There’s growing concern across the lettings sector about the buy to let mortgage market seeing lenders pull product ranges, tighten lending criteria and widen margins.
For example, Barclays has announced that it’s withdrawing all portfolio buy to let products and is no longer accepting new applications; it’s also closed two underwriting sites, therefore limiting the number of applications it is currently accepting. And the Halifax has withdrawn the majority of its mortgages due to a “lack of processing resource."
Now Property Master, an online mortgage brokerage, says the range of products across the board is tightening sharply.
“Landlords are finding that their borrowing options are being drastically reduced as lenders respond to this new record low base rate environment and fears of falling house prices by withdrawing entire product ranges. We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds” explains Property Master chief executive Angus Stewart.
“We can well imagine the difficulties lenders are facing when it comes to valuing properties and properly pricing risk” he adds.
The brokerage says these are the key trends it has seen in the market:
Some lenders have chosen to exit the buy-to-let mortgage market altogether for the foreseeable future: Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, currently has no products available saying only that its product range is under review. The Melton Mowbray Building Society and Vida have followed suit. Together Money has suspended lending in both the buy-to-let and residential market. Barclays has withdrawn all its products for portfolio landlords.
Tracker buy-to-let mortgages, where the rate charged tracks usually the Bank of England rate plus a set percentage, are being taken off the market: In recent days The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future.
Lending criteria are being tightened: In recent times some lenders have been prepared to lend up to 85 per cent of the value of a buy-to-let property. Now Property Master says it has observed fewer being prepared to do so as fears grow of falling property prices. Kensington Mortgages, for example, has reduced maximum loan to value lending criteria down from 85 per cent to 75 per cent.
Widening margins: The brokerage says that whilst landlords might expect a lower Bank of England base rate will lead to lower mortgage rates this is not always proving to be the case. “Lenders concerned about the increased risk of tenants defaulting on rents and falling property prices may well choose to widen their margins and increase the cost of borrowing. Some lenders have increased rates despite the 0.65 per cent fall in base rate where margins as a result have increased by about 1 per cent.”
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Grim times for landlords and agents.... and it will probably get worse, especially as all this becomes clearer...
...and our dear government has effectively told tenants they don't need to pay rent now due to the coronavirus crisis - in theory they are supposed to only stop paying rent if they completely lose their income and have no savings or support (such as a guarantor) but in reality many will make spurious claims and stop paying. Again in theory they will still owe it but it will probably prove impossible to collect it even via court action (the courts will be swamped with claims, so very slow to deal with them, and inevitably extremely sympathetic to the tenants no matter what the evidence).
And at the same time our stupid ignorant government has "guaranteed protection for landlords" by, um, saying we can have mortgage payment holidays if we can do a lot of paperwork and somehow "prove" everything BUT it isn't really "protection" of any sort... all it means is we still pay but later and with additional interest roll-up so our costs will have increased, and anyhow INTEREST is ONLY A BUINSESS EXPENSE (even though our despicable government won't allow us to treat it as such anymore, so yet more cost an burden to us as we all have long known). Obviously it is the NET PROFIT (if any these days for some now loss making BTLs "investments").... and of course they haven't thought that many people (including us) are totally relying on that as the income we live off, and nobody is offering us 80% of any we lose due to the crisis!
The government really doesn't care about us, understand the private rental sector or actually bother to investigate it - instead just taking advice from extremely dubious self-interest political lobbying groups like Shelter (that pretends to be something else from what it really has long been), Generation Rent and all the rest.
On the other hand its always possible there might be a few crafty, highly devious and utterly dishonest people in the lower and upper houses of Parliament working together to drive us all out of business so a few of the larger landlord companies (some of them seem to have their fingers in, directly and indirectly) can get rid of most of us (their competition) and where it suits them buy some of our properties (especially but not only, small to medium sized portfolios), and basically have a laugh.
Humph!
I've long been posting cynical 'doom and gloom' comments here and it seems ALL of my predictions have been steadily coming true!
I really wanted to get out of private residential lettings years ago - and probably leave the whole steadily sinking mess of this increasingly silly, badly run, and depressingly PC country behind. However for personal reasons like depending on BUPA to keep me alive (and so less easily able to emigrate) and other equally onerous reasons, sadly I wasn't able to even though I clearly saw most of "the writing on the wall" years ago when for most people it would have been easy and for many the right and best thing to do. Oh well.
That's pretty much about the size of it ( Unfortunately ;-(
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