First Time Landlord Product Availability in Decline
The availability of first time landlord mortgage products is in decline, according to research from Moneyfacts.co.uk.
Although the overall number of buy-to-let mortgage products has risen, the availability of deals for first time landlords has dropped by 5% over the past year.
The Finance Expert at Moneyfacts.co.uk, Charlotte Nelson, explains: “Over the past few years, the number of buy-to-let products on the market has increased but, despite this, new landlords have missed out on the buy-to-let boom, as they now have a smaller percentage of the market to choose from, following a drop in availability of 13% over just two years.
“This can be explained in part by the uncertainty that exists in the market at current, which has made some providers slightly more risk-averse. By their very nature, first time landlords lack experience in managing rental properties, and this is considered more of a risk now than perhaps it once was.”
She continues: “The tougher affordability rules which have reduced the amount landlords can potentially borrow are being felt in the market, with the average two-year fixed rate at 70% loan-to-value [LTV] having risen by 0.14% to 3.16% since January. This could be disproportionally affecting first time landlords, who may want to borrow at higher LTVs.
“This extra regulation means borrowers will face added checks and questions about their finances. So, any would-be landlords will need to do their homework and prepare in advance to ensure they can pass with flying colours and get the buy-to-let mortgage they want.”
However, she adds: “Despite the reduction in availability for first time landlords, deals have not been removed completely, and with savings rates remaining in dire straits, buy-to-let still looks like a good option. However, anyone considering it should seek the advice of an independent financial adviser to see if this riskier option is the right choice for them.”
If you a first time landlord considering a property investment, you must be aware of the recent changes introduced in the buy-to-let sector regarding tax relief. This Government guide explains exactly how you will be affected: /government-guide-tax-relief-changes-residential-landlords/