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Buy-to-Let Benefits From Market Slowdown

Aug 16, 2008
The flagging property market has claimed many scalps over the past year or two. Most notable of these are specialist lenders who opened their doors to borrowers of questionable worth and home owners who have since been issued with repossession orders in record numbers. Amid all the chaos at least one section of the property community has benefited. Buy-to-let landlords have experienced a period of prosperity recently as they pick up the scraps from the ailing property market and let their properties out to battle weary first time buyers.

It was inevitable that someone would gain from the credit crunch. While the mortgage market may have taken a few uppercuts to the jaw of late it is important to note that there are still just as many properties in existence today as there was a few years ago. Mortgage products may disappear from the face of the earth but properties do not meaning that someone has to own them and someone has to live in them. While the number of owner occupiers may be in decline, or at least not experiencing a period of expansion, individuals still need homes and the properties they need still exist.

All this leads to a situation in which buy-to-let landlords have been able to cash in on other people's dismay. First time buyers in particular are finding it extremely difficult to get a foot on the property ladder. It may seem as though this trumpet is constantly blowing however in the current mortgage climate this situation is true perhaps more now than ever before. Home loans for first time buyers are simply not as widely available as they once were which means that many are being forced to sit on the bench and wait for the coach to give them a chance.

In the meantime this demographic are being forced to rent. Landlords are therefore experiencing a period of prosperity as young professional workers and other financially stable individuals are simply unable to wave goodbye to their landlords and take the plunge into the owner occupier market. Lenders have also stopped pulling buy-to-let mortgage products from the market as rapidly as they previously have been and are offering them to experienced landlords with substantial deposits.

Property prices have also begun to decline, or at least have stopped growing as rapidly as they were for the last five to ten years, so landlords are able to snap up quality properties with relative ease. Lenders are willing to secure their buy-to-let mortgage products on such quality properties provided the landlords stump up a healthy deposit and prove by way of a business plan that they expect rent will more then cover the monthly mortgage payment required.

So it seems that the property investment market has outplayed the credit crunch as has remained a healthy business despite the turmoil in the residential property market. Buy-to-let mortgage lenders also appear to have come to terms with the market and have begun to offer products to landlords with low risk business proposals. There had to be at least one winner from the stormy waters of the credit crunch and it appears to be the buy-to-let property industry.
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