The collapsing housing market might be making things difficult for first time buyers to get on the housing ladder by finding a mortgage lender willing to offer them a mortgage, but investors have been taking advantage of the low prices for buy-to-let investments. However the biggest mortgage lenders in the UK are to tighten the criteria on buy-to-let, making it more difficult for investors.
The Mortgage Works, owned by Nationwide, announced that it will be refusing mortgage applications from property developers, which will make it more difficult for landlords to remortgage their properties in 2009. The mortgage lender said they wouldn’t accept any mortgage applications from people who own 25% (or more) of any property development company.
Abbey is also making it difficult for homeowners who want to let out their properties when they have a residential mortgage. They say that homeowners would need to prove that any rent they can accrue from the property covers 125% of the mortgage repayments, based on an interest rate of 7%.
Savills Private Finance’s Melanie Bien commented:
Abbey is sending out a clear message that landlords are no longer welcome. By refusing to offer any new or remortgage buy-to-let deals, and implementing draconian rental covenants for those taking out a residential mortgage who have buy-to-lets in the background, it is making itself very unattractive to anyone with buy-to-let property.
The message from mortgage lenders seems clear towards potential landlords looking to let out their properties.