On a recent edition of The Money Programme, BTL was claimed to be in trouble following a slump in house prices. It claimed that the traditional landlord was feeling the squeeze and trying to get rid of properties.
It claimed that supply was outstripping demand and that too many developments were being built, leading to a fall in values. It also suggested that too many landlords were relying on capital growth.
One landlord reported making a loss of more than £2,500 a month two years ago, but having switched his loans to fixed rates for his properties, he was losing £6,000 a month in comparison to the £15,000 he would have been losing on variable rates. He managed to survive financially by covering the loss with external profits.
Lombard Street Research economist, Jamie Dannhauser, said that people planning to become investors should think again as rental yields were below mortgage rates so the more they went up, the fewer landlords were earning.
Lee Grandin, managing director at Landlord Mortgages said: “There has been a slowdown in transaction levels and this is across the board. I would question how long people who have been in the market will last, people who are new would look away. There will be a 30 per cent reduction in new landlords, but what will happen to specialist lenders?”
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