Much Buy to Let commentary is misleading and sensationalist
Mortgages for Business, the leading UK specialist Buy to Let mortgage broker, has today warned investors that much of the recent media commentary relating to Buy to Let may be deceptive and misrepresentative.
Recent negative Buy to Let coverage seems to focus on the new build sector in city centres, and oversupply in areas such as Leeds has certainly affected the demand for this property type. However observations on the Buy to Let market as whole must be judged across the entire UK and for all property types. Much of the negative hype tends to neglect better performing categories with higher yields such as HMOs (Houses in Multiple Occupancy) and it also fails to address areas around cities that due to affordability issues are up and coming.
Many media reports have also focused on issues surrounding property valuations on new builds, where in some cases builders’ discounts appear not to have been taken into account in the mortgage valuation. If the valuer is aware of these discounts then he is breaking the law and mortgage fraud is being committed.
“Would it be fair to assess the performance of shares in financial service companies using Northern Rock as a gauge? I would suggest not. So why judge Buy to Let solely on city centre new builds and by transactions where allegedly shady dealings have taken place.” Comments, Jonathan Moore, Head of Marketing
The Buy to Let mortgage industry has demonstrated concerns around new build valuations for some years. This was further reinforced by Mortgage Express (the UK’s largest Buy to Let lender) in early February stating future remortgage offers on new builds will be based on the lower of purchase price less discount or valuation.
Investors who make blind purchases without even seeing a property are likely to be those who will ultimately come unstuck; again it is ridiculous to use these investors as a barometer of the investment success for Buy to Let as a whole.
“Get comparables for property rents and valuations in the area you are buying, the best research is your own research. The most successful investors are those with have a good understanding of the local property market.” recommends Moore.
