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Finding funding in the buy-to-let market

by: Mark Long
  • 26/06/2012
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Finding funding in the buy-to-let market
They are often confused but the private rental sector and BTL are not the same thing.

Our latest research of private landlords indicates that over a quarter (28%) don’t owe a penny on their property portfolios.

A nice situation to be in!

A growing number of landlords in the market are withdrawing investment funds from ‘the markets’ to purchase property for investment and rental purposes.

Clearly though, the majority of landlords do borrow to fund their lettings properties, typically holding eight individual BTL loans with five lenders.

Access to finance has been a real issue for landlords over the last couple of years, acting as a brake to portfolio expansion and our research suggests that this remains the case for some (only 3% landlords agree strongly that it’s ‘getting easier’ to access BTL mortgages).

Landlords also tell us that they see little product differentiation from lenders, and that they want to see greater innovation in product design and delivery.

Looking at product innovation more closely, many landlords feel that lenders are reluctant to treat BTL mortgage applications in a holistic way.

Instead of looking at their investment performance ‘in the round’, lenders focus on an application for an individual investment property.

According to the CML, the volume of BTL product sales continues to grow, though they are still a long, long way short of the volumes witnessed at the peak of the market in Q3 2007.

We see no demand based reason for this situation to change. Indeed, 20% of landlords interviewed in Q1 reported that they plan to add at least one additional property to their portfolio by the end of 2012.

From a landlord’s perspective, bring on the supply, and bring on the innovation.

Mark Long is director at BDRC Continental

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