According to its research, 21 per cent of lenders believe BTL borrowers are most at risk of repossession. The research, which included high street banks, building societies and specialist prime and non-conforming lenders, showed that 75 per cent of lenders expected an increase in repossessions of over 5 per cent in 2007, of which buy-to-let was the second most likely category to be affected, after customers with high lending multiples.
The areas of greatest concern to lenders regarding buy-to-let borrowers’ ability to pay:
• 75 per cent - reduced rental yields
• 55 per cent - rises in interest rates
• 65 per cent - correction in house prices
Paul Walshe, head of lender services with Moore & Blatch, said: “Rising house prices have given some people false confidence. The buy-to-let market is different, more like commercial property. Many who thought it was a quick way to make money will suffer in the face of falling rental yields and rising interest rates, both of which have created a real problem for some amateur investors. Professionally, we believe that a buy-to-let market should require the same stringent regulation as any investment, with buyers being made more aware of the potential downsides.”
