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Would-be BTL investors unsure how to apply
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The buy-to-let sector continues to go from strength-to-strength, with more investors than ever entering the market. However, an alarming new survey suggests that a number of potential investors lack the knowledge of how to obtain a mortgage.
Results
A survey from specialist mortgage lender Kensington found that 28% potential buy-to-let landlords considering entering the market do not know how to apply.
Interestingly, the same survey found that 54% of over-40’s said that they would consider investing in the market in order to increase their retirement income.[1]
In order to source the most suitable product, 44% of would-be landlords said that they would use a broker, with 28% suggesting that they would use their existing lender.[1]
Kensington’s analysis of average flat prices in England and Wales found that the 25% required for a first-time landlord is £43,000.[1]
A small house with a label for the rent. Isolated render on a white background
Risks
Other results from the survey found that potential landlords looking to invest their pension cash into the buy-to-let market are mostly concerned about the risk of not achieving a solid income. 47% said that the amount of income was their main worry, followed by 42% who were concerned about running out of money in retirement as a result. [1]
25% of people questioned said that they were concerned about the tax implications of withdrawing a pension, whereas 21% said that they were confused about buy-to-let laws.[1]
Bright future, but concerns remain
Steve Griffiths, head of sales and distribution at Kensington, believes the future of the buy-to-let market remains strong. He said that, ‘the outlook for the buy-to-let market is bright and the potential for further growth as pension freedoms come into effect is undeniable.’[1]
He warns however that, ‘would-be landlords will need to be realistic and it is worrying that so many are considering buy-to-let without knowing how to apply for a mortgage. Advice from brokers on mortgages is vital.’ Griffiths also feels that, ‘claims of a wall of money are unlikely to come true and in any case raising a 25% deposit for a buy-to-let mortgage from pension funds will be tough as a look at average property prices across the country shows.’[1]
[1] http://www.braxtons.co.uk/news/buy-to-let-investors-dont-know-how-to-apply.html
