Buy-to-let remains a solid investment opportunity

Press release: 14 February 2004

Buy-to-let remains a solid investment opportunity

Mortgages for Business reaction to the CML buy-to-let lending half yearly report

The buy-to-let market has continued its strong growth in the last six months of 2004 reports the Council of Mortgage of Lenders.  At the end of 2004 there were an estimated 536,200 buy-to-let mortgages with a combined value of £52.2 billion, a 34% increase over the same period in 2003.  Buy-to-let lending now accounts for 6% of all mortgage lending.

New lending in the second half of 2004 is estimated at £9.8 billion, 18% lower than the first half of the year and 16% lower than the same period in 2003.  However, new lending as a whole has increased by 14% when compared against 2003.

David Whittaker, managing director, Mortgages for Business echoes the sentiments of the CML: “It is not surprising that buy-to-let lending has slowed slightly in the past six months as it is following movements in the housing market generally.  However, it is clear from the CML’s figures that buy-to-let is still a solid investment option.”

The CML report also highlights the fact that lenders continue to require rental incomes to exceed mortgage payments by an average of 30% (a rent to interest calculation of 130%).  However, Mortgages for Business has found that an increasing number of lenders are rewriting their lending criteria on certain products offering landlords with an established property portfolio mortgages with a rent to interest calculation at just 100%.

“Rental incomes have failed to increase in line with property prices and recent interest rates rises and as such many borrowers are now finding the rent to interest calculation increasingly difficult to meet,” says David Whittaker.

These new 100% rent to interest mortgage products are aimed specifically at a more professional class of investor with lenders looking for a solid investment history.

“The introduction of these new products also reflects a maturing of the market.  Many of the amateur investors who wrongly believed they could make a quick profit from buy-to-let have left the market, leaving behind those who understand the market and invest for the long term,” concludes David Whittaker.

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Notes for Editors

Mortgages for Business are independent experts in buy-to-let and commercial mortgages managing single and multi-let property portfolios for thousands of UK investors.  Its brokers have access to a large portfolio of fixed and variable interest rate mortgages from a panel of over 30 lenders and offer truly independent advice that is appropriate to investors.

For further information contact:

Matt Baldwin, Coast Communications

Tel: 01233 721597 or 07930 439739

Email: matt@coastcommunications.co.uk

Jonathan Moore, Mortgages for Business

Tel: 01732 471619

Email: jonathanm@mortgagesforbusiness.co.uk