First-time buyer landlords flourish despite pandemic

Many first-time buyers have been significantly impacted by the coronavirus pandemic, with rising loan to values and increased difficulty to get on the residential property ladder.;
To Let

Many first-time buyers have been significantly impacted by the coronavirus pandemic, with rising loan to values and increased difficulty to get on the residential property ladder.

For first-time buyer landlords, however, it is a different picture, as many have remained resilient despite the difficulties posed by the pandemic.

In an attempt to avoid the negative effects the pandemic has had upon the residential property market, many individuals are opting for buy to let properties, resulting in a rise in the number of first-time buyer landlords.

Many brokers in the buy to let market have reported a surge in activity over recent months.

Why take the buy to let route as a first time buyer?

Despite the fact that deposits are higher for buy to let, a buy to let investment can be a strong alternative to buying a residential property.

For individuals who reside in affluent areas, such as London and the South East, it can be particularly difficult for first time buyers to meet residential property costs.

Thus, many purchase buy to let properties in other regions, where prices are generally lower.

Through this method, individuals are able to get on the property ladder, despite not having a residential property.

Considerations for investing in buy to let

Although the buy to let market is attractive, it is not always the simplest way to own a property.

Typically, individuals seeking a buy to let property require a larger deposit than for a residential property.

At the time of writing, the minimum deposit for a buy to let mortgage is 20%. However, some lenders will only accept a deposit of 30%.

Furthermore, many first-time landlords will have to provide lenders with plausible reasons for seeking a buy to let property, as the lender wants to be assured that individuals will not go and live there themselves.

Whilst most buy to let affordability calculations are based on the rental income a property can make, for a first time buyer, personal income is a consideration.

Buy to let lenders will not extend a mortgage to a first time buyer, unless their personal income as well as the rental income of the property meets affordability calculations.

Lastly, any decision to lend is always at the discretion of the lender.

It is therefore important for all first-time buyer landlords to meet the borrowing criteria, in order to be accepted.

Guidance from a buy to let specialist can save on time and money, to navigate through the array of lenders in the market.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.