Credit crunch hits UK buy-to-let sector
Thursday March 6 2008
By Jennifer Hill Quoted from the Guardian (link displayed below)
LONDON, March 6 (Reuters) - Liquidity woes are starting to hit British buy-to-let property investors, as the availability of mortgage debt shrinks, a survey shows.
Instructions to let residential properties fell in the fourth quarter of 2007 -- the first decline since the Royal Institution of Chartered Surveyors (RICS) started its survey in 1998 -- as lenders tighten their criteria and the range of mortgage products narrows.
Mortgage hunters are facing increasingly tough times as the market shrinks and lenders re-assess risk in the wake of the credit crunch.
Cheap products have been pulled and rates on remaining ones hiked, maximum loan-to-values cut and lending criteria tightened, making it harder for people, especially those with a poor credit rating, to obtain a home loan.
However, the RICS survey also showed that demand for rental properties has continued to grow, and yields remain on an upward trend.
A total 16 percent more chartered surveyors reported a rise than a fall in tenant lettings, down from 20 percent in the last quarter.
Demand for family homes remains stronger than for flats due to an oversupply of new build properties, the data shows.
At the same time, gross yields in the three months to end-December increased at their fastest pace since the third quarter of 2005, a factor that might have helped to curb a sell-off.
The percentage of landlords selling their properties when tenant leases expire fell to 4.6 percent from 6.5 percent.
Barry Hall, a spokesman for RICS, said: "While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be-buyers unable to make the jump to home ownership.
"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector."
He said some small-time landlords might, however, desert the market following a cut in capital gains tax at the start of the new tax year on April 6. (Editing by Jeremy Lovell, editing by David Christian-Edwards)
http://www.guardian.co.uk/feedarticle?id=7361453
By Jennifer Hill Quoted from the Guardian (link displayed below)
LONDON, March 6 (Reuters) - Liquidity woes are starting to hit British buy-to-let property investors, as the availability of mortgage debt shrinks, a survey shows.
Instructions to let residential properties fell in the fourth quarter of 2007 -- the first decline since the Royal Institution of Chartered Surveyors (RICS) started its survey in 1998 -- as lenders tighten their criteria and the range of mortgage products narrows.
Mortgage hunters are facing increasingly tough times as the market shrinks and lenders re-assess risk in the wake of the credit crunch.
Cheap products have been pulled and rates on remaining ones hiked, maximum loan-to-values cut and lending criteria tightened, making it harder for people, especially those with a poor credit rating, to obtain a home loan.
However, the RICS survey also showed that demand for rental properties has continued to grow, and yields remain on an upward trend.
A total 16 percent more chartered surveyors reported a rise than a fall in tenant lettings, down from 20 percent in the last quarter.
Demand for family homes remains stronger than for flats due to an oversupply of new build properties, the data shows.
At the same time, gross yields in the three months to end-December increased at their fastest pace since the third quarter of 2005, a factor that might have helped to curb a sell-off.
The percentage of landlords selling their properties when tenant leases expire fell to 4.6 percent from 6.5 percent.
Barry Hall, a spokesman for RICS, said: "While banks remain cautious about offering loans, demand for rental property will continue to increase with many would-be-buyers unable to make the jump to home ownership.
"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector."
He said some small-time landlords might, however, desert the market following a cut in capital gains tax at the start of the new tax year on April 6. (Editing by Jeremy Lovell, editing by David Christian-Edwards)
http://www.guardian.co.uk/feedarticle?id=7361453
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