Legal News

Competition among mortgage lenders has sparked a fierce battle to corner the buy-to-let market, with more than 900 new mortgage deals on offer to homebuyers buying property to let out.

The Daily Mail reports that banks have slashed their lending rates to record lows – and launched hundred of new products to attract buy-to-let landlords.

Buy-to-let mortgages usually attract higher repayment rates to reflect their commercial aspect, but new products are being launched with rates similar to residential home loans.

In 2010, the cheapest two-year fixed rate mortgage with a 25% deposit was 5.69% for landlords – 3% higher than a residential home loan.

However, the cheapest deal for buy-to-let landlords is now 3.49% – 2% higher than the residential rate.

The falling rates have also attracted more families to the buy-to-let housing market, with a huge rise in the number of “amateur landlords” entering the sector.

The Intermediary Mortgage Lenders Association estimates that landlords will own one-third of all UK properties within 15 years. Research from the Council of Mortgage Lenders shows landlords already own almost £1 trillion worth of property – a fifth of the country's private housing wealth – compared with one-seventh in seventh in 2007, when the equivalent figure was £580 billion worth of property.

There are currently 2.1m landlords in the UK, compared with 1.5m in 2007 – and approximately 4.6m homes are owned by landlords, an increase from 3m in 2007.

The burgeoning buy-to-let market has in part been blamed for the lack of affordable housing, as council tenants buy their council homes under Right-to-Buy and then re-let them at market rents in the private rental sector.

The government’s emergency Budget on Wednesday (08/07/15) may also announce Right-to-Buy will be extended to housing association tenants, meaning thousands more public sector homes will fall into the hands of buy-to-let landlords and be rented out at market rates, fuelling the shortage of affordable homes across Britain.

Many rental homes in the private sector are now also owned by overseas investors and offshore companies, some of whom leave the properties empty rather than rent them out.

Landlords also receive around £6.3bn in annual tax relief on mortgage repayments – but there are fears the Chancellor may reduce the level of tax relief on mortgage interest in the interim Budget.

The Bank of England has also warned new landlords that they could find their investment becomes “unprofitable” when the Bank of England base rate rises and mortgage repayment interest increases accordingly.

Chief executive of the housing charity Shelter, Campbell Robb, said:

“Something is seriously wrong when millions of young people are struggling to get even a toe on the housing ladder – yet buy-to-let investors can easily access money to build their property portfolios.”

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors offer competitively priced conveyancing services to homebuyers – and can guide first-time buyers or buy-to-let landlords through the conveyancing process.

There are Duncan Lewis offices nationwide and our housing lawyers can also advise landlords on their legal duties to tenants, as well as Landlord & Tenant disputes, disrepair and notice to quit.

Duncan Lewis can also advise homeowners on debt management and mortgage repossession, including the council’s legal obligation to re-house after repossession.

For expert legal advice on all housing matters, call Duncan Lewis housing solicitors on 020 7923 4020.