I was talking to a local senior bank manager recently and gone are the days of 25% down on a buy to let for an average investor. 35% Loan to Value (LTV) and better seems to be the requirement, but lenders will look at the whole of your finances to view the proposition that you as an investor present.
I get the impression most of the banking and mortgage industry are ahead of the curve on this one effectively driving up LTV requirements for non specialist investors so we are unlikely to see much change in the BTL market. Especially given that investors with mortgages face the tightening of profits due to mortgage interest relief further tightening on lending has taken place.
The LTV for rental property is traditionally however quite low. The average LTV rate is around 70% on new aquisitions however of all rental stock only around 31% of rental property has a mortgage, according to Savills research. And according to the Council of Mortgage Lenders where there is a mortgage the level of debt is equivalent to that seen in the residential market. As they put it…
“…indicating that high leveraging by landlord investors is no more common than in the residential space”
Speaking for myself and the Hillingdon and Uxbridge area most landlords I encounter who invest do so due to excess cash not attracting high rates of interest in the bank, and are looking for long term yield and capital growth and many accidental landlords who live in the property first will have seen strong property prices rises over the last few years which have decreased their LTV.
I am not a financial advisor, merely a Letting Agent but regular readers will know my risk adverse stance of borrowing to invest in BTL (or anything else): Avoid it and save more.
