Landlords with established portfolios benefitted from the credit crunch, according to the latest claim by a property consultancy expert.
David Lawrenson, owner of property consultancy LettingFocus has posed the unconventional argument that certain landlords, namely those with lifetime trackers, were able to benefit from historically low interest rates
He wrote: ‘The credit crunch which started eight years ago was a great thing for landlords with established portfolios. Anyone with large borrowings in 2008 will have enjoyed seeing their mortgage rate(s) suddenly plummet. And as borrowing rates fell, the price of anything that could count as a ‘real asset’, (and there is nothing more of a ‘real asset’ than property), started to rise – and sometimes rise very fast.
‘The restrictions on lending that came in as a result of the crisis added another fillip. Suddenly loans were in short supply and hard to get, which meant folks could not easily get new mortgage finance – at least not for a while. This meant more would-be home buyers found they had to rent for longer, pushing up demand for rented accommodation even more. Another boost for the landlord community. So, if in 2008, you already had mortgages that backed previous property purchases – and especially if those mortgages were on base rate trackers, (as many buy to let loans were), it was very happy days indeed.’
However, within his argument Lawrenson agreed that the credit crunch was not good news for everyone, with savers and first time buyers facing trouble as a result, although some have taken issue with his points, namely John Heron, director of mortgages at Paragon. He rebutted: ‘There’s no question interest rates fell since the financial crisis and with Brexit they will be low for a long time. ‘Clearly that has changed asset values. Does that favour landlords over other mortgage borrowers? Not particularly.’
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