Tuesday, 24 February 2009

How will the Northern Rock announcement affect Landlords?

Yesterday's announcement that the Government intends to use Northern Rock to pump £14billion of mortgage lending into the UK market could kick start the mortgage market.

Landlords know just how desperate the Buy-to-Let mortgage has become over the last 18 months and whilst it seems that none of this £14billion will end up being directly lent to Landlords there is little doubt that it can only help the overall mortgage market.

As with most things that the Government do the devil will be in the detail but if £14billion is really going to be pumped into the mortgage market this will be a very significant step. Alistair Darling confirmed that Northern Rock would be offering mortgages up to 90% which is of huge importance to first time buyers. It has been calculated that this £14billion will fund around 46,000 average mortgages.

This initiative is likely to push other lenders to offer competitive deals as they will not want to be left behind. The hope is that this will generate increased activity in the mortgage market. In itself this will not help Buy-to-Let Landlords as none of this money is aimed at Buy-to-Let, but it is probable that lenders will eventually begin to look to other ways to generate income and so, in time, lenders will return to Buy-to-Let.

Most commentators think that even if the residential mortgage market recovers quickly it will be some time before Buy-to-Let and Commercial lending returns to anything like the previous levels. It is our belief that competition in the Buy-to-Let market is unlikely to return during 2009 and probably well into 2010. It is probable that if residential lending returns to some normality then lenders will turn their attentions to commercial lending next. Buy-to-Let lending is likely to be a distant third. Even then it is highly unlikely that we will ever see a return to the situation of just 18 months ago when there was around 3,000 Buy-to-Let mortgages available.

But Landlords who wish to buy properties should be aware that the prospect of homeowners returning to the market is likely to reduce the amount of properties available for Buy-to-Let. At this moment Landlords have a golden opportunity to secure bargains on both new and second hand houses.

Through our business partners Accuro we can offer thousands of brand new homes and apartments at up to 25% discount from recent valuation and most of these properties come with 12 month rental guarantees. Finance, subject to status, is available on all these properties. For more information contact us now on 01352 721300 or email us at enquiries@netrent.co.uk. Please also check the Rental Property for Sale section of our website.

There is a long way to go before any normality returns to the housing market but perhaps we have seen the first real signs of an upturn.