Buy To Let Mortgages are Still Difficult to Arrange For Eager Landlords

Buy to Let mortgages are still proving difficult to obtain by landlords eager to expand their property portfolios, according to new research.

Research by LSL Property Services has found that half of landlords who want to grow their portfolios are being frustrated by the unavailability of buy to let mortgages.

49% of landlords polled said the current market is attractive for investment and that they wanted to expand their portfolios. But only 27% of landlords say they will be able to buy more property in the next 12 months.

The lack of availability of mortgage finance remains the fundamental barrier for landlords. Only 12% of respondents mentioned the availability of finance as a positive factor for buy-to-let investment.

Landlords’ confidence in the market is driven by their desire to maximise returns in a low interest rate environment, with a third of them attributing their positive sentiment to the superior capital returns of buy-to-let as compared with other forms of investment. In 2009, a typical landlord made a total return of 7.6% – higher than many other forms of investment.

This high return on investment for landlords who can obtain suitable finance is commented on by David Brown, commercial director of LSL Property Services:

“2009 saw the buy-to-let market return as a viable investment. Landlords recognise this, despite the rough ride they have had to endure over the last couple of years. The average landlord made losses in 2007-8, but 2009 marked a return to form for property investment. But the availability – or lack of – of mortgage finance is holding the sector back.”

“Even experienced landlords who are keen to take advantage of lucrative returns and improving market conditions can’t get access to the cash they need.”