Buy to let landlords in UK can’t get loans despite wanting to expand their property portfolios, it is claimed

Lack of finance is severely hampering the buy to let property market in the UK as landlords who want to expand their real estate portfolios cannot secure loans, it is claimed.

The latest figures from the Council of Mortgage lenders show that buy to let loan advances were down almost 70% in the second quarter of 2009 compared with last year. It is the seventh successive quarter of decline in the sector.

About 21,600 loans were advanced from April to June compared with 69,900 in the same period in 2008. There were 22,400 buy-to-let loans advanced in the preceding quarter, down 4%. 

The CML figures also show that buy-to-let gross advances totalled £1.9 billion in the quarter or 5.6% of total gross mortgage lending and that is down from £8.9 billion in 2008.

CML said that the peak in buy-to-let arrears had passed with the number of loans more than three months behind fell 10% from the previous quarter to 40,200. 

But the figures reveal that would be landlords are struggling to get loans and this is not because they don’t want to invest, according to Vincenzo Rampulla of the National Landlords Association. He described the situation as severe.

‘What is still clear is that the lack of available credit continues to stifle market growth and, therefore, reduce available housing options. We are hearing from a greater number of landlords who are seeking to expand their portfolios but who cannot get the appropriate finance. We would call on lenders to see what more they can do to increase the flow of credit,’ he said.

Meanwhile the NLA is also concerned about confusion over the new landlord registers in the UK as a widely different approach is being followed in England, Scotland, Wales and Northern Ireland.

In England a national register of landlords is proposed that would include not only their names and addresses but also the addresses of their rental properties. Run by an independent organisation, landlords (or their agents) would have to register every year. In return, landlords would receive a unique landlord registration number to be used in tenancy agreements, court proceedings including eviction, and housing benefit claims.

In Scotland councils already have a register of landlords and letting agents. If they have not registered, or applied for registration, it is a criminal offence. Since its introduction in 2006 there have been calls for the scheme to be reviewed as 25% of rental properties are not registered. It is also felt that registration has failed to have sufficient teeth to deal with rogue landlords who have failed to register.

Northern Ireland has rejected a register and in Wales there are no immediate plans for any type of landlord register.


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