Let to buy is soaring, say lenders and letting agentsMake Text Bigger
The broken housing market is pushing more accidental landlords into the buy to let market, according to lenders and letting agents.
As homes are becoming more difficult to sell, desperate owners who need to move are turning to let to buy mortgages so they can buy a new home while renting their former home out.
Around 20% of buy to let mortgage applications handled by Platform, the Co-Op Bank’s property investment arm, are from let to buy owners who need to move home.
Let to buy allows is a special mortgage package that lets a borrower take out a loan on a new home while retaining the loan on their former home, which is rented to tenants.
To highlight the problem, Platform quotes online property portal Rightmove, which released figures showing homes stay on the market for an average 105 days – up from 80 days a year ago.
Platform’s Lee Gladwell said: “Uncertainty around the economy, employment and house prices is continuing to dampen demand for house purchases and this is driving demand from those choosing to rent rather than buy.”
“Our experience shows that some of those that want to move and are unable to sell are choosing to become landlords and rent out their existing property, at least until the market improves.”
The claim is backed by letting agents. One trade body, the Association of Residential Letting Agents (ARLA), reports almost half of agents (47%) saw a rise in let to buy landlords in the last three months of 2011, up from 40% at the start of the year.
“Investing in a buy-to-let property has always been an attractive opportunity, and the high demand for rented property means there are a growing number of first time landlords in the market,” said an ARLA spokesman.
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