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Friday, November 21, 2008
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Blog
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| FT News 14th December 2007
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Location: Blogs PricedOutMedia Comment |
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| Posted by: PricedOut |
Sat, 15 Dec 2007 17:12:59 GMT |
14th December 2007 - FT Headline was “Buy-to-let financing in UK evaporates” by Sharlene Goff
“Financing for buy-to-let investors is drying up as lenders slash funding for deals and tighten loan criteria. The total number of buy-to-let mortgages on offer to borrowers has almost halved since July after an explosion in recent years of products that helped fuel the UK residential property boom, according to market research from Moneyfacts.co.uk.
Sub-prime buy-to-let mortgages, which cater for investors with blemished credit records, have virtually ceased to exist. There are now only 18 available in the market for such borrowers compared with 1,383 five months ago, according to Moneyfacts. For prime borrowers, the number of products has dropped from 2,265 in July to 1,724.”
PricedOut says – We applaud the reduction of BTL mortgage availability. This reduction of supply is due to a reduction of demand – so we applaud that too.
The FT continues “Landlord Mortgages, a buy-to-let broker, said only two or three big lenders were taking on any sizeable amount of new business. “We can’t see any significant input from 90 per cent of buy-to-let mortgage lenders,” said Lee Grandin, managing director. “The past two years have brought an enormous influx of buy-to-let lenders to the market but this has been dramatically wiped out in the past two months.” Those lenders still active in the market have introduced blanket rate rises, increased deposit requirements and cut the amounts they are willing to lend.
PricedOut says – Good. Let us hope that this is permanent – although we fear that when demand returns that the lenders will re-emerge. Nice of the FT to give this story top billing.
Meanwhile on page 4 of the FT we find the headline “Councils pass ‘bloody awful’ housing plans” by Jim Pickard. He goes on to say “Councils are allowing swathes of mediocre housing to be built across the UK because they are under government pressure to wave through new developments, according to a former chief planning inspector. Chris Shepley, who was head of the Planning Inspectorate from 1994 to 2002, said the quality of some applications was “bloody awful” but it was not always possible for planning departments to resist them.”
PricedOut comments – we need the homes and the Government is right to insist on them being built. Probably it is actually healthy that someone can be found to oppose this.
The FT continues – “The Royal Town Planning Institute has, meanwhile, warned that the quality of new housing is likely to deteriorate. Andrew Kliman, a spokesman for the RTPI, said: “We are really clear that the quality might suffer because of the targets. We have got to learn from the mistakes of the past when we build houses. We mustn’t build the sink estates of the future.” Ministers want to see more homes built because demographic and immigration projections suggest there will be more households in the future.”
PricedOut comments – “likely” and “might” – this is not exactly a statement with a firm foundation (foundation – geddit?). More seriously, it is worrying that ministers are building to satisfy future increase in demand when there is plenty of pent-up demand already. The vast majority of private tenants want to buy their own homes – this is a known fact. Avoiding “sink estates” is a worthy aim. The main point is that we need lots more homes and we need them sooner rather than later. Get Building! |
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