Landlords still blocked by mortgage finance

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by Gill Montia

Mortgage finance remains a major problem for landlords who want to expand their portfolios.

Research from LSL Property Services indicates that 49% of landlords believe the current market is attractive for investment but only 27% see themselves buying more properties in the year ahead, with the lack finance a fundamental barrier.

The lettings agent network’s commercial director, David Brown, comments: “The average landlord made losses in 2007-8, but 2009 marked a return to form for property investment.”

However, he adds: “Even experienced landlords who are keen to take advantage of lucrative returns and improving market conditions can’t get access to the cash they need.”

The study also reveals that landlords’ confidence in the market is driven by their desire to maximise returns alongside today’s low interest rates, with a third attributing their positive sentiment to the superior capital returns of buy-to-let, as compared with other forms of investment.

Furthermore, 39% of respondents think tenant demand has grown in the past six months, and two in three anticipate the surge will continue over the next two years.

In related news, buy-to-let lender Paragon has reported a slight improvement in mortgage arrears and confirmed that the funding markets have improved further, with new securitisation issues being planned by some market participants.

The group says it intends to monitor developments with a view to returning to new lending.