Is The Buy To Let Market Finished?
A debt solution comparison site has claimed that the buy to let bubble has finally burst, leaving a large number of smaller property investors in financial hardship as they are struggling to let their properties and are unable to sell due to falling prices and lack of consumer confidence in the housing market.
Many individuals have jumped on the buy to let band wagon in recent years in the belief that they can not lose, as property prices have risen dramatically over the years and would continue to do so. Unfortunately, as we now know, this is not the case and a large number of smaller property investors have had a rude awakening.
Many have taken out large buy to let mortgage loans to fund their purchases and even remortgaged or taken out a secured loan on their own home to pay for the deposit on their rental property. In many cases, the properties remain un-let, or the rental income is not sufficient to cover the cost of the loan and investors are having to fund both their home loan and buy to let loan from their income.
However, the National Landlords Association (NLA) has defended buy to let, saying that there is still a large demand for rental property, particularly as many potential home buyers are now choosing to rent for longer rather than commit to a mortgage or home loan of their own. Coupled with this is the fact that most landlords are investing for the long term, not for a quick kill on the property market.
Simon Gordon of the NLA said “It is simply not true that the nation’s landlords are now facing some sort of crisis. For the cautious and mature investor who has bought the right property in the right location, they will be seeing an increase in rents and can expect demand to keep climbing. This kind of market is not for the feint hearted and the landlords who may be struggling may well be more recent entrants to the market with large loan to values on their portfolios.”
