Tuesday, February 17, 2009

BTL lending now needs propping up

Buy-to-let will suffer without government support, warns IMLA

The Intermediary Mortgage Lenders Association has warned that buy-to-let lenders will not be able to cope with demand unless they are able to access government support. An IMLA survey of 506 mortgage brokers carried out in December found that eight out of ten first-time buyers unable to secure a mortgage through their broker were choosing to rent instead. Brokers expect business levels to drop in all sectors but are predicting that buy-to-let will be particularly hard hit.

Posted by jack c @ 01:30 PM (1524 views)
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17 thoughts on “BTL lending now needs propping up

  • little professor says:

    A rent price crash has to come – rents have gone through a boom albeit not as steep as house prices. I was paying £400 a month a few years ago for a decent 2 bed house. Nowadays that wouldn’t even get you a studio flat in the worst area of town.

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  • OMG, does this mean that BTL landlords can no longer price FTBs out of the market -GB had better intervene quickly with some taxpayer dosh to “restore confidence in the market” .

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  • it is laughable.

    But Gordon Brown might just be stupid enough to do it.

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  • stillthinking says:

    I live in London and I can’t see that rents have changed much since 2001, maybe a little down now. That is admittedly at the bottom end of the rental market, one bed flat territory at 800-900/month.

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  • stillthinking – I lived in Westminster from 2000 to 2005 and rents were increasing constantly then. I moved out of my last flat in Westminster when my landlord’s company (the biggest landlord in London and largest land owner in the country) wanted to put my rent up 11% and refused to negotiate the deal. I don’t thinnk that rents there managed to keep pace with the sales market, but they were definitely pulled up.

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  • stillthinking – I find it hard to believe. 1 beds in 2001 were around £450 per month in the less pleasant areas of zone 2. Now you’ll be lucky to find somewhere equivalent for £900. I can’t find a rent price index to back me up though….

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  • brightonrentfodder says:

    Its the agencies that are usually ramping up the rents, my one (cuntrywide) tried to put it up another 35 squid, and that was even without the landlord’s consent (oh yeh + their £85 admin fee!). We told the Landlord leave it out or we walk. He agreed but still get the impression he believes he can do better, but we told em that they’re getting more than the going rate so we’re quite happy to move. Brighton is starting to get inundated with flats available and I believe the rents are starting to creep down slowly. Brighton’s economy is totally unsustainable and landlords know it. Where’s the money going to come from now?

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  • mark wadsworth says:

    @ Davet and others. As a general rule, rents increase in line with wages, so if wages on an area go up or down markedly, so will rents, but on the whole there’s a slow steady increase. This is borne out by the Nationwide’s chart on page 2 of this that shows that the house price to earnings ratio moves more or less exactly in line with the house prices to rents ratio, in other words, the rents to wages ratio is fairly constant.

    From personal experience of my local area and talking to letting agents, rents went up by about 50% nominal over the last ten years in East London, much the same as local wages.

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  • Don’t do it Brown. I’m warning you.

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  • Rents are edging down here in sunny Surrey.

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  • MPs can not be bankrupt – it’s part of the rules.
    If MPs have BTL portfolios then it must be a major consideration with regard to whether to help landlords out or not, surely.

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  • GB couldn’t seriously support the rental market. Too many people would just stop paying rent. It just won’t happen.

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  • @brightonrentfodder you’d better believe it. just rented a new place in Brighton in Nov and royally took the p*ss in the discounts that i asked for and eventually got. Paying £200 more than the place I was renting in 2000 in Palmiera Square for the same location and a much better condition property. And i have it on a 6 month let as I fully intend to demand a further discount in the summer and i’ll get it. The landlord is already subsidising my rent in order to cover his mortgage and a few months void period will most likely send him under. Sorry if i sound dispassionate to any reluctant landlords reading – but a decade of re-locating every time a landlord decides to sell up has conditioned me to being able to move house without needing to give it much thought.

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  • stillthinking says:

    I remember how much I was paying and I also remember looking around at the very cheap end of the market. I ended up with a small one bedroom flat in Shepherds Bush, West London that cost 800 a month without service charges in 2001. The only thing Shepherds Bush has is good transport links, otherwise its a dangerous unpleasant place that you certainly wouldn’t want your daughter/wife to be caught out alone, risk of robbery, litter etc. I was also looking around Hanger Lane (not so great), Chiswick (too much), Ealing blah blah
    I find it very difficult to believe that there were 450 London rents in 2001. Anyway, rents don’t seem to have changed that much to me in the time.

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  • Tenyearstogetmymoney Back says:

    Despite the fact that I am renting here at the moment at a lower price than a mortgage would be,
    I have never understood why people think it SHOULD be cheaper to rent.

    IF house prices are stable then a landlord has a load of extra expenses
    like the admin fees brightonrentfodder mentioned, void periods, maintenance
    etc which a homebuyer wouldn’t have so you would expect renting to be more expensive.

    On the plus side the renter gets alot more flexibility and certainly won’t get stuck in a
    house they hate, with neighbours from hell for ten years while they wait for the price to
    get back to what they paid for it (not that I’m bitter about it 🙂

    :- Duncan

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  • Please don’t say that stillthinking – my better half works there and my sister lives just down the road with my 1 year old niece…

    But yeah – I think Central London did have a bit more rent ramping than Inner City London.

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  • Old_traveller says:

    letthemfall @ 10: +1, bigtime.

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