Buy to Let Mortgages with long tenancies can provide stable income and eradicate uncertainty
As a Buy-to-let landlord myself I was delighted to hear Mayor Boris Johnson beat the drum at London Assembly recently with regards to longer tenancy agreements. A useful sound bite which will hopefully alert the product developers within the buy-to-let lenders to what the market is demanding as for far too long lender’s have imposed rules restricting assured shorthold tenancies (ASTs) to 6 or 12 months so can reclaim the property quickly should the buy-to-let landlord default on their mortgage. This is head in the sand doomsday stuff. Most of the landlords I deal with are only too aware of their mortgage obligations and cross-subsidise income across properties if there is a void in one or if one property continues to under perform they have the sense to shift it long before the need to hand the keys to the lender.[pullquote]Tie your good tenants in for longer[/pullquote]
Longer tenancies you’d think would therefore benefit all concerned: the tenant, the landlord and the lender as the income stream is tied up for longer!
So why is the demand for longer tenancies increasing? Well to find one of the principle drivers all you have to do is stand in a junior school playground to discover why. How so well, there is genuinely a lack of first rate secondary schools in London and the surrounding counties and parents are scrambling to rent properties in the catchment areas. Believe me it is dog eat dog with instances of parents leapfrogging house numbers in certain streets to get nearer to their Mecca but schools are wising up to this practice and point to short tenancies as merely a manipulation of the system to serve the purpose. Bosh, throw down a three year tenancy agreement and the counter argument in completed as it shows a much greater commitment to the area and the child’s place. The schools love this as it demonstrates a driven-backing from the parents and a stable student is more like to perform.
Also as revealed in a recent survey by Nationwide 2/3 of tenants would prefer to stay in their rented accommodation ‘long term’. Its common sense if they like the property and area, and are struggling to obtain a mortgage in their own right.
Most landlords let unfurnished and the tenant needs confidence that the furniture they purchase will be usable. The upheaval of loosing friends should not be underplayed. And if you are lucky to secure a job at this moment you are more likely than ever to make the best of the opportunity and stay put.
From the landlords perspective you might want to start a tenant on a traditional six month AST and flip them in a 3 year deal if they prove to be good tenants to tie them down.
Whilst all of this makes sense greater access to buy-to-let mortgage funds is required on a longer tenancy basis. As you might have come to expect from Niche Advice we have a solution available now but even we struggle beyond the first five properties in your portfolio. So Major Johnson was right to town cry for greater assistance from the buy-to-let lenders.
If you have need a buy to let mortgage for a tenancy agreement longer than 12 months call us now.
For more information on how we can help you get a Buy to let Mortgage , please contact us on 0207 993 2044 or alternatively complete the simple enquiry form on the top right hand side of this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines.