With a rise in the number of people looking at property as an investment vehicle, Sarah Gwilt, mortgage adviser at Dickson Lishman Prince, said lenders would have to adapt their lending criteria, specifically rental yield requirements.
“Fewer and fewer properties fit the lender’s criteria on the rental yield within the buy-to-let market. Unless lenders expect reduced levels of business, what are they going to do?” she said.
Despite record figures for the BTL sector, released by the Council of Mortgage Lenders (CML), Gwilt said lenders must drop their lending yield criteria if this trend is likely to continue in the foreseeable future.
Commenting, Paul Hunt, head of marketing at Platform, said there was certainly evidence that the general housing market was changing and hinted that lenders would move to review rental yield criteria over the next six months.
He explained: “There is definitely evidence of over supply and slowly falling house prices in the market. Mortgage lenders are watching the market closely and I would expect to see a number review their lending criteria in the next six months to a year. I cannot see, in the current market conditions, that any lender would increase their rental yield requirements.”
However, Paul Rockett, sales and marketing manager at The Business Mortgage Company (TBMC), said rental yields and affordability would remain strong in the BTL sector. He said: “Yet again speculation is rife that the buy-to-let market will come to a standstill. This couldn’t be further from the truth. There are a number of economic factors, including a shortage of houses, houses that are too expensive and increased immigration that contravene this theory completely. The requirement for letting is going to increase until consumer incomes rise as swiftly as house prices. Lenders looking to drop their rental yield requirements are playing a dangerous game.”
