Is the Cash Flow for Buy-to-Let Mortgages Drying Up?

Although some buy-to-let lenders did loosen their standards for loaning money to buy-to-let borrowers, the tides seem to have changed somewhat. Although the amount of money that is actually available to borrowers in the buy-to-let property arena hasn’t actually changed all that dramatically, the ability to secure that money has undergone some dramatic changes of its own.

Some lenders have made a complete turnaround and individuals who could have secured a buy-to-let mortgage months ago can no longer do so. Both building societies and banks have tightened the standards required to secure a buy-to-let mortgage in reaction to the chaos of the financial world and its status. Their cautionary efforts to remain strong in their own financial makeup include the issuance of fewer mortgages. In fact, some banks and building societies have stopped offering funds in this area entirely, so some reduction in the total funds available has occurred.

Essentially, these changes are creating a potential slump in the buy-to-let market. After all, if potential landlords cannot access the funds they need to secure a property, then, obviously, fewer listings for buy-to-let housing is going to come onto the UK housing market. While this does not affect existing buy-to-let investors, it does prevent new ones from entering the market should they not have stellar credit histories. On the other hand, established investors can simply enjoy the increase in rising rents.