CFI: Bridging
Buy-to-let bounce
Award winning Commercial Mortgages.
by
Martin Kearns, head of strategic policy, Tiuta
News from the Council of Mortgage Lenders that buy- to-let mortgages now ac- count for nearly 13% of the total outstanding value of UK home loans has, quite rightly, been greeted with positivity by those active in the marketplace.
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While a strengthening buy-to-let sector is one thing, the fact remains that the supply of available buy-to-let finance is still heavily out- weighed by demand and many existing and potential landlords/property investors cannot access the finance they need to move projects on or take an active part in the opportunities that do exist. That said, we are now starting to see lenders such as building societies actively announcing their return to the sector and/or a keen in- terest in accepting this type of business. Whether it will be enough to meet the grow- ing demand for such mort- gage products is another matter entirely though. For that reason I suspect
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that short-term finance will still be in demand from land- lords and investors for the foreseeable future, particu- larly when we consider the criteria changes which have taken place in buy-to-let lending since the credit
crunch. Portfolio lending has diminished considerably and other criteria, such as the need for much larger de- posits and higher rental in- come percentages, have now become the norm. Even with this being the
case, the anticipation has to be that buy-to-let lending will continue to represent a far greater percentage of overall lending in the years ahead. The Government’s Housing Policy appears to demand this with many more people expected to rent rather than buy over the course of the next generation and possibly beyond that as well. The simple truth is that lending for prospective homeowners is not going to change much any time soon. Therefore, what are the op- tions for these individuals apart from renting? Many are suggesting this is the start of the UK moving towards a far more continen- tal approach to housing with those renting at some point outnumbering those who own their properties. Whilst I think we are a number of years away from this, it’s fair to say that the move is start- ing to happen, and the limit- ed supply of new housing that is currently being built (or not being built as the case may be) will only exac- erbate such a move. This all goes to make prop- erty investment an increas- ingly attractive option for individuals.
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