BTL is now 'backfiring' for many investors, warns website
Credit crunch is now hitting the buy-to-let sector hard now, says IVA
The buy-to-let boom has blown up in the faces of borrowers who overstretched themselves to climb on to the property ladder, according to debt solution comparison site IVA.
According to the website, the recent crisis affecting Bradford & Bingley, Britain's biggest buy-to-let lender, is an indication that the market is facing a serious downturn as lending options for landlords diminish. It added this is underlined by the beleaguered lender's moves to draft in an extra 70 staff to cope with a predicted surge in defaulting customers.
Terry Balfour, director of IVA, 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 them high, sell them 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."
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said that there still is a strong market for buy-to-let.
He said: "I am sure that the boom is over, but there is still going to be a strong market, not least because homeownership is contracting and there is going to be demand for renting. However, I expect strong growth in the sector."