Here’s An Opinion On:
Submitted by: Carlton Johnson
The number of mortgage products that are available to property buyers has decreased by almost 75% since April 2007. Lenders are making it increasingly more difficult for the first time investor to enter the buy to let market. In response to the credit crunch, banks appear to be hitting landlords the hardest.
HBOS, who is the owner of a number of lenders including the Bank of Scotland and the Halifax, to name just two, has recently taken steps to effectively price itself out of the buy to let market. The other big lenders seem set to follow suit and “shut up shop,” for all but the most risk free investments. They seem set to abandon the buy to let investor until the property market shows serious signs of turning around.
The rates that are being offered to UK buy to let landlords are becoming so unattractive that it is causing many to either seek a buyer for their portfolio or decide to hold and not consider buying any new property or refinancing their current portfolio until things get back to some form of stability.
It is as if the banks have got together and made a collective decision to price the first time landlord out of the buy to let market. They are doing this by asking for larger deposits and changing rates to be so high that it makes it almost impossible for the first timer to see the value or profit in investing.
What are investors currently doing to weather this storm?
1. Many investors are now looking more seriously at buying overseas properties
2. Investors are holding onto their properties and not buying any more and not refinancing their current portfolio until the economic climate changes.
3. As an alternative to investing in buy to lets, investors are turning their hand to developing properties instead.
4. Investors are putting their money into other potentially lucrative investments; things such as becoming a venture capitalist are becoming very popular.
5. Property investors are now having to travel further than just their local area to find the right kind of properties at the right price. They are then trying to obtain the best mortgage rate they can and making a decision to sit things out until the market begins to move in a positive direction again. Then they will be able to refinance to a better rate and draw out some much needed cash from the equity.
Is there any good news?
For the experienced UK buy to let landlord who has a surplus of cash, there are some great bargains to be had. There is less competition at the moment, which means that those investors that have the cash and the knowledge to weather this storm are in a very strong position.
Home owners that have to sell their home are finding it difficult to sell. Hence, the opportunity for investors to pick up many BMV properties that previously they where finding it difficult to get their hands on.
At the moment surveyors don’t seem to have a grip on what the real current market value of property is and in certain situations this can open things up for the discerning investor to pick up a bargain.
Any property investor, including the first time investor, that is prepared to do double the work to find the bargain properties and then is prepared to live with perhaps a couple of years of higher mortgage rates, in a few years time when they refinance, will potentially see huge gains.
Although, many analysts are predicting the worst property crises for two decades, there are always those astute investors that seem to thrive in any sort of property market.
The question all investors, new or old, have to currently ask themselves, is do they see opportunity or just a black hole in the current buy to let market place. If all they can see is a black hole, then they will probably find making money from their investments virtually impossible in the current market conditions; however, if they see opportunity, they may end up being among the few property investors that thrive in these sorts of adverse investing conditions.
Lenders do seem to be abandoning the large majority of UK buy to let landlords; yet, what they are also doing, perhaps unintentionally, is separating the men from the boys, the strong from the weak, the experienced from the novices and the low risk investors from the gamblers.
About the Author: Carlton Johnson is a well respected author, investor and webmaster. To learn more about how to be a successful landlord in the UK visit the
UK Investment Property
website, for all the latest investment property tips and advice.
Source:
isnare.com
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