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Buy to Let

Would-be landlords clueless about buy-to-let

Adam Williams
Written By:
Adam Williams
Posted:
Updated:
05/05/2015

More than a quarter of potential landlords have no idea how to purchase a buy-to-let property, research has suggested.

The survey by lender Kensington found 28% of people do not know how to apply for a mortgage of this kind.

More than half of people over 40 said they were interested in buying a property to let out and help fund their retirement.

Some 44% of these people said they would visit a broker to take out a buy-to-let mortgage while 28% of respondents would visit their existing lender.

For a would-be landlord to buy a property, an average 25% deposit is currently £43,000.

However, this varies wildly between areas of the UK. This deposit can be as little as £8,128 in Blaneau Gwent in Wales but more than £104,000 on properties in Greater London.

Kensington claimed that most borrowers are now aware of the risk involved. Almost half (47%) of those questioned said they were concerned that they would not make as much money as they want.

Some 42% also feared property investment would leave them short of cash in retirement.

Steve Griffiths, head of sales and distribution at Kensington, said: “The outlook for the buy-to-let market is bright and the potential for further growth as pension freedoms come into effect is undeniable.

“However the would-be landlords will need to be realistic and it is worrying that so many are considering buy-to-let without knowing how to apply for a mortgage. Advice from brokers on mortgages is vital.

“Claims of a wall of money are unlikely to come true and in any case raising a 25% deposit for a buy-to-let mortgage from pension funds will be tough as a look at average property prices across the country shows.”


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