Buy to let mortgages Monday, 29th June 2009

Research shows buy-to-let landlords are losing their properties at over three times the rate of other homeowners.
1,700 buy-to-let properties were repossessed by lenders in the first three months of this year, Council of Mortgage Lenders figures show.

Buy-to-let mortgages much harder to come by, caused by the recession.

Lenders are appointing more receivers of rent.In this process, a tenant is allowed to remain in a property instead of losing their home. It also gives the lender time to decide what to do with the property, whilst offsetting the mortgage interest against the rent. That in turn can help reduce the arrears faced by the landlord.

0.35% of buy-to-let properties were taken back by lenders - more than three times the rate in the owner occupier markets where 0.11% of mortgaged properties were lost.

This has come about as many landlords got into trouble after paying too much for buy-to-let flats. Rents have often not lived up to expectations, and landlords have struggled to pay the mortgage.

And with falling house prices - which have often hit city centre flats especially hard -many could not afford to sell either. The situation has been made more difficult by lenders getting tougher over mortgages, with buy-to-let loans particularly badly affected.

At the beginning of last year it was easy to get a buy to let mortgage with a 15% deposit. Now borrowers need a 25% deposit to have any chance. And now what is happening is this is hitting the number of buy-to- let mortgages taken out. In the first three months of this year there were 22,400 new buy to let mortgages.

Whereas at the height of the boom two years ago - when 346,000 buy to let mortgages were snapped up in just twelve months.