This article will give you an over view of the current attitude that lenders in the UK have to buy to let landlords. It will then give you some insight into how to be one of the successful property investors that manage to cope in this difficult time and come out stronger.
It is becoming almost impossible for new investors to buy property and become a landlord. Banks are only offering mortgages that are not financially viable for the first time investor to make a profit from. Since April 2007, until now, the number of mortgage products on the market has decreased by almost 75%.
HBOS, who is the owner of a number of lenders including the Bank of Scotland and the Halifax, to name just two, has recently taken steps to effectively price itself out of the buy to let market. The other big lenders seem set to follow suit and "shut up shop," for all but the most risk free investments. They seem set to abandon the buy to let investor until the property market shows serious signs of turning around.
The rates that are being offered to UK buy to let landlords are becoming so unattractive that it is causing many to either seek a buyer for their portfolio or decide to hold and not consider buying any new property or refinancing their current portfolio until things get back to some form of stability.
It is as if the banks have got together and made a collective decision to price the first time landlord out of the buy to let market. They are doing this by charging rates that are so high that the cash strapped novice investor has no chance of being able to make a profit. On top of this they are also asking for larger deposits.
What are investors currently doing to weather this storm?
1. Many investors are now looking more seriously at buying overseas properties
2. Investors are holding onto their properties and not buying any more and not refinancing their current portfolio until the economic climate changes.
3. As an alternative to investing in buy to lets, investors are turning their hand to developing properties instead.
4. Investors are putting their money into other potentially lucrative investments; in particular some are trying their luck at venture capitalism.
5. Investors are having to travel further than their local community and really seek out the undervalued properties, that can still be found in certain parts of the UK. They are then trying to obtain the best mortgage rate they can and making a decision to sit things out until the market begins to move in a positive direction again. Then they will be able to refinance to a better rate and draw out some much needed cash from the equity.
Is there any good news?
For the experienced UK buy to let landlord who has a surplus of cash, there are some great bargains to be had. There is less competition at the moment, which means that those investors that have the cash and the knowledge to weather this storm are in a very strong position.
Home owners that have to sell their home are finding it difficult to sell. Hence, the opportunity for investors to pick up many BMV properties that previously they where finding it difficult to get their hands on.
At the moment surveyors don't seem to have a grip on what the real current market value of property is and in certain situations this can open things up for the discerning investor to pick up a bargain.
Any property investor, including the first time investor, that is prepared to do double the work to find the bargain properties and then is prepared to live with perhaps a couple of years of higher mortgage rates, in a few years time when they refinance, will potentially see huge gains.
Although, many analysts are predicting the worst property crises for two decades, there are always those astute investors that seem to thrive in any sort of property market.
The question all investors, new or old, have to currently ask themselves, is do they see opportunity or just a black hole in the current buy to let market place. If it is a black hole, then they are destined to find life difficult over the coming months; however, if it is opportunity, then they maybe amongst the few investors that thrive and actually love this kind of uncertain property market.
Lenders do seem to be abandoning the large majority of UK buy to let landlords; yet, what they are also doing, perhaps unintentionally, is separating the men from the boys, the strong from the weak, the experienced from the novices and the low risk investors from the gamblers.
Why The Property Experts All Set Goals!
This article explores the importance of goals setting in order to be successful at property investing. It gives helpful hints and guidance as to why you need to set goals and what sort of goals to set.
Compulsory Purchased Orders Explained
This article will give you the definition of compulsory purchased orders. So that if you ever come across them you will know what they are and you will be able to make an educated decision as to whether to buy a property that is subject to a CPO or whether to avoid it.
Is it Wise for Investors to Still be Buying Properties at the Moment?
This article explores whether it is still wise for investors to be buying property at the moment, or whether they should hold off and wait for better times financially. It also gives tips on how to buy property successful in any financial environment.
