Buy-to-let continues to struggle

At the British Mortgage Senate last week, some delegates said lenders viewed the buy-to-let market as too risky for many reasons including a weak return on investment.

They added that the Mortgage Market Review, which has introduced the possibility of regulation of the market, has further added to lender reluctance as regulation may have to be very different to the residential mortgage market as a buy-to-let mortgage is a commercial transaction.

Ian Stewart, head of securitisation and mortgage funding at Halifax, said more buy-to-let lenders were needed to re-establish a stable market.

He added: “People need somewhere to live and the private rented sector has a real role to play in meeting that demand. More active lenders are needed in this sector to re-establish the market.”

John Malone, executive chairman of PMS, said that due to low LTVs, the market will only cater for professional landlords and customers looking for quick capital returns will be excluded.

He added: “While one or two recognised players are likely to enter the market in 2010, the buy-to-let market which existed a few years ago with many lenders offering a variety of products will not be repeated.”