Repossessions benefit BTL sector

With repossessions on the up and growing numbers of homeowners falling behind with their mortgage repayments, those with the means to stay afloat in the current climate are making the most of others’ misfortune by picking up properties that are priced to sell.

“Following the recent interest rate rises we have seen an increase in enquiries from purchasers of investment properties being offloaded by owners who can no longer afford to keep them,” said My Mortgage Direct director Cath Hearnden.

“Buy to let as a money-making exercise has certainly overstretched itself since the beginning of the millennium and some people are having to accept a loss on what they hoped would be a nest egg for their future.”

During the height of the buy to let boom around three years ago new builds in particular were selling for over-inflated prices and that factor has proved to be the undoing of some investors. Bought with a very low interest rate, these properties seemed to offer a viable opportunity for purchasers to get a slice of the buy-to-let pie, but now that rates have risen, the closing gap between mortgage repayments and achievable rent has squeezed the life out of the idea.

With rates continuing to rise, the reality of maintaining their commitments has proved too much for some and borrowers are having to offload their property before it drags them down, even if it involves making a loss.

“Today’s buy to let investor is more considered, better informed and less eager to buy at any cost,” said Hearnden. “Of course, hindsight is a wonderful thing and many people would not have bought had they foreseen today’s market conditions.

“There is still mileage in property investment but not for anyone and everyone. With analysts predicting a surge in mortgage arrears and bad debts associated with mortgages, becoming a landlord will not be quite as easy as it has been in the past.”