Opposing Studies of Buy To Let

A property sourcing company claims that landlords are able to benefit from more flexible criteria than first time buyers and they will find more and more lenders will be allowing them to borrow more.

They say that buy to let landlords are replacing first time buyers and they are a better risk than most homeowners. Lenders have dropped the rental income criteria from 125% to 120% and consider that many lenders will allow experienced landlords to borrow on 100% once the rental growth is realized by the lender.

On the other hand Moneyfacts say it is more difficult for a landlord to obtain a mortgage. They say that landlords have been affected by the credit crunch. At this time, a year ago, average buy to let loan to values across prime products was 82.8% but now it is 80.1%. An average house price in February 2007 was £189,197 and a borrower need a deposit of £32,542 nowadays the figure would be £38,063.

In May 2007 when the market was strong thirteen buy to let lenders offered 90% loan to value now this has dropped to five.

They also add that it is very difficult for first time buyers to get a mortgage now, as almost half of lenders will not lend to first time buyers. This means that there are 80% less products are on the market.

A London mortgage broker says that lenders have put up premiums but feel it correct that buy to let landlords should pay more. They do, however, agree that high percentage fees can be difficult to justify but these can be added to the loan. It can, they admit, be more difficult to get buy to let mortgages but good brokers should know the lender to approach.

Rental Yields (COMBINED)     2004       2005       2006       Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3                             England (inc London) 6.37 6.32 6.11 5.99 6.22 6.03 6.08 5.97 5.87 6.15 5.91   5.69 5.54 London 6.12 6.09 5.96 5.93 6.09 5.96 6.08 5.99 5.82 6.58 6.07 5.70 5.53 Scotland 7.77 7.11 7.27 8.02 6.92 6.88 7.37 6.47 6.77 6.27 6.58 6.48 5.91