Number of accidental landlords to rise as mortgage lending falls?
Posted by Gary Winter
The number of 'accidental landlords' could be set to rise next year as mortgage lending continues to be subdued in the current economic climate.
Availability of mortgages for the owner-occupier sector has remained constrained since the 2008 recession, while lenders are requiring larger deposits than many can afford.
This has led to many of those looking to sell their homes struggling to find buyers and are instead opting to rent out their properties instead to generate extra income until the housing market improves.
Now, new figures from the Council of Mortgage Lenders (CML) suggest this pattern could continue into 2012.
The organisation has announced it is cutting its 2011 gross mortgage lending forecast down to £138 billion, from an earlier prediction of £140 billion, while lending will fall even further in 2012 with a figure of £133 billion forecast.
It said this is down to a weaker than expected economic backdrop, something which is also due to have an effect on housing transactions.
The CML anticipates that 852,000 transactions are likely to have taken place by the end of 2011, but is forecasting just 825,000 next year.
"As a by-product of sovereign debt worries, lenders face challenging conditions in wholesale funding markets, and these could have negative effects on the cost and availability of UK residential mortgages through some or all of next year," said CML chief economist Bob Pannell.
In contrast, lending for purchasing buy-to-let properties had become increasingly easy to obtain over recent months.
Commenting on the CML's figures, Richard Sexton, director of e.surv chartered surveyors, said: "Banks are running for cover and scratching around for capital.
"We're seeing them focus more on lending to buy-to-let investors - which they see as lower risk - who are accounting for an increasingly large percentage of new loans."
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