Amateur landlords will 'stay out of buy-to-let market...

18 May 2010

2074 Reads
2 Comments

Written by rosalind renshaw

The heyday of the amateur buy-to-let landlord is over, says an expert, despite forecasts of much larger lending volumes in the market.

Datamonitor predicts that buy-to-let lending will triple to £25.6bn in 2014.

Michael White, chief executive of Email Mortgages, said virtually all the lending would be taken up by experienced investors building their portfolios.

He said: “If I were to hold a finger in the wind I would suggest that only 15% of that lending volume increase will come from ‘amateur landlords’ who may be looking at property as a place for their money.”

You can read Michael White’s lively views on the subject in today’s blog, written exclusively for Introducer Today. Find it in the editor's blog section.

Comments

- michael white emailmortgages
Lee,

With respect, 15% of the BTL market is a very large number and not one where I suspect IML come close, but that does not mean you cannot still maintain a successful enterprise dealing with the fortunate 'cash kings' client you refer to.

As you will note when you read the full article clearly, I believe if amateur landlords are now viewing buy-to-let as an investment they should be very aware that we are in a different marketplace to a few years ago. Back then large numbers of lenders were falling over themselves to lend in the BTL market which meant low rates, high maximum LTVs and low rental cover requirements. We now have a much more responsible lending situation and any new landlord looking to enter the BTL sector is going to need at least a 20% or 25% deposit to secure finance. Add significant fees, often 3% of the loan, and the risk for potential landlords is indeed significant.

In short, having to pay out this amount of money to secure a deal should ensure that amateurs do their homework in terms of property, area, achievable rent, target market, etc. They cannot enter the BTL market on a whim or a punt anymore – they will need a large amount of money to get going and therefore they should fully understand what they are getting themselves into.

Hence, my conclusion that while lenders do feel more confident about the level of risk they are taking on with BTL it is not a market open to everyone; the sector is therefore likely to stay one for professional landlords in the main while amateurs will need to be very clear about what they are getting themselves into before making the move.

If you are lucky enough to be attracting a healthy percentage of the amateurs with lots of cash, then good for you. My conclusion remains the same however.
- 20 May 2010 12:30 PM
- Landlord Mortgages
As a market leader in this field and having many portfolio landlords this is utter rubbish. In fact our currently business is being done by investors with spare cash not our hard core portfolio landlords......this will continue....cash is king nothing more nothing less.
Lee Grandin
Landlord Mortgages
www.lml.co.uk
- 18 May 2010 10:01 AM