UK BTL Property Market Examined in a BBC Report

As a result of the buy to let, many buy to let investors were purchasing properties that they have not seen or that have not been built in bulks in order to win the rent race. However, recent BBC report demonstrated that a large number of investors have lost this race. The report was compiled by Richard Scott, a personal finance journalist for BBC, with the help of the figures provided by the Council of Mortgage Lenders (CML). Mr. Scott’s report suggests that buy to let landlords are losing their properties three times faster and more often than general homeowners. The data provided by the CML shows that 1,700 buy to let properties were repossessed in the first quarter of 2009, excluding the 4,100 cases when lenders appointed the receiver of rent – a person, who collects rent on behalf of the lender in case a landlord fails to meet his/her mortgage commitments. The data compares with the first quarter of 2008, when only 900 properties were repossessed and 300 receivers of rent were appointed. Mr. Scott says that the figures suggest that 35% of UK landlords have been losing properties compared to only 11% of homeowners. Moreover, the report suggests that UK buy to let investors have suffered from the purchase of houses and flats, which are now staying unoccupied or provide very low yields, which cannot cover buy to let mortgage repayments. At the same time, falling house prices make it highly unprofitable for landlords to sell their properties. Moreover, lenders have toughened their mortgage requirements, which fact has seriously affected the buy to let sector. The report also revealed that in September 2007 more than 3,660 buy to let mortgage deals were available for investors; in May 2009 this figure shrunk to merely 218, which represents a 94% decrease. The report of Mr. Scott concluded that if the situation on the buy to let property market in the UK remains the same throughout the year of 2009, the number of taken buy to let mortgages across the country will amount to not more than 89,600.