December 8, 2008

Buy to let problems to come

At the moment there are an estimated one million buy to let properties in the UK, most of these have been bought with very high mortgages and have a very high loan to value ratio.

Because of this, there is the potential for a sudden rise in the amount of these properties being either repossessed or simply walked away from by the owners who can no longer cover the cost of the outgoings with the rental income.

With property prices falling this puts more pressure on the owners because they are not able to sell the property either, this is a potential time bomb for the property sector where this is no way out for the immediate future.

This is a not much different to the owner occupier market, except that they have a home, rather than running a business.

Source [The Money Ferret]