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Buy-to-let boom is over, claims debt adviser

The buy-to-let boom has ended, with many smaller property investors who overstretched themselves finding the plan has backfired, debt solution comparison site IVA.com has claimed.

By Gemma Westacott | Published Oct 01, 2008 | comments

IVA.com said the market is facing a serious downturn as lending options for landlords diminish, something that was highlighted by the need for the government to nationalise Bradford & Bingley, Britain's biggest buy to let lender.

IVA.com director Terry Balfour said: "Plummeting property prices and the effects of the global financial crisis are having disastrous effects on property market investors at the lower end of the scale.

"A couple of years ago when buy-to-let mortgages were stack ‘em high, sell ‘em cheap and property values were soaring, a second property was an affordable way for ordinary working people to try to build a nest egg for the future.

"But since living costs have gone through the roof and mortgage lenders have battened down the hatches in the wake of the credit crunch, this plan has backfired for many."

IVA.com added that some investors risked losing both their investments and their own homes, as second mortgages drain their resources.

Balfour added: "The margins of rents over mortgage payments that made the buy to let boom possible have closed to such an extent now that more and more borrowers are having to dip into their disposable income to meet the repayments.

"But if they already have debts, the problem can snowball very quickly and become unmanageable. The sums just don't add up anymore."

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