Over recent years the buy to let market has been buoyant. People who either had the cash or access to mortgage lending saw property as a failsafe means of making money and a solid long term investment. But as property prices have crashed the buy to let market has suffered. Those with several properties have found themselves particularly vulnerable as huge sums have been wiped off their portfolios.
Mortgage lenders have traditionally viewed the buy to let market as safer than the general mortgage sector as it has, generally, performed better. But statistics from the Council of Mortgage Lenders (CML) published in November last year, show buy to let mortgages are also subject to arrears. In many areas of the country, apartments and starter homes have been built until the market is close on saturation point and this, combined with falling rents, has left landlords dangerously exposed to the situation where their rental income does not fulfil their mortgage obligations. If landlords cannot sell their property, or achieve a high enough price to cover the outstanding mortgage, then they will find themselves in trouble.
Defaults on mortgage payments in this sector were rising at the end of last year - a trend that is expected to continue for the foreseeable future. The CML does not anticipate a substantial number of repossessions in the buy to let market, but it does warn that landlords are being - and will continue to be - affected by the property crash and economic downturn, with some going into administration or declaring themselves bankrupt.
Should landlords need to re-mortgage it is likely to be difficult to find a buy to let deal in the current lending market place. The number and availability of products is far less than it was this time last year; landlords can expect to pay higher interest rates and/or fund a large proportion of the property price as a deposit.
Until the market picks up and lending flows more freely, the situation is unlikely to improve. Inevitably, some landlords will find themselves facing repossession or the possibility of becoming bankrupt simply because there looks to be no available exit strategy.
Property Rescue will buy property of any type, in any condition. If you are a landlord and need to sell up to avoid going further into debt or tarnishing your credit rating by getting into arrears, contact Property Rescue for an informal chat with one of their advisers. They will want to know about the tenancy of your property, whether it is currently occupied and when the lease ends. All calls are in complete confidence and there is no obligation to proceed, even once a valuation has been provided.