Mortgage companies tighten buy to let lending by LettingFocus
There were some interesting bits of news from the weekend financial press.
First off is the fact that Alliance & Leicester is to restrict lending on new build flats to 70% loan to value amid continuing concerns that prices of new build are falling in many areas and there is a big oversupply problem -too many flats and too few tenants causing landlords who have bought into these places to struggle with falling rents and capitals values.
Those who came to see me speak over the last few years will be well aware that I’ve warned of a big problem to come with identikit flats. Well, now it’s here!
Second, Paragon’s shares were under pressure last week. Paragon is one of the biggest buy to let mortgage lenders. Formerly, known as National Home Loans, they struggled in the credit crises of 1989-1990, when they had to be bailed out. Just as in 1989, they still raise nearly all their money from the money markets -so this really is a case of history repeating itself.
Will Buy to Let Become a Rich Man's Game?
Third, mortgage lenders’ continued tightening of lending criteria in the buy to let market has led RICS to say that buy to let will be a rich man’s game from now on.
I don’t think it’s that bad, but if you have not been in buy to let before you are going to have to find at least 20% of the value of a property – and probably 25% from your own funds from now and for a little while.
So, yes it will get harder for the novice.
Gifted Discounts and No Money Down
But if you are a new to buy to let and you don’t have at least 20% to put in, please don’t be tempted to listen to all the guff about “gifted discounts” on new build and bridging loans to buy below market value – if you do, you are only asking for trouble further down the line.
Sorry to say, but if you cannot really afford to get in, don’t play the game.
ABOUT LETTINGFOCUS.COM
We are LettingFocus.com - the property investment experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property book for the last 3 years.
What’s unique about LettingFocus is that I offer independent unbiased
property information and one to one advice covering all aspects of being a landlord and investing in property.
Unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can advise where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to eliminate the risk of getting a bad tenant and more. I have been a landlord and property investor myself for over 25 years.
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Our Events only take place twice a year. For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
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If you sell products to landlords and property investors and you have national coverage and would like to join our partnership programme, please get in touch!
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
For ONE TO ONE CONSULTING click here: Property Consulting
For TESTIMONIALS from past customers click here: Testimonials
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Read our article on Getting a Mortgage from a Broker
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First off is the fact that Alliance & Leicester is to restrict lending on new build flats to 70% loan to value amid continuing concerns that prices of new build are falling in many areas and there is a big oversupply problem -too many flats and too few tenants causing landlords who have bought into these places to struggle with falling rents and capitals values.
Those who came to see me speak over the last few years will be well aware that I’ve warned of a big problem to come with identikit flats. Well, now it’s here!
Second, Paragon’s shares were under pressure last week. Paragon is one of the biggest buy to let mortgage lenders. Formerly, known as National Home Loans, they struggled in the credit crises of 1989-1990, when they had to be bailed out. Just as in 1989, they still raise nearly all their money from the money markets -so this really is a case of history repeating itself.
Will Buy to Let Become a Rich Man's Game?
Third, mortgage lenders’ continued tightening of lending criteria in the buy to let market has led RICS to say that buy to let will be a rich man’s game from now on.
I don’t think it’s that bad, but if you have not been in buy to let before you are going to have to find at least 20% of the value of a property – and probably 25% from your own funds from now and for a little while.
So, yes it will get harder for the novice.
Gifted Discounts and No Money Down
But if you are a new to buy to let and you don’t have at least 20% to put in, please don’t be tempted to listen to all the guff about “gifted discounts” on new build and bridging loans to buy below market value – if you do, you are only asking for trouble further down the line.
Sorry to say, but if you cannot really afford to get in, don’t play the game.
ABOUT LETTINGFOCUS.COM
We are LettingFocus.com - the property investment experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property book for the last 3 years.
What’s unique about LettingFocus is that I offer independent unbiased
property information and one to one advice covering all aspects of being a landlord and investing in property.
Unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can advise where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to eliminate the risk of getting a bad tenant and more. I have been a landlord and property investor myself for over 25 years.
LINKS
IF YOU HAVE A SITE WHY NOT LINK TO THE BLOG OR OUR WEBSITE?
Our Events only take place twice a year. For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Seminar Event
Find out about GREAT DEALS we have arranged for landlords with our Partners by clicking here: Services and Products for Landlords and seeing our Landlords’ Resources (Useful Links) page.
If you sell products to landlords and property investors and you have national coverage and would like to join our partnership programme, please get in touch!
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
For ONE TO ONE CONSULTING click here: Property Consulting
For TESTIMONIALS from past customers click here: Testimonials
To BUY THE BOOK click here: Buy the Book at Amazon
For THE HOME PAGE OF THIS BLOG click here: Blog
For THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!
Read our article on Getting a Mortgage from a Broker
This blog is updated roughly once a week usually on a Monday or Tuesday.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
It's easy peasy. Over on the right hand side under all the previous blog entries, there is a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
If you have a website & are thinking of reproducing material here, that’s fine but we DO require a link to the blog to be included, including also all the links in this section. (The full article including all links must be available to ALL VIEWERS of your site and not restricted.)
To view posts on related topics select a “Category” at the bottom of this page.
WANT TO ADD A COMMENT OR VIEW OLD COMMENTS?
To add a comment to this post, simply click on “link to this post” then add your comment. Use "link to this post" to view past comments.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.
Labels: buy to let ghettos, buy to let mortgage, buy to let mortgage lending, Gifted Discounts, identikit flats, No Money Down
This entry was posted by lettingfocus, on
Monday, November 26, 2007.
