Tougher lending environment bites for landlords

Landlords are finding it harder to secure mortgage finance than they did a year ago, with many saying mortgage payments have become more expensive.

Research carried out by letting agents Your Move and Reeds Rains with over 1,100 landlords shows that 42 per cent of buy-to-let investors who tried to raise mortgage finance in the last 12 months found it more difficult than they did a year ago.

A further 39 per cent of landlords polled said payments on their buy-to-let loans have become more expensive in the last year.

Landlords also predict a slowdown in the current pace of annual rent rises over the next 12 months, falling from an average of 2.4 per cent currently to 1.8 per cent. If this were to be the case, rents would be rising at a slower pace than the targeted 2 per cent rate of inflation, or cost of living.

Your Move and Reeds Rains director David Newnes says: “Securing mortgage finance is not a conundrum restricted to first-time buyers, but is a considerable hurdle for landlords too.

“The Government and the Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time.”

But it is not all doom and gloom. The research found that 41 per cent of landlords are seeing a rise in tenant demand, as strong house prices in some areas of the UK mean those saving for a deposit have to continue renting.

In the last year, 18 per cent of landlords added to their rental portfolio, and 22 per cent expect to do so over the next 12 months.

Natalie Holt