Would-be landlords thwarted by lenders

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by Gill Montia

Fewer prospective landlords are able to secure the mortgages they need to enter the buy-to-let sector.

According to a survey of residential lettings from the Royal Institution of Chartered Surveyors (Rics), “Access to the buy-to-let market became harder for would-be landlords as mortgage products became scarce.”

The statement is borne out by the fact that the number of new instructions from landlords fell towards the end of 2007, for the first time since 1998.

In its research, the Rics found “One per cent more chartered surveyors reported a fall than a rise in landlord instructions [in the last three months of 2007] compared to the previous quarter.”

However, the figures contradict recent data from mortgage lenders, which suggest the buy-to-let market is thriving.

In February, the Council of Mortgage Lenders (CML) reported that the total number of buy-to-let loans increase by almost one-quarter in 2007, taking the number of such loans in existence to 1,038,000.

In addition, lending rose in the second-half of the year, despite the credit squeeze and the Northern Rock crisis.

An Rics spokesman explains: “Our figures are based on just the last quarter of the year, by which time we believe mortgage lenders had started to tighten their lending criteria.”

Meanwhile, demand from tenants remains buoyant, with the Rics predicting: “demand for rental property will continue to increase, with many would-be-buyers unable to make the jump to home ownership.”