LandlordZONE Newsletter - October 2007

This edition looks at issues involving mortgages and the current market conditions for buy to let.

The buy to let mortgage, introduced 11 years ago, has helped, along with the AST, to transform the rental market in the UK at a time when social and demographic changes demanded a big increase in rental accommodation. This has been good for the country and the economy.

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However, during this time house price inflation has been unprecedented—the average house price has risen threefold since 1991.

This has led to claims from some quarters that BTL landlords are to blame for the plight of first time buyers and that tax relief on buy to let mortgages should be removed.

The five successive interest rate rises, now the credit crunch and so called “sub-prime” debacle in the US, have led to a slowing down of the housing market and to lenders being much more circumspect when it comes to approving loans.

Both these claims need to be challenged as far as genuine investor BTL landlord is concerned!

The speculators, some of whom have been buying to leave empty, and the growing number of second home owners, have no doubt had some effect on distorting the housing market, though this could change rapidly if we see a real downturn.

A recent CAB report claims that some landlords are using the possession procedure (Section 21) to avoid repairs, making their tenants live in squalor.

The so called below market value (BMV) strategy now being advocated by some advisors (nothing new if you’re a savvy investor landlord), if it is not applied ethically, is likely to be further grist to the mill to the critics of BTL.

Several high profile TV programmes out in the last week have been highlighting the seedier side of property investment and showing some of the horror stories on both sides—landlord AND tenant.

All of this does the image of the landlord no good whatsoever, as if it wasn’t bad enough already in some quarters.

Tom Entwistle, Editor - LandlordZONE