Buy-to-let sector loses its shine

Worry over finance is causing landlords to lose confidence in the buy-to-let sector, says an online letting agent, Upad.

In an online survey, landlords said they were less confident than they had been.

One replied at length, saying that he had 55 properties, bought with SVR mortgages: “I can’t remortgage because I’ve only got about 15% equity across the portfolio, but now banks want 25%. If interest rates go up 1%, I will find it hard. A 2% base rate will bankrupt me, forcing me to default on a £6m portfolio.

“I wonder how many landlords are in this situation.”

Another landlord said: “Since the withdrawal of Birmingham Midshires from larger portfolios, financing is very difficult.”

A third noted: “I bought at the peak time and my property has depreciated 10%, which was my deposit, and I have not been able to make anything other than interest payments due to my own employment situation. It is not getting any better nor is it going to  – it is going to get much worse.”

James Davis, Upad’s CEO and a landlord himself, said: “This is a very worrying time for landlords. While tenant demand is up and falling property prices ought to offer opportunity for investment, the wider economic climate means that many landlords feel they are on a knife-edge.
 
“The private rented sector is being left by the Government to pick up many of the pieces from the recent cuts, but not given any support to do so.

“The nationalised banks must be encouraged to free up finance so that landlords can play their crucial role.”

The survey questioned 348 landlords.