Intermediaries can pick up on the demand for additional properties as the desire for owning a second property, and the potential wealth it can generate, continues to grow.
Research published by the Resolution Foundation shows that over one in ten people across Britain own second homes, buy-to-let and overseas properties worth £941bn, up 53 per cent since 2001 (from around £610bn in 2001).*
However, people can end up acquiring additional property for a variety of reasons and in a number of different ways. Acquisitions aren’t always pre-planned but through circumstances that arise where keeping hold of a property is the better option. These people are often referred to as ‘accidental landlords’. These include inheritance from a partner or a parent, or they couldn’t sell their existing home so when they moved house they kept it as a buy to let.
Another typical situation is where a property is bought by a parent for a child who maybe starting at university or a new job in a different town or city. In this situation a regulated buy to let mortgage is needed, if it’s to be formally let. At Leek United, we can provide a range of buy to let criteria to help in this situation even if they are first time landlords. What’s more, for regulated buy to lets we base the rental assessment on market rent rather than what the family member is paying.
An affordability assessment needs to be assessed when looking at customers taking on a regulated buy to let. For non-regulated buy to lets and regulated non-homeowner buy to lets an affordability assessment is no longer required.
It’s also the case that as buy to let property is often seen as part of a long term investment and income strategy, the term of the mortgage could take customers beyond their retirement age. With our criteria having no upper age limit on the end date of a mortgage, we see this as a real opportunity for brokers to be confident to place these mortgages with lenders catering for those looking to invest in bricks and mortar to help achieve their longer term financial goals.
As the market for additional property ownership continues to evolve, lenders will enhance their criteria to help satisfy demand in a responsive and responsible way. Property remains a popular form of investment beyond the primary residence for those seeking to boost capital appreciation, plan further ahead for their retirement, or help a family member get a roof over their head, and even plan to pass on the additional properties to the younger generation.
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