Buy-to-let investors 'more attractive to lenders' than regular buyers

Buy-to-let mortgages are becoming cheaper than regular mortgages as lenders are seeing landlords as more reliable than other buyers, it has been claimed.

Buy-to-let continues to grow in popularity, with Alliance & Leicester predicting a 40 per cent surge in this type of mortgages by 2016.

Hamptons figures show that investment property purchases experienced a six per cent annual growth rate in March, compared with a six per cent annual fall for regular mortgages.

Technical director of Hamptons Jonathan Cornell told the Citywire website that buy-to-let landlords are seen as presenting a lower risk than first-time buyers.

They require lower loan-to-value mortgages and are more able to afford their borrowings, he explained, with professional landlords with ten or more properties among the most attractive to lenders.

Mr Cornell commented: "These investors have greater experience and understanding of the market and have a diversity of properties within several locations should the market suffer any instability."

Research from Paragon Mortgages reveals that as of February 2007, the average number of properties owned by a landlord is 11.1, with the typical number of properties across a portfolio predicted to rise by eight per cent before February 2008.

Landlord Mortgages “Whilst buy to let mortgage rates will be driven lower the Buy To Let landlord must make sure his or her Buy To Let Property investment stacks. With over 20,000 Buy To Let landlords on our books we are best placed to say that the average rental yield must exceed 5.5%.”

LettingAgent.com “The London effect is pushing rentals higher in most areas of the country and we are expecting more Buy To Let purchases in the coming months.”

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