The number of buy-to-let mortgages for first time landlords has dropped to a record low, according to new research from Moneyfacts.co.uk.
Annually, however, the overall amount of buy-to-let mortgages has risen, which would lead one to believe that the availability of deals for first time landlords has also grown.
Five years ago, just 434 buy-to-let products were available for first time landlords, compared to 813 today. The proportion of buy-to-let mortgages available to first time landlords has also fallen, from 82% five years ago to 75% today.
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Drop in Mortgages for First Time Landlords
The Finance Expert at Moneyfacts.co.uk, Charlotte Nelson, comments: “Despite all the changes to regulation in the buy-to-let market, the number of buy-to-let mortgages has increased; however, first time landlords have been missing out on this boost in product numbers. Indeed, the percentage of the market that is available to new landlords has now dropped to just 75%, down by around 10% in two years.
“As first time landlords don’t have a proven track record in managing rental properties, offering them a buy-to-let mortgage poses a greater risk to the lender, and it’s this risk that is making the number of first time landlord deals remain relatively static.”
She continues: “The additional regulation in the buy-to-let market and the added economic uncertainty following the Brexit vote means even more lenders may reconsider whether first time landlords are a safe bet. As a result, would-be landlords are likely to face more probing questions about their finances than their more experienced counterparts.
“Nevertheless, high rents and rock-bottom mortgage rates mean that buy-to-let is still an attractive proposition for aspiring landlords, particularly those who are fed up with the dismal savings options currently available. However, buy-to-let is not without its risks, so anyone considering it as an option should seek the advice of an independent financial adviser to determine whether it is the best choice for them.”