Buy-to-let investors frozen out of mortgage market

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by Gill Montia

New figures from the Council of Mortgage Lenders (CML) have prompted LSL Property Services to comment on the plight of would-be buy-to-let investors.

According to the CML, the number of loans advanced for house purchases increased by 12% in February, showing a modest recovery on January when the figures were weak due to the end of the stamp-duty holiday and the severe winter weather.

In total, 35,000 house purchase loans were advanced worth £5 billion with the figures up 49% by volume and 67% by value, when compared with a year earlier.

However, LSL commercial director, David Brown, says: “On the face of it, borrowing is beginning to look easier… while it’s easier for home buyers, many property investors remain frozen out.”

He adds: “There simply aren’t enough buy-to-let mortgage products available for investors, and lenders’ criteria remain limiting for landlords.”

On a more positive note, Paragon Mortgages has predicted a 7% rise in mortgage lending during the early months of 2010, having consulted its brokers.

The buy-to-let lender’s Financial Adviser Confidence Tracker index has been in positive territory for four consecutive quarters and demand for finance in the private rental centre looks set to remain strong.

Recent research by property management firm, Young Group, found that 49% of landlords polled were considering purchasing additional properties in London over the next 12 months, and 22% were looking for opportunities outside the Capital.