It was ideal before, but now the Buy to Let Boom strategy has hit a brick wall. According to a previous report by theguardian.com, "Buy-to-let mortgage rates are tumbling which is a great news for older people because of their newly liberated pension pot on an investment property, but less so for struggling first-time buyers competing with landlords for a home."
While bloomberg.com further reported that, "Buy-to-let loans have made up most of the growth in mortgage lending since 2008 as banks compete for borrowers, often by requiring that only the interest is paid each month."
Statistics have shown that "The buy-to-let market has exploded since lenders launched specialist mortgages in 1996." This approach led to the rising numbers of an estimated 2 million private landlords in Britain. However, the problem lies on the borrowers that are accounted for almost 20 percent of new mortgages in the early 2000. According to a previous report by bloomberg.com, "A landlord who bought a property with a 25 percent down payment in 1996 saw the value of their investment soar almost 15-fold by the end of last year, smashing the returns on shares, bonds and cash deposits."
The home crisis in London and other areas in Britain may prove to be a challenge as well. According to an earlier report of bloomberg.com, "With homebuilding failing to keep pace with a growing population, officials may face an uphill battle to cool demand for rental homes." This problem will also result in a 1.8 million private renters for over the next decade as projected by PricewaterhouseCoopers.
The lower buy-to-let mortgage rates, and higher rents will indeed aid the landlords and aspiring landlords but it will also affect the tenants in the long run. According to previous report by bloomberg.com, "The new 20 percent limit on tax relief will reduce the volume of buy-to-let lending by about 10 percent relative to previous forecasts."
It is already difficult to own homes in Britain and the rising rent makes it difficult even more. With the changes in the renting and borrowing costs, the tenants are the ones affected the most.
