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Some good news at last for us Buy To Let Investors:

John Heron, managing director of Paragon Mortgages, says the public’s image of buy-to-let is distorted and that it is no riskier than the prime residential sector.

He says a few lenders dragged the sector down and were guilty of having weak lending processes in the past which has increased arrears levels in the sector.

He blames this on their computer-assisted underwriting and weak approach to mortgage valuation.

He adds: “Buy-to-let is not risky and performs just as well as prime residential mortgages. The perception of the sector is that it was responsible for the credit crunch, but it was not.

“Too few lenders asked buy-to-let investors the right questions and were too specu-lative when valuing properties. They didn’t look at whether applicants would make good landlords.”

Latest repossession data from the Council of Mortgage Lenders shows the number of buy-to-let mortgages in arrears by more than three months fell by 17% in Q2.

But Heron believes the Financial Services Authority has formed a negative view of the sector from its thematic review earlier in the year and is worried this could cause it to over-regulate the market.

He says: “The wrong sort of regulation will hit those who need the rental sector. We want to see joined-up thinking on regulation in the mortgage market.

“If funding is restricted in the private rental sector it will depress the supply of rental property.”

Taken from Mortgage Strategy

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