Posts with tag: BTL risks

Would-be BTL investors unsure how to apply

Published On: May 28, 2015 at 12:11 pm


Categories: Finance News

Tags: ,,

The buy-to-let sector continues to go from strength-to-strength, with more investors than ever entering the market. However, an alarming new survey suggests that a number of potential investors lack the knowledge of how to obtain a mortgage.


A survey from specialist mortgage lender Kensington found that 28% potential buy-to-let landlords considering entering the market do not know how to apply.

Interestingly, the same survey found that 54% of over-40’s said that they would consider investing in the market in order to increase their retirement income.[1]

In order to source the most suitable product, 44% of would-be landlords said that they would use a broker, with 28% suggesting that they would use their existing lender.[1]

Kensington’s analysis of average flat prices in England and Wales found that the 25% required for a first-time landlord is £43,000.[1]

A small house with a label for the rent. Isolated render on a white background

A small house with a label for the rent. Isolated render on a white background


Other results from the survey found that potential landlords looking to invest their pension cash into the buy-to-let market are mostly concerned about the risk of not achieving a solid income. 47% said that the amount of income was their main worry, followed by 42% who were concerned about running out of money in retirement as a result. [1]

25% of people questioned said that they were concerned about the tax implications of withdrawing a pension, whereas 21% said that they were confused about buy-to-let laws.[1]

Bright future, but concerns remain

Steve Griffiths, head of sales and distribution at Kensington, believes the future of the buy-to-let market remains strong. He said that, ‘the outlook for the buy-to-let market is bright and the potential for further growth as pension freedoms come into effect is undeniable.’[1]

He warns however that, ‘would-be landlords will need to be realistic and it is worrying that so many are considering buy-to-let without knowing how to apply for a mortgage. Advice from brokers on mortgages is vital.’ Griffiths also feels that, ‘claims of a wall of money are unlikely to come true and in any case raising a 25% deposit for a buy-to-let mortgage from pension funds will be tough as a look at average property prices across the country shows.’[1]