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Some Lenders Are Withdrawing From B T L Market

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Housing Act affects buy-to-let mortgage lending

13 Apr 2006

Mortgages for Business, the specialist buy-to-let mortgage broker, has warned that the implementation of the 2004 Housing Act is beginning to have adverse affects on buy-to-let mortgage lending.
The act deals specifically with Houses of Multiple Occupancy (HMOs) stating any property that falls into this category must have licences for both the property and the landlord. The licences are issued by the landlord’s local authority and are granted on the basis of the property and individual meeting a set series of guidelines.
David Whittaker, managing director of Mortgages for Business comments: “HMOs have always been challenging to finance with few lenders having an appetite for the sector. The new HMO regulations contained in the Housing Act seems to have further complicated the issue.”
Some lenders have temporarily withdrawn whilst others have announced changes in their lending criteria. There is some anticipation in the marketplace that some lenders may even withdraw from the sector altogether.”

Will many BTLers be selling their high rises as a result?

Control of this sector by the government has a long history. Rent controls may be next as the economy weakens and unemployment rises making it hard for the low paid and unemployed to pay rents.

TTRTR may be thinking its time to sell high (having bought low) as the other problem facing BTLers is the consensus around the world that it is TTRTRates.

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It's not just high rises. It is often student accomodation in large houses. Whilst HMOs only HAVE to be registered if they meet certain criteria (3+ storeys & I can't remember what else), local authorities have the power to extend these criteria further and are quite likely to in university towns etc.

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the government will bring in a form of rent control by restricting housing benifit amounts.The minute they need to look for desperate savings this is one area they will be looking at for sure.

I have found that is housing benifit limits that set the areas rentals anyway.

ie in my area the council will give a family 100 pound housing benifit a week, now just have a guess what the standard rental home goes for? you got it 100-110 a week

It wasint the fact the council had to come up to match the local rents so there housing benifit claiments could be housed, it was more the case the local council were setting the rates themselves.

As about 50% of all rental homes are paid out by housing benifit, you can see how this will have an affect on local rents ie the landlords will not accept less that they can recieve from the housing benifit claimants.

The only time this dont hold true is in the higher priced housing areas, then its all professionals.

Ya see to builders and landlords there realy is only 2 classes of people

dole scroungers and professionals.

everyone that works is now considered a professional, hence all they adverts for the elusive professional couple

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Looks like the skies the limit from here (for rents).

Rubbish. As the market tames, we renters will move into sales. You btl merchants will be left with bankrupts.

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You're such a kno*-*ead RB.

I've been telling the forum for MONTHS that lenders will pull out. They are the investors, they're the backbone of your cheap rents.

Looks like the skies the limit from here (for rents).

When the lenders pull out the buyers go with them. Harder to unload BTLs when the crunch comes.

With wave after wave of IR hikes in the offing IR sensitive assetts should have been sold months ago. The economic cycle is changing and it is not going to favour investment properties. The deteriorating economy in the UK will crimp rents--especially with the government being forced to house more people at low rents.

Remember the rule: buy low but sell high.

"High" was last year but there may still be a small crack in the window of opportunity to sell. Remember, chasing the market down is an expensive practise as you have to discount heavily to stay ahead of the downcycle wave and compete with others headed for the exits.

With so much turmoil in the world and IR heading skyward cash would seem to be the best bet.

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more people move back with parents

which i am now hearing more of sadly

yes some are even 30 year olds

Yes - Quite funny really, my generation couldn't wait to get away from home ASAP. These 20 and 30 somethings seem quite happy to live with thier parents. Cheap (or no rent) plenty of disposable income and lots of bonking....ahh to be young again!

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