According to data from Moneyfacts, there are now more than 1,000 mortgages available to first-time landlords, a significant increase on previous levels. For example, last April there were 956 first-time landlord buy-to-let mortgages, while the year before new landlords had just 650 mortgages from which to choose.
However, this doesn’t tell the whole story. While the number of mortgages open to first-time landlords has jumped, they now make up a smaller proportion of total buy-to-let mortgages. In April 2015, 81% of the available buy-to-let mortgages were open to first-time landlords. Today that percentage stands at just 68%.
Charlotte Nelson, finance expert at Moneyfacts, said: “This can be explained in part by the uncertainty that exists in the market at present, which has made some providers slightly more risk-averse. By their very nature, first-time landlords lack experience in managing rental properties, and this is considered more of a risk now than perhaps it once was.”
James Mole, head of finance and mortgages at Nova Financial, noted that it can be very difficult for first-time landlords to get onto the ladder, not because they don’t have the money but because they don’t meet the stricter lender criteria.
He continued: “If you don’t own a residential property before attempting to become a landlord the vast majority of lenders have no interest in talking to you. I find this odd. Especially as some people like the flexibility of renting so they can move around with work.
“Vida Homeloans are a great new lender I tend to use quite a lot for new landlords as they have a very sensible approach to this by using a 4.5 times salary multiplier. A few others do this too, but Vida are the most flexible I have used.”
David Sheppard, managing director of Perception Finance, added: “I can understand that there may be some reticence in the market to lend to someone who has not done buy-to-let before but every portfolio landlord had to start somewhere to be able to get to that point.”