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On the eve of what is sure to be Alistair Darling's most important political statement there is speculation and counter speculation about how he will address the situation of the UK economy next...
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Tuesday 26th August 2008
News that the number of mortgages approved in the buy to let sector fell by almost 20% in the first six months of 2008 has not gone down well with landlords around the country. During the good times the banks were literally falling over themselves to support the sector – with heavy asset backing available to cover loans – but now house prices are falling and some tenants are suffering we are seeing changes in the sector. So what next?
When you also consider that the average buy to let loan has now fallen from 85% of the purchase price to 83% it seems that the banks are tightening their criteria as well. The problem now is a possible knock on affect as some tenants struggle and landlords are unable to cover their outgoings. Those who become involved in the market at an early stage will likely be ok as long as they have not overstretched their finances, but those who joined the party at the top of the market could see their asset backing fall like a pack of cards.
The headlines may be suggesting that the buy to let market is picking up as more people look to rent, but it seems that more and more tenants are struggling to find funds to cover their rent. |
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