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Optimistic landlords frustrated by lack of mortgage finance

David Brown, commercial director of LSL Property Services, said: "2009 saw the buy-to-let market return as a viable investment. Landlords recognise this, despite the rough ride they have had to endure over the last couple of years.

"The average landlord made losses in 2007-8, but 2009 marked a return to form for property investment. But the availability – or lack of – of mortgage finance is holding the sector back. Even experienced landlords who are keen to take advantage of lucrative returns and improving market conditions can’t get access to the cash they need."

Landlords’ confidence in the market is driven by their desire to maximise returns in a low interest rate environment, with a third of them attributing their positive sentiment to the superior capital returns of buy-to-let as compared with other forms of investment. In 2009, a typical landlord made a total return of 7.6% – higher than many other forms of investment.

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One thought on “Optimistic landlords frustrated by lack of mortgage finance

  1. Major Landlord says:

    People have short memories, don’t they?

    Not so long ago, we thought the world would descend into a financial abyss, with banks crashing everywhere and total lack of any investment finance to support the continuation of our spend-spend-spend consumer over-indulgence. The banks then realised the error of their ways in lending to people who were over-extending themselves and would not be able to service their loans. A lot of these were the nouveau riche of buy-to-let, who believed anything they were told by property developers, buyers’ clubs, lenders, mortgage brokers, estate agents and letting agents . . . all keen to make money out of the gullible, without taking the risk themselves.

    Now, just as sanity is returning – with gentle property inflation, readjusted values, improved yields, more careful lending, many of the suicide jockies driven from the market and overall stability returned – we read that over-optimistic landlords cannot borrow more money in order to hasten their financial suicides.

    Questions: what will they do when interest rates rise again (inevitable, given our sick economy and Brown’s legendary borrowing which will see our credit status reduced to “trash”)? What will they do when unemployment rises again as the government finally reins in expenditure, and their tenants stop paying their rents? What will they do when the benefit system collapses under the strain? What will they do when rents start falling due to the renewed over-supply they will create?

    Answer: jump from tall buildings, just like the greedy bankers on Wall Street did in the 30s. Good riddance. Some people NEVER learn.

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