New investment schemes offer hope to struggling landlords

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by Gill Montia

Buy-to-let investors who are finding it difficult to remortgage may benefit from new schemes that offer partnership agreements for struggling landlords.

The downturn in the housing market and collapse of buy-to-let lender, Bradford & Bingley, has led to dire warnings of high levels of repossession in the private rented sector.

In its recent Financial Stability Report, the Bank of England warned that buy-to-let borrowers could increasingly fall into mortgage arrears or be forced to sell at a loss as lending becomes tighter and their investments lose value.

However, according to a report in the Financial Times, mortgage adviser, Egerton Partners, is in the process of creating a bank of investors who might be interested in providing capital for buy-to-let owners with property portfolios of between £5 million to £30 million.

It is understood that a partnership agreement of this nature would allow buy-to-let landlords to retain ownership of their portfolios, while the investor would receive any return on the properties, up to an agreed limit.

Investors are unlikely to be property professionals and would rely on the landlord to continue to manage their portfolio.

For the landlord, such an arrangement could prevent the need to sell in a market downturn and offers the chance to benefit from a rise in rental yield, should this exceed the threshold in the partnership agreement.

Experts are expecting more schemes of this kind to emerge in the months ahead.