Buy To Let

Bulk buy to let is a term that we, Landlord Mortgages, have introduced to represent the new phase in buy to let property investment. Leading buy to let mortgage companies have unknowingly backed our ‘bulk buy to let’, landlords can now borrow substantially more than they use to. When the buy to let scheme emerged over 10 years ago it was still difficult to borrow a high LTV (Loan To Value) i.e. it was not common to borrow more than 75% LTV (Loan To Value), but today 90% LTV (Loan To Value) is now common place. But it is the amount of borrowings you can obtain that has really created the bulk buy to let phenomenon. 10 years ago only a handful of high street mortgage companies were in the buy to let market and would only lend on a handful of properties. Soon the number of mortgage companies entering the buy to let mortgage market increased significantly and with it increased lending. Today, it is possible gain an almost unlimited number of properties thus to build a portfolio of £100 million is truly possible. Even with profit margins tight a net return of only 1% per a year on £100 million is annual income of £1 million.

Bulk Buy To Let is the future for the buy to let property investor

It is predicted that the growth in borrowing by homeowners will lag behind that of buy to let property investors. With a healthy influx of foreign nationals into our work force from neighbouring new EU entrants the requirement for flexible accommodation and the need to rent not buy will probably push buy to let mortgage lending past first time buyer lending by 2011. This means that by 2011 you could have a situation where the housing stock is predominantly controlled by Property buy to let investors and existing homeowners. You may well read stories about the frustrations of would be first time buyers trying to get onto the property ladder. But such frustrations may seem widespread but unfortunately the situation is only going to get worse! And who will the would be first time buyer blame, the landlord. Such blame is not new and is well publicised in the national papers such as Sunday Times and Financial Mail on Sunday but it is likely to increase with intensity as the situation becomes dire for the first time buyer.

I recall our Landlord Mortgages call centre having a National Newspaper reader respond to an advert that we placed in the paper. He did not call during working hours but called after hours and left a message on our answer machine. The message was harsh back then with a few swear words and relating to the fact we were helping landlords take his right to property ownership.

Popularity of Buy to Lets

The buy to let market is still healthy even though there are more fears over new build properties.

A building firm specialising in city centre developments has said it is calling a halt to work in Manchester and do not expect it to restart until the New Year.

A number of lenders have altered their loan to values on new builds.

It is felt that local authorities have allowed too many new developments in city centres such as Leeds and Manchester and that not everyone wished to live in the centre of a city.

For those investors prepared to stay in the business long term it is still a good investment because of the ever-increasing population numbers.

Those renting expect a high standard of accommodation so investors should consider carefully the type and location of premises they intend to purchase and should be prepared to commit for the medium to long term.