to-let (BTL) mortgages has increased, so it would be fair to assume that the availability of deals for first-time landlords has also expanded. However, our latest research shows that this isn't actually the case, and instead, the proportion of mortgage deals available for new landlords has shrunk to a record low.

Not as it seems

The figures reveal that, despite the availability of BTL mortgage deals to new landlords having risen in numerical terms, the proportion of the market open to first-time landlords has shrunk – so what may initially seem to be rising availability isn't quite as good as it first appears.

Take a look at the table below to see what we mean:

Five years ago
Two years ago One year ago Today
Number of buy-to-let products available to first-time landlords 434 518 677 813
Percentage of the buy-to-let market that is available to first-time landlords 82% 83% 80% 75%
Source: Moneyfacts.co.uk Compiled 04/07/2016

"Despite all the changes to regulation in the BTL market, the number of BTL mortgages has increased," said Charlotte Nelson, finance expert at Moneyfacts. "However, first-time landlords have been missing out on this boost in product numbers. Indeed, the percentage of the market that is available to new landlords has now dropped to just 75%, down by around 10% in two years."

This is largely because of the level of risk involved, Charlotte explains: "As first-time landlords don't have a proven track record in manaaing rental properties, offering them a BTL mortgage poses a greater risk to the lender, and it's this risk that is making the number of first-time landlord deals remain relatively static.

"The additional regulation in the BTL market and the added economic uncertainty following the Brexit vote mean even more lenders may reconsider whether first-time landlords are a 'safe bet'. As a result, would-be landlords are likely to face more probing questions about their finances than their more experienced counterparts.

"Nevertheless, high rents and rock-bottom mortgage rates mean that BTL is still an attractive proposition for aspiring landlords, particularly those who are fed up with the dismal savings options currently available. However, BTL is not without its risks, so anyone considering it as an option should seek the advice of an independent financial adviser to determine whether it is the best choice for them."

What next?

If you want to get on the BTL bandwagon, check out the top BTL mortgage deals for first-time landlords to see if it's a viable option

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.