A comment on funding issues in the residential market by Selwyn Langley.
There has been much press speculation on the state of the Buy To Let Market.
At the height of the market there were many mortgage facilities available
and 85% loan to value was readily available.
Under present conditions there are a small number of providers only for
facilities of this type and the deposit normally required is at least 35%.
New flats are particularly difficult to fund at the present time as lending
sources consider the value of these suspect.
To the seasoned Buy To Let investor there has however been an unusual fillip
as with the drop in mortgage interest rates many Buy To Let investments are
now showing a positive return after payment of interest. These are normally
funded on interest only basis as most operators in this market would wish to
take advantage of capital growth.
Those who were brave enough to purchase in the early part of last year are
now also sitting on substantial capital gains and when sales are made they
can be making anything up to 40%-50% return on capital they have employed as
Some lenders have tried to be innovative when fixed rate deals have ended
and have offered new deals at interest rates probably 1% above standard
variable rate. As press speculation today is that interest rates are
unlikely to increase this year this would make for expensive borrowing.