Helping landlords fill the housing gap
Posted on July 26th 2010
The Association of Residential Lettings Agents reported last week that there is a growing shortage of private rented property available vs the number of tenants looking for a place to rent. This piece of news is supported by a number of indices reporting that rental yields have been firming up for a number of months. When you think about it, the underlying root causes are again the lack of supply of BTL mortgages and the fact that many ordinary people cannot get a mortgage therefore forcing them into rented accommodation.
BTL lending has dropped from a peak of £44bn gross lending per annum down to a paltry £8bn this year, the last time we say gross lending this low was in the 1990s. So structurally the UK has a problem, a growing army of people who have no choice but to rent a property and a complete dearth of mortgage lenders with funding allocated to BTL loans. No doubt this is great news for landlords as you can only see rental yields rising over the medium term which will probably more than compensate for the slower capital growth of the underlying property, but it is going to be a tough job for landlords to expand their portfolios or even start one.
This is surely good news for brokers. It is highly unlikely that BTL mortgages are ever going to take off in lenders’ branches so if a landlord wants a BTL loan they need to go to a broker.
I imagine that many would be landlords and indeed existing landlords probably believe they cannot get new finance, so it is up to brokers to identify customers who are suitable for this type of deal and bring to their attention that finance is available. There is a very restricted amount of BTL products out there right now but that does not mean that no lender wants to do them. Precise Mortgages has a strong appetite for BTL loans and has the liquidity to fund them, but it is first come first served.
