Buy to Let
Would-be landlords clueless about buy-to-let
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.”