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Lack of funding the main setback for buy to let growth

Clearly there are pressures in the funding and supply of social housing sector – so the best option for meeting housing needs in the medium term is through the private rented sector, and the buy to let market has a very important role in meeting this demand."

The bitter-sweet news does not come of surprise to property investors who are looking to take advantage of low-prices but have become frustrated with lower loan to value requirements and other stringent criteria. 

Clarke was nevertheless complementary of the property investment educational programmes whilst also reporting lower buy to let deliquencies and reiterated the organisation’s discouragement of the regulation of the industry: "we have made it clear that we are not convinced about this.  There may be a need to look at the main causes of problems within the buy to let sector – this, however, is more about people’s decisions to invest in property rather than taking out a mortgage in order to do so. 

Questioned on buy to lenders current risk-aversive approach towards new-build properties, Mr Clarke commented: "lenders are taking a risk averse approach to all types of transactions in the market at the moment – not solely for new builds – and where there are issues of over-supply and valuation, they are looking particularly keenly at the security of the loan.  We don’t expect any change in the housing finance environment.  We have tried to create greater transparency by working on improved disclosure of incentives by developers (discounts and other transactional related benefits) – which has often occurred in regional markets where there is an over-supply of property.  What the lender needs is to have a clear understanding of the exact nature of the transaction and to make a decision accordingly.  We hope this transparency will help build confidence in the sector for everybody – uncertainty in an environment like this is not helpful."

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You can read the full interview here: http://www.psinvestors.co.uk/blog/2010/10/the-council-of-mortgage-lenders-cml-on-the-2010-2011-market-for-property-investors-buy-to-let/