Only the wealthy can preserve with buy to let

The Royal Institute of Chartered Surveyors (RICS) has noted some major changes in the buy-to-let market that suggest that only wealthy investors can enter and survive.

Recent rises in interest rates and changes in lending criteria are making investment property out of reach of the majority of small time investors.

The average deposit that investors need today is 30 per cent of purchase price, or £65,600, compared to 8 per cent, or £10,100, in 2002.

Prospective buy-to-let property investors may also need to exceed monthly mortgage repayments by 125 per cent of with their rental income in order to persuade lenders to make the finance available.

Would be investors who missed out on the impressive returns in previous years are now finding it harder to invest in property in the first instance.

Existing long-term landlords will have to rely on the equity that has built up in their portfolios in order to make any expansions when the market finally bottoms out.

While some contraction of the £108bn buy-to-let mortgage market is expected, it is believed that professional landlords will be able to weather the storm best and possibly benefit in the long-term.

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November 19^th 2008

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