Buy To Let Mortgages

Since the nineties when the buy-to-let mortgage industry really took off there has been an increase in the cost of the average home. It has been reported that the cost of a home purchased to let has risen by £14,000. This study shows the impact the investment buyer has on home values.

The report from the National Housing and Planning Advice unit reports that the private owner who will not purchase for a buy-to-let are now having to pay on average £90 more a month. This has put pressure on the first time buyer and many might not be able to procure a mortgage because of it.

The National Housing and Planning Advice unit was set up for the government so they could track the housing supply and affordability. Currently the average price of a home has risen about 150%. This has given many issues to people who want to purchase a home many now cannot afford to do so.

The buy-to-let mortgages have had a large impact the price of a home, while you want to see your property values increase you must also remember that it will increase the cost of your mortgage. Before this trend began you would be able to purchase a home for £169,000 now the average is more likely to be £183,000. This difference alone can raise a person’s mortgage an average of £90 a month.

It should be noted however, that this buy-to-let market is not the only reason we have seen an increase in the cost of mortgages or monthly payments. We must take into consideration that a smaller housing supply and the growing number of people wanting to purchase a home have also increased.

The influx of new landlords brought about by the new buy-to-let loans has increased the amount of homes purchased for this purpose to about 2.5 million. These mortgages were calculated on the basis of anticipated income from the rental property than on the income of the landlord. The investor is able to take some tax relief as well from their loan interest. These very things made the private landlord sector very appealing.

The current economic downturn that is being felt by everyone has not helped those that want to buy find a mortgage. There is decidedly less money available for the average home buyer and one wonders where help might be found. The British Property Federation spoke at its conference in London recently that the continuing home crisis could get worse if something isn’t done. It was mentioned that perhaps the government needed to step in and talk with financial institutions. The hop being that they could encourage them to help with residential mortgages.

The typical contract for a but-to-let also appears to be having an impact in this market. The tenure of most contracts is only six-months this seems to concern most tenants. This option is known as assured shorthold tenancies. This situation needs to be resolved so that the people who find themselves without a home can be more assured of a place to live for longer than six-months.