Bridging finance can help expand BTL portfolios
Bridging loans are the key to expanding buy-to-let (BTL) portfolios in the current market, LendInvest has said.
Michael Minnie, senior business development manager at the specialist property lender, noted recent media reports showing that BTL landlords are selling up due to higher taxes and increased mortgage costs.
“While more landlords are selling their properties, they aren’t selling them to homeowners, who are constrained by high mortgage rates in the current market, so instead they are being bought by other landlords,” said Minnie.
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“What’s the opportunity here? Diversification, portfolio expansion… it is not one localised or universal factor making landlords want to tap out of the market, it is a myriad of smaller factors they are uncomfortable with, if landlords can get comfortable with those – and a large, diversified portfolio will certainly help that – it becomes a buyer’s environment.”
Minnie also cited a recent media report that said more homes are going up for rent, as owners shift from selling to letting as they cannot get their desired price. He said that this could create a longer-term opportunity for established, professional landlords.
“These aren’t people becoming landlords out of choice, it is the best way for them to raise capital for their home move, or offset their increased mortgage rates with a live-in tenant,” he added.
“As time moves on and the market stabilises, there will be a whole host of newly established rental properties on the market, with owners who may not want to do this for the long term.”
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With this in mind, landlords should consider bridging finance to enable them to move quickly in the market.
“Speedy acquisitions, flexibility around refurbishment to meet environmental standards, and the ability to purchase with a bridge and keep tenants in the property all make it an essential tool for an ambitious landlord in the market,” Minnie said.
“Where specialist lenders can provide both bridging and BTL solutions as well, this process of expansion can become simpler.
“Where the market continues to change, lenders need to move with it to offer brokers and their customers the best option for their next mortgage.”
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