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The BTL market is becoming the preserve of the financial elite, claims RICS…
The buy-to-let market has grown sharply in recent years. In 1996, when buy-to-let mortgages were first launched, only 20,000 were taken out. According to the Council for Mortgage Lenders (CML), by September 2007 this figure had grown to 990,000 and the total amount borrowed to £116bn.
But the recent problems in the wholesale financial markets have prompted a tougher approach from lenders, some of whom have withdrawn buy-to-let products altogether. In November, Rics said property investors were typically being asked to produce a 30% deposit, costing an average of £65,600.
That contrasts with 2002 when an 8% deposit was common, an average of £10,100. Many lenders now also require that the rent on any prospective buy-to-let property equates to more than 125% of the monthly mortgage payment, which can be hard to achieve in some areas. Rics concluded buy-to-let had become a "rich man's game", with all but the wealthiest priced out of the market.
But a recent survey of more than 3,800 landlords conducted by Bradford and Bingley, the UK's largest buy-to-let lender, painted a more positive picture. It found 60% of those surveyed were "undaunted" by reports of a buy-to-let slowdown, with 86% planning to leave their property portfolio untouched or expand it in 2008.
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