Buy to Let Remortgages are Difficult to Obtain for Many Landlords
As households are still finding it hard to purchase a property and are forced into rental situations it is unfortunate that the majority of landlords have reported they are planning to raise their rental fees. At a time when the hopeful home buyers are trying to save for a home purchase deposit they may now have to put that money toward higher rental fees making it a much longer until they can buy. The result of on a personal level may seem tragic but unimportant to those already in homes but the reality is that without buyers the house prices will continue to decline and so will property values and homeowner’s equity levels.
Research from the Mortgages for Business found that 84% of investors in buy to let properties are planning to build their portfolios while 3% are planning to reduce their portfolios which is 6% down from the first quarter of the year. Six out of ten landlords reported they plan to increase rental fees.
David Whittaker, managing director at Mortgages for Business, said, “Landlord appetite for buying residential property is high. This will support the private rented sector and ease the strain on would be renters chasing too few properties.”
The survey polled 159 buy to let investors and more than three quarters of those felt that lenders are failing to provide the products they need to adequately do business and address the higher demand for rental properties. Their main complaints were at the level of fees associated with mortgages and remortgages as well as the loan to value levels and interest rates.
Over one half of the landlords reported a need to remortgage to add to their portfolios. Of the 54% expecting to remortgage 20% admitted they will struggle to obtain a remortgage due to lack of equity in their portfolio properties.
Whittaker added, “Landlords are bullishly confident about the prospects of the buy-to-let market over the next six months. There are a huge number of would-be owners being displaced into the rental market every year, which has kept tenant demand sky high and pushed yields on private rental property over the 6% threshold.”