I am interested in buying a new build flat to rent out. I have heard that some lenders will not lend on new flats, is this true and if so, why? Most importantly, are there lenders who are willing lend on newly built flats? If so, will the interest rate be higher than if I were to buy an older property?
It is true that some buy to let lenders are wary of lending on new build flats. This is because at the height of the property market there was some dodgy dealing on new build flats particularly in city centres. Some developers, valuers and lawyers were in cahoots. Flats were being over-valued and then sold at a supposed discount. Investors would buy at the supposed discount using bridging finance, then immediately remortgage the flat for the over-valued price. When the market crashed, property prices fell leaving lenders massively over-exposed.
Today the property market is very different. Housing is in short supply and the lending environment is much stricter. Most buy to let lenders won’t allow remortgages until a property has been owned for six months, to ensure that the true value is established. Fortunately for you, there are now lots of lenders that will consider new build flats and the rates will be the same as older properties. If you’ve found a flat to buy, do get in touch and we will help you find the best buy to let mortgage for your circumstances.
1st January 0001