Credit Crunch Hits Landlords

Credit Crunch Hits Landlords

Credit crunch issues have moved to landlords according to analysis by Moneyfacts.

The research has shown that buy-to-let landlords are now having to contribute a larger sum of their own money to buy property.  The research reveals that the average loan-to-value available on prime buy-to-let mortgages has dropped from 82.8 per cent in February 2007 to 80.1 per cent currently.  

Based on the Halifax House Price Index, Moneyfacts said this equates to an increase of, on average £5500 in the amount of deposit that a buy-to-let borrower has to find themselves.

Our view

It is the rental income that matters as this is what gives you your return.  If the rental income only just covers the interest payable on any loan and then you add the deposit that you pay and the capital gains tax you may pay on sale, the investment return may not be as good a people think.

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