Ratings agency gives gloomy outlook on UK buy to let investment

Ratings agency gives gloomy outlook on UK buy to let investment


Todays other news
The idea comes from HMO management platform COHO...
Residents have started moving in to this decade-long project...
The right property type and postcode are essentials for successful...
The market is the most tempting for investors for the...
The analysis is by London lettings agency Benham and Reeves...


An international ratings agency has given its verdict on investors’ prospects for the UK buy to let market – and it doesn’t make for pretty reading.

KBRA – the full name of which is the Kroll Bond Rating Agency – is a global ratings service offering advice to investors.

Its most recent report explores the regulatory and financial difficulties facing investors in the UK buy to let sector in a climate of economic difficulties from rising interest rates, slowing house price growth, and an increased cost of living affecting tenants. 

It says: “This has created a challenging landscape for landlords, especially those looking to remortgage in this new environment. In addition, regulators have altered policies to try and ensure higher quality BTL mortgage origination, including energy-efficiency improvements for older properties.”

The key takeaways from its report are:

  • The BTL sector’s growth will slow and may even shrink as it encounters  a higher cost of financing, declining tax benefits, changing regulations, and the poorer tenants;
  • The remortgage risk factor is elevated for loans nearing the end of their fixed rate period;
  • KBRA reviewed nearly 20,000 BTL loans and found that 20.3 per cent may have a higher remortgage risk factor due to relatively low debt service coverage ratios or high LTV levels;
  • Within the subset of soon-to-end fixed rate BTLs, the exposure in London is “fairly high”;
  • However, remortgage risk factors are mitigated by a landlord’s ability to raise rents, the diversification benefits of portfolio landlords, and the relatively low borrower leverage in the BTL sector;
  • There are further looming risks that cloud the BTL sector, including changes to tenancy rights, taxation, and energy-efficiency regulations.

Click here to view the report.

Share this article ...

Join the conversation: Login and have your say

Want to comment on this story? Our focus is on providing a platform for you to share your insights and views and we welcome contributions. All comments are screened using specialist software and may be reviewed by our editorial team before publication. Property Investor Today reserves the right to edit, withhold or delete comments that violate our guidelines, including those that harass, degrade, or intimidate others. Users who post such content may be banned from commenting.
By commenting, you agree to our Commenting Terms of Use.
1 Comment
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Recommended for you
Related Articles
Landlords generated average rental yields of 6.3% in the second...
Looming tax changes around furnished holiday lets and the approaching...
A new survey of 250 UK office landlords commissioned by...
On July 3 the National Landlord Investment Show returns to...
The idea is part of the Financial Conduct Authority's review...
If conditions are met, it’s possible to buy a probate...
Picturehouse has now won a judgment against the landlord London...
Recommended for you
Latest Features
The idea comes from HMO management platform COHO...
Residents have started moving in to this decade-long project...
The right property type and postcode are essentials for successful...
Sponsored Content
We buy any type of property – no matter the...
As the property industry shifts towards sustainable practices, Inspired Property...
Are you concerned about rising interest rates and their potential...

Send to a friend

In order to send this article to a friend you must first login. Click on the button below to login or sign up.

No one likes pop-ups ...
But while you're here