Saturday, September 03, 2005

Buy to let: speculation out, long-term investment in

"Numbers of new property investors entering the buy to let market have almost halved in the past year, figures released by the Mortgage Trust have revealed. The Trust's borrowers survey has shown that the number of new investors has fallen from 23 per cent in July 2004 to 12 per cent in May of this year.

The market slowdown has discouraged many of the purely speculative and opportunistic that had been fuelling buy-to-let growth in recent years - certainly not a bad thing for those prepared to wait for the big returns on their investments, says Mortgages for Business managing director David Whittaker.

The decline of part time property investment has also bought those who are prepared to stay in the market other dividends, such as more flexible and affordable mortgage lending. Buy-to-let mortgage lenders have had no choice but to ease restrictions on their products to keep property investment capital flowing, say analysts. Buy-to-let lending criteria has fallen to as little as five per cent deposits requirements and rental interest cover of only 110 – 125 per cent, compared to the 130 per cent of a year ago."

Quick capital growth is a thing of the past. New investment in rental property must now stack up from an income point of view.

Chris

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3 Comments:

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