Should building societies be lending buy-to-let mortgages?
The subject has had an interesting airing in The Guardian, where respected writer Patrick Collinson said he was surprised that the issue has not been raised at any building society annual meeting.
In a thought-provoking piece, the Guardian Money editor is not unsympathetic to landlords, saying it is not surprising that people should want to invest in property for their pensions, given that a cash ISA now yields a pathetic 1.7% average interest.
However, he also argues that for every property bought by a buy-to-let investor, one disappears off the radar as far as first-time buyers are concerned. Furthermore, the buy-to-let purchaser is sentencing someone else to renting.
Building societies are, of course, mutuals, supported by members for members (ie, ‘money in’ more or less equals ‘money out’).
Aside from all the usual arguments that building societies are really there to help home ownership, should a mutual even be thinking of lending to a sector where mortgages are unregulated?
However, like any other organisation, building societies are interested in the bottom line – and buy-to-let mortgages command higher rates and fees than residential loans.
Collinson wrote his article after a reader in Yorkshire said he was keen to put his money into a building society that lends only for owner occupation rather than funding landlords’ investments.
If there are such mutuals, they must be thin on the ground, says Collinson. The Building Societies Association says virtually all its members offer buy-to-let mortgages.
The piece is also worth reading for readers’ reactions. And, of course, we’d be interested in yours.
http://tinyurl.com/amqr67p
Comments
What rubbish from 12:31:14 post. Were it not for the BTL landlords how many agents would be a lot worse off due to a shortfall of sales?
IO - Of course the BTL landlord buys at the lower end as those unable to buy want somewhere small to rent so they can save the massive deposit the lenders want to allow lending and then they get the raw end of the deal where the loan takes weeks and weeks to get approved. The lower end market for landlords is much bigger than the 5 bedroom pads end of the rental market.
It is the MONEY being diverted into BTL that is the problem for FTB's - not just the actual properties!
Isn't it a shame that all those lefty middle class young adults are stuck at home or in rented accommodation rather than having somewhere of their own to drink their krupps espresso and read the guardian!
Best someone reminds Mr Collinson that were it not for the private rented sector, none of the GMG divisions would be making a profit. One only has to look at the meteor fall to earth of CFP to see how capable GMG are of killing the Golden Goose. Through nothing more than a total lack of understanding of the industry GMGPS has turned 3 good, well respected, profitable, software firms that provided good service to Agents into a single one they and their agent customers are desperate to offload.
Did he make the point that the damage is caused because BTL Landlords tend to buy at the first time buyer end of the market?
BTL Landlords inadvertently cause 'problems' of course no matter where in the market they buy in terms of it being another property removed in a chain for purchasing instead iof letting.