Landlords insurance: buy to let

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It appears more Brits are choosing to become landlords insurance holders in 2011, following the release of new figures this week.

That’s because the National Landlords Association (NLA) has reported a continued increase in the popularity of buy to let mortgage products.

A survey by NLA Mortgages found the number of schemes provided during the second quarter of 2011 grew by 25 per cent when compared to the first three months of the year.

Average loan sizes for buy to let insurance holders also went up by £2,166 to hit £138,525 – representing a growth of 6.4 per cent since January.

David Salusbury is chairman of the NLA.

He says these new findings are very positive.

He comments: “Landlords provide a valuable source of housing at a time when tenants are finding it increasingly difficult to find properties to rent.”

He goes on to say: “Any mortgage products that encourage greater investment in the private-rented sector (PRS) should be encouraged.”

This growth is mainly due to the greater number of lenders offering higher loan-to-value (LTV) mortgages and the availability of finance for Houses of Multiple Occupation (HMOs) – which tend to be properties of greater value.

Over 50 per cent of buy-to-let offers processed by NLA Mortgages were for loans over 70 per cent LTV – resulting in a typical LTV of 67 per cent.

Low interest rates and future predictions were reflected by the increased popularity of variable mortgage products, comprising 59 per cent of all mortgage applications.

Paul Rockett is managing director for NLA Mortgages.

He remarks: “Wider choice and better products for landlords mean that the overall buy-to-let market is improving. Although demand for finance still outstrips supply, the level of buy-to-let lending is gradually increasing giving property investors a reason to be optimistic.”

In other news, the relative shortage of people being forced to sell their property has helped the housing market not fall further, it has been claimed.

David Smith, economics editor at the Sunday Times, said that despite house price falls during the recession, the market had performed better than “most people had expected” due to the lack of repossessions.

“Because unemployment rose by less than people expected, we haven’t had the phenomenon of the early 1990s when people had to sell because they had been made unemployed or they could no longer keep up the repayments.

That hasn’t happened on anything like that scale this time,” he said at the BCSC Conference and Exhibition 2011.

27th September 2011